Friday , April 28 2017
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Why go after Milton Friedman?

Summary:
The top question on my Reddit AMA was "When and why did you start hating on our lord and saviour Milton Friedman?". Two or three other questions were basically the same.And it's true, I have been on a Milt-bashing kick of late. I did a post evaluating how Friedman's macro theories had held up, and gave them a C+ overall. I wrote another post complaining about his "pool player analogy", which people use to justify not checking their model assumptions against micro data. I wrote two Bloomberg posts declaring the Permanent Income Hypothesis dead (post 1, post 2). And I wrote a tweetstorm (since deleted in a periodic tweet-wipe) about how Friedman's libertarian policy program might have prevented racial integration in the United States.My revisionist campaign against the late Friedman has

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Why go after Milton Friedman?

The top question on my Reddit AMA was "When and why did you start hating on our lord and saviour Milton Friedman?". Two or three other questions were basically the same.

And it's true, I have been on a Milt-bashing kick of late. I did a post evaluating how Friedman's macro theories had held up, and gave them a C+ overall. I wrote another post complaining about his "pool player analogy", which people use to justify not checking their model assumptions against micro data. I wrote two Bloomberg posts declaring the Permanent Income Hypothesis dead (post 1, post 2). And I wrote a tweetstorm (since deleted in a periodic tweet-wipe) about how Friedman's libertarian policy program might have prevented racial integration in the United States.

My revisionist campaign against the late Friedman has ruffled a lot of feathers. Uncle Milt is something of a secular saint among both economists and libertarians. If you say "people don't smooth consumption," economists will talk about the issue calmly and reasonably, but if you say "the Permanent Income Hypothesis is wrong" - which means exactly the same thing - lots of hackles are instantly raised, and people jump to defend the hallowed PIH. Similarly, in policy discussions, if you diss vouchers, people will argue, but if you say "Milton Friedman was wrong about vouchers," they get mad.

So why do it? Why not leave Friedman alone and just talk about his ideas, or the modern-day versions thereof? Here are my reasons:

1. Clickbait!

Saying "X is wrong" gets less attention than saying "X, which Milton Friedman supported, is wrong." So why not do the latter? If it gets more laypeople paying attention to economic research and serious economic ideas, I say that's a good thing.

It's hard to get people interested in the latest research on consumption smoothing. That is a nontrivial thing to do. And putting Friedman's name up there is one way to do it. As long as I'm not misattributing anything to the man, what's wrong with that?

2. Fighting against "Great Sage" culture

"Science alone of all the subjects contains within itself the lesson of the danger of belief in the infallibility of the greatest teachers of the preceding generation," Feynman said. And you should take it from him, right?. ;-)

Anyway, that principle makes sense. If understanding is going to progress, people can't have too much reverence for the opinions and theories of respected humans. In the humanities, there tends to be a lot of reverence for the ideas and thoughts of the Great Old Masters. "Kant said X" and "Foucault said Y" are things you'll actually hear when you talk to humanities types. Who cares? Why should I believe Kant or Foucault? I never understood this. I guess in the humanities, lots of things are just matters of opinion, or untestable conjecture, so it's not that important to go out and try to prove Kant wrong. But in a scientific field, it's the knowledge that matters, not the people who found it (or tried to find it and failed). Too much reverence for the teachings of a Great Sage can hold people back from finding better ideas.

I feel like economics has a bit of Great Sage disease. People are way too reverent about old masters like Friedman or Lucas. This is in contrast with physics, where people delight in saying "Einstein was wrong" or "Feynman was wrong" about something. I like the irreverent way better.

3. Annoyance at the mixing of econ and politics

In his scholarly writings, Friedman was careful to draw a distinction between normative and positive economics. But it's not clear his fans got the message. Friedman very publicly engaged in policy advocacy. His most famous book was an ideological tract. They made that book into a TV show!

Do you think that Friedman's status as a top academic economist had nothing to do with the respect and credence that were afforded to his ideological and political ideas? If so, I've got a bridge to sell you. Friedman taught a generation of fans that laissez-faire policies were great, and his academic status lent an imprimatur to those teachings that a Wall Street Journal writer or libertarian pundit never could have enjoyed.

So by informing the public that Friedman got some big things wrong in his academic research (which of course is true of any economist), I hope to be able to dispel a little of that mystique. Fans of Friedman's libertarian ideology need to know that their sage was just as fallible a scientist as any other.

So there you go. Three reasons to publicly criticize the ideas of Milton Friedman. As for reasons not to -- well, the man has already passed away, and he amassed so much fame and respect that the tiny stings of an insignificant insect such as myself pose no real threat to his legacy. So I don't feel guilty at all.

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Noah Smith
Noah has been a finance professor at SUNY Stony Brook, an economics PhD student at the University of Michigan, an academic editor in Japan, and a physics major at Stanford. He is currently hard at work on solving all the problems of the world. So don't be surprised when all your problems suddenly vanish.

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