Milton Friedman – Christopher Wink

Power and Progress

Technology has a way of dazzling us into the deterministic fallacy: assuming path dependence for the ways a technology develops and its impact on society. But we have agency.

The so-called “productivity bandwagon” that we assume follows a new technology (where Schumpeter’s creative destruction will generate more jobs than are destroyed) is not inevitable. Widespread gains require that a technology creates more demand for workers (by creating new tasks and industries), and that demand induces higher wages. Neither are certainties, and take societal negotiation between labor and capital.

That’s from a 2023 book co-authored by economists Simon Johnson and Daron Acemoglu called “Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity.”

The book is big and thorough, with a sprawling historical comparisons over a millennia. Yet, I was disappointed by how few concrete examples the authors gave for what precisely they want to be done differently — especially in a book that is more than 500 pages. For example, on page 353, they write “digital technologies, which are almost by their nature highly general purpose, could’ve been used to further machine usefulness – for example, by creating new worker tasks or new platforms that multiplied human capabilities.” But that “for example” is not actually an example, but rather a reassertion of the general outcomes they seek (“new worker tasks or new platforms.”) Instead, I wanted an example of what exactly could have been done differently to ensure new worker tasks or platforms.

In that way, I found so big a book disappointing, and felt it could have been half as long. I appreciated their overall point, though, of idealizing “machine usefulness” in four ways: machines should improve worker productivity; create new tasks; distribute accurate information (like the web) and give better access and markets. Just don’t look to this book for the path to get there.

As they write: “How technology is used is always intertwined with the vision and interests of those who hold power.” Below I share my notes from the book for future reference.

Road to Serfdom

American style, lightly regulated democratic-capitalism so dominated the late 20th century that it’s easy to forget it was not destined to be. The form’s critics (and fans) can benefit from unwinding the tape.

Austrian-British economist Friedrich Hayek (1899-1992) was among the chief architects of an ideology that resulted in that system, which gave us unprecedented growth and predictable inequality. With John Maynard Keynes (1883-1946), Hayek outlined much of today’s economic thought, in part by inspiring economist Milton Friedman who influenced the so-called Reagan Revolution. That’s not to say the system is necessarily the best option, but it is worth remembering Hayek viewed himself in opposition to fascists.

Whatever your stance on it, Hayek’s book Road to Serfdom, published in 1944, is an influential of classic liberalism and modern American and western light-touch capitalism. That’s why he still catches the ire of those defending greater state intervention. Since it is so often referenced, I finally read the thing myself.

I share my notes for future reference below.

Keynes Hayek: The Clash That Defined Modern Economics

Fair or not, today’s economic theory gets simplified in popular understanding as a binary between two influential leaders: English economist John Manyard Keynes (1883-1946) and younger Austrian-British economist Friedrich Hayek (1899-1992).

One way to understand economic theory then is understand these two men, and how they debated and intersected. That’s the goal of Keynes Hayek: The Clash That Defined Modern Ececonomics, the 2011 book by British journalist Nicholas Wapshott.

Keynesian economics gets simplified as describing government as the spender of last resort; In the face of recession, government spending can reverse those threats (think of the initial pandemic era); Hayek helped establish the Austrian School of economic theory (which greatly influenced the University of Chicago school, including Milton Friedman), which can be simplified as arguing for government to set the rules and little else. Like so many silly binaries, there are lessons from both.

Below I share my notes from the book for future reference.

Intellectuals and Society

If “social justice” is the work to ensure our human-made systems operate with greater fairness, then “cosmic justice” is the understanding that the universe results in countless unexpected obstacles to that goal.

At times these forces operate in competition, and to better understand the world, one must appreciate them both. That’s among the themes of Intellectuals & Society, a dense 2010 book written by conservative economist Thomas Sowell. The book is centrally a criticism of “intellectuals,” whom Sowell describes as those “dealers in ideas” who have never implemented any. By and large, he directs his ire on left-leaning academics, authors and commentators.

Sowell’s writing and speaking are frequently distributed on social media via the Hoover Institution and other right-leaning political efforts, so I was curious to dig deeper into his work. Harvard educated and associated with the conservative University of Chicago economics department (an acolyte of Milton Friedman), Sowell is himself is one of the more prominent conservative intellectuals.

