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Milton Friedman on big business and big government

Following the Rothbard talk I mentioned yesterday, here is another performance by a dead great guy, in this case Milton Friedman, supplied by Sam Bowman at the ASI blog.

What a shame, as Rothbard so regularly noted, that Friedman didn’t include banking in his list of big businesses that the government should not be giving money and power to.

I say dead. Thanks to their books, but now especially thanks to video and audio, and to the internet that now allows us all to choose what video and audio we will pay attention to, these great men live on.

6 comments to Milton Friedman on big business and big government

  • Paul Marks

    It should be pointed out that most big business enterprises (banks are a special case) are more hurt than helped by government.

    Regulations may (do) make it harder for small business enterprises to grow into competitors – but regulation at the current level (thousands upon thousands of pages) hurts big business also – and hurts a lot.

    Also the United States (supposedly a country run by corporations) currently has some of the worst regulations in the world (company directors can be sent to prison for what would be considered minor clerical errors in other parts of the world) and the highest corporate taxes (Federal and State) in the world.

    “But they do not have to pay” – actually most of the business enterprises (even the very biggest) DO have to pay, the “pets” are a minority.

    It is a pity that when business is being undermined by regulations and taxes some people (although not the late Milton Friedman) regard “business” or “the corporations” as the problem – and join in the collectivist attack. It is especially irritating that some of these collectivists (Blag Flag types who actively cooperate with Red Flag Marxist union thugs, and other such, on the streets) call themselves “libertarians”.

    Milton Friedman and the banks.

    The late Milton Friedman seemed to speak on both sides of this issue.

    He may have said “the money can be thrown from helecopters” but it seems his misunderstanding of money (which he got from his reading of Irving Fisher – someone he called the “greatest American economist of the 20th century”) was not only about the need for “monetary stimulus” in the case of a bust (he never seems to have understood that it is the credit money “boom” that is the problem) – it was also about the means by which this “monetary stimulus to prevent the collapse of the broad money supply” (i.e. the credit bubble) was to be done.

    Milton Friedman always seems to have assumed it would be done via the banks (rather than throwing money from helecoptors or whatever). Failinig to grasp that this is CORPORATE WELFARE.


    Milton Friedman at other times said (and said repeatedly).

    That the Federal Reserve system should never have been created.

    And that….

    The “monetary base” (the government notes and coins) should be frozen.

    If one has no Federal Reserve (no Central Bank) and one does not allow government to increase the money supply directly (i.e. the Treasury to produce more notes and coins) it is difficult to see how the “monetary stimulus” (the bailout corporate welfare) can be done.

    As I say above – Milton Friedman appears to have been on both sides of this matter.

  • Dyspeptic Curmudgeon

    There is another great video of Friedman from 1999, where Milton is asked which US cabinet level departments he would disband. His response is that he would fold Veteran’s Affairs back into Defence, and trash another 14…leaving 4 out of the present 19.

    Given that there is little direct constitutional grounding for at least 8 of the 14, it’s refreshing to think about what the government does not *NEED* to do.

    The clip is from an interview conducted by the Hoover Institute and is probably also available through its site.

  • PeterT

    Its a statement of the obvious but it is perfectly possible to hold a view on how things work and the role of government involvement with that thing. So you may believe such things as money illusion and (especially) nominal rigidities are real (no pun intended), which I do, while still believing that a banking system along Austrian Economics lines is the best possible, which I also do.

  • lucklucky

    “Regulations may (do) make it harder for small business enterprises to grow into competitors – but regulation at the current level (thousands upon thousands of pages) hurts big business also – and hurts a lot.”

    It doesn’t hurt most of workers of that companies since most big companies turn into a moscovite numenklatura where what matters is to increase their own bureaucracy.

  • Paul Marks

    Till they go bankrupt lucklucky – till the go bankrupt.

    And that time is comming – and not all the bailouts in the world will save them.

  • Paul Marks

    Even Keynes did not really believe in the “money illusion” – if he had done he would not have supported government control (which he does in the introduction to the German edition of the General Theory….).

    If people were really so stupid as to not take prices rises into account in their wage demands (the “money illusion”) no such control would be needed to make the Keynesian con trick “work”.

    As for “rigidities” in labour markets (or other markets) they are created by government interventions (such as pro union laws – allowing obstruction, “picketing”, and so on).

    Government interventionism creates a problem (such as wageds that are “sticky downwards”) and then uses the problem (the problem it has created) as a excuse for even more interventionism.