Thursday, March 19, 2009

‘Where Have You Gone, Milton Friedman?’

Thursday, March 19, 2009
By Christopher Ruddy

If Simon & Garfunkel were still recording today, they might pen a hit new song, to the beat of “Mrs. Robinson,” titled “Where Have You Gone, Milton Friedman?”

The Nobel Prize-winning, free-market economist died in 2006. But Friedman was not only a brilliant theoretician, he was an articulate advocate for our free-enterprise system. President Reagan awarded him the Presidential Medal of Freedom in 1988.

I remember as a high school student watching his TV program on PBS, “Free to Choose.” Friedman’s ideas became the underpinnings of the Reagan revolution, not to mention Margaret Thatcher’s privatization movement that helped leapfrog Britain’s economy.

Today capitalism is under attack as never before and Milton Friedman is not here to defend it.
President Barack Obama and congressional Democrats are blaming capitalist greed for the current economic crisis, seeking to make scapegoats out of the “rich,” banks, Wall Street — the entire capitalist system.

Their solution is more government, more spending and higher taxes.
What would Milton Friedman say to that?

Well, I can share with you a video of a testy but amusing confrontation between Friedman and liberal TV talk-show host Phil Donahue that took place in 1979.

Acting like Barack Obama, Donahue asks the renowned economist, “When you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?"

Friedman shot back: "Is there some society we know that doesn’t run on greed? What is greed? Of course none of us are greedy; it's only the other fellow who's greedy. [The audience chuckled.]
Friedman continued: “The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus . . .

“In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, they have had capitalism and largely free trade . . .

“There is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."
Those words are so appropriate today. [You can watch the video of Friedman’s exchange with Donahue — Click Here Now.]

Friedman’s point is not that capitalism is perfect, but that it is better than all the other systems. Consider that the United States has just 5 percent of the world’s population, but its free-enterprise system produces 25 percent of the world’s GDP.

If Obama gets what he wants, attacking the rich and “spreading wealth around,” the U.S. will resemble the socialist economies of Europe — and it will also mirror their low rates of growth and economic activity. Obama’s plan will not just hurt the U.S. economy, it take the steam out of the world economy’s engine.

But Milton Friedman still has more to say about Obama.

Recently, Newsmax’s sister publication, Financial Intelligence Report, included an economic analysis from market expert David Skarica.

Skarica cited Friedman’s 1992 classic work “Money Mischief.” As Skarica notes, everything that is unfolding today, including our government’s response to the current crisis, is all laid out in Friedman’s prophetic book.

“Friedman argues that, during recessions, governments turn on the printing presses,” Skarica wrote. “Interest rates plummet as governments move to inflate the money supply in response to an ensuing economic meltdown,” and the initial effects seem good.

That is, governments use spending to cover up economic ills, but that leads to rampant inflation.
Amazingly, what Friedman described is exactly what is happening today. Obama and the Democrats are unwilling to cut spending and be fiscally responsible, and instead will massively increase the money supply — which inevitably leads to inflation.

Skarica writes, “We are seeing this phenomenon unfold right now before our very eyes.”

Federal Reserve Chairman Ben Bernanke has said there is no problem with inflation, declaring on March 10, "We do think inflation will be low over the next couple of years."

And just this week, it was announced the Fed pumped another $1.2 trillion into the economy!
Bernanke surely knows what Friedman explained in “Money Mischief” — that it takes at least a year after the massive expansion of the money supply for inflation to rear its ugly head. And Bernanke is well aware, as Friedman so artfully explains, that inflation causes a brutal economic “hangover,” making things actually worse in the long run.

Sadly, our biggest problem today is not the economic one, but one of leadership and character. We do not have the Milton Friedmans to rise to the challenge.

Without Simon & Garfunkel’s new song, perhaps we can just change the lyrics in “Mrs. Robinson” to “Where have you gone, Milton Friedman? A nation turns its lonely eyes to you.”

© 2009 Newsmax. All rights reserved.

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