The book has a few opinions that might be considered unsavory, and others that twist facts as much as he criticizes his political opponents of doing. For example, he rightly celebrates the good of a free market, but he seems unwilling to admit of any market failures — like, industry consolidation that eventually results in limited choice, or the concentration of inherited wealth that saps productivity.

But Sowell is serious and rigorous, so I follow him for his perspective. Like, John Stuart Mill wrote of those whose politics differ from your own, “know them in their most plausible and persuasive form.”

In particular, I appreciate two bits of criticism he lobs at the left. For one, years back I heard his challenge that progressives spend a lot of time working to redistribute wealth without pausing much to consider how that wealth is created in the first place. In my reporting, I’ve found that to be largely (if not entirely) true. Second, in this book in particular he introduces a framework between the “tragic vision” of the world, in which the world will always be messy, and the “vision of the anointed,” in which the world can be cleaned up. Sowell, who clearly identifies with the tragic vision, criticizes intellectuals as falling victim to the vision of anointed — forever trotting out some neat and clean idea to organize the world without ever caring much about how it works in practice.

I disagree with Sowell on lots of topics. But he is someone who challenges me in important ways. I respect him, so I would recommend his books, including this long and dense tome. Below I share my notes from the book for my future reference.

Free to Choose: Milton Friedman’s 1980 defense of American capitalism

Capitalism exposes inequality. It doesn’t cause it.

That’s among the big arguments that influential free market economist Milton Friedman (1912-2006) made in his bestselling 1980 book “Free to Choose.” By 1980, Friedman was the best-known economist of his generation; In 1962, he wrote Capitalism & Freedom, in 1970 he introduced his influential case for shareholder value and in 1976 won the Nobel Prize in Economics.

The book was published in a period of increased government intervention in the economy, high inflation and economic stagflation in the United States. Friedman’s ideas were seen as a counterpoint to the dominant Keynesian economic policies of the time, and he was part of a wave that was epitomized by the so-called Regan Revolution. The book was also the basis for a ten-part television series of the same name that aired on PBS in 1980. The series and book were well received by the public and helped to popularize Friedman’s views on economics.

See my notes below.

Capitalism & Freedom

Is capitalism the cause of differences or the reason why those differences are so small?

Influential Nobel Prize-winning economist Milton Friedman (1912-2006), who is a champion or a scourge depending on your political persuasion, long argued the latter. First published at the height of the Cold War in 1962, Friedman argued in “Capitalism and Freedom” that economic freedom is an essential component of political freedom, and that a capitalist system is the best way to promote both. This book serves as essentially the foundation of his status as a kind of public intellectual, though even his critics must acknowledge he went beyond punditry — he won the 1976 Nobel Prize in economics due to his scholarly work on monetary policy.

Attacks of capitalism often confuse what that economic system causes with what it exposes. As Adam Smith wrote and Friedman quotes: “There is much ruin in a nation.”

I read a 2002 edition, but when it was originally published the book was the beginning of a movement that led to Friedman’s bestselling Free to Choose (first published in 1980 alongside a PBS series of the same name) and is often associated with the Reagan Revolution. Friedman’s work heavily influenced conservative American politics.

In this earlier book, Friedman argues that government intervention in the economy, such as through regulation and redistribution, is detrimental to individual freedom and economic prosperity. He also advocates for the privatization of certain government services, such as education and healthcare.

The book was published during a time of Cold War tensions and the rise of socialist and interventionist economic policies in the United States and around the world. Friedman has lasting influence. For one, his description of monetary policy having “long and variable lags” has been often referenced to this pandemic era. In 1970, his ‘Friedman doctrine’ that companies existed to maximize profit for shareholders came to define the modern era, and experienced a revival 50 yers later.

Read my notes from the book below.

The Value of Everything

The way we count how big our economy is gets determined by a set of changeable decisions. Those decisions have changed over time, and they can change in the future.

That is a major theme from the 2017 book The Value of Everything by economist Mariana Mazzucato.

Below I share my notes from reading the book, which are for my own purposes for review later.