Milton Friedman died last week. Friedman is recognized as one of history's greatest economists - according to some, the greatest. He's remembered not just because he made great strides in explaining the economy, but because his policy prescriptions revolutionized the way people think about government's role in the economy. Friedman's fame, like that of most, was based in politics.
Friedman's essential idea was that government management of the economy created inefficiencies. He believed in scrapping the dizzying arrays of regulations and interventions that had been put in place after the Great Depression. His greatest scientific triumph - showing that it's not really possible to lower unemployment by raising inflation - dovetailed nicely with his general philosophy. In fact, Friedman's anti-government stance made him into a (possibly unwilling) champion of the conservative movement.
Before Friedman, economists like Britain's John Maynard Keynes and America's John Kenneth Galbraith had argued for a bigger role for the government in the economy. The Great Depression brought that view to prominence, but the stagnation of the 1970s swept Friedman and the free-marketers back to power. Necessity is the mother of revolution.
Free-market economics is now the norm worldwide. The argument over government's role has shifted from "How should it intervene in the market?" to "How should it set up the market in the first place?". Friedman would be proud.
But is this the end? Beyond removing government obstacles to efficiency, what can we do to improve our economic lot?
My answer: Growth.
To get a sense of why I believe in the importance of economic growth, read this article in the Economist. An excerpt:
This gets at the heart of my central idea about economics - the important thing is not how much we have, but how we live.[I]f we had stopped [growing in the 1930s], how many things should we have missed that we didn't even know we wanted? Penicillin, heart bypass surgery, hip replacements; foreign food, gourmet meals, cheap lean protein, fruit and vegetables year round; world travel, widespread secondary and tertiary education, home ownership, effective birth control; cheap books and mass music ownership; eight hour workdays, vacations, the dirtiest, dullest and most uncomfortable jobs taken over by machines†; air conditioning, mass marketing of refrigerators and vacuum cleaners, self-regulating ovens, automatic washers, dishwashing machines...
[T]hat last group is responsible for what we now consider one of the most basic necessities of all: the ability of women to spend their lives on more than housework.
A majority of women work outside the home today for two reasons:
1. Most workers are no longer used as slightly smarter horses [, and]
2. Labour saving appliances have reduced the amount of housework that must be done.[I]n the 1930s, almost no one imagined that all these worthless, decadent consumer goods had the power to revolutionize gender relations. Aldous Huxley thought we'd have to invent increasingly equipment-intensive games to use up all our excess production; George Orwell envisioned a world permanently at war to destroy these dangerous goods; John Kenneth Galbraith foresaw corporations tricking consumers into buying all their useless geegaws through slick advertising. The reality was that for the first time in history, an average Western woman could have her own family, and her own home, and still have a career besides cooking and cleaning for them. We are no doubt similarly blind to the people who might be empowered by economic revolutions still to come.
Women's equality is possibly the most important and positive change that economic growth has brought to our society in the last century. But there are many others. For example, the internet allowed intellectuals, formerly derided as "nerds", to become independent and financially successful, while using their talents in jobs more fulfilling and stimulating than any that had existed before. Academia has thrived, too - "professor" is a great job now, when it used to be a one-way ticket to the poorhouse. Disabled, sick, and elderly people are able to live fuller lives than ever before. Growth has allowed green technology to flourish - it's no accident that America, Europe, and Japan are the world's cleanest countries. And technological progress has slowed birth rates, which has (arguably) made the world a more peaceful place. All direct results of economic growth.
Unfortunately, it is almost an article of faith among in many (liberal) circles that growth and inequality are tradeoffs. Certainly, that can happen. But are we really less equal now than we were in, say, 1700? 300 years of economic growth are precisely what allow today's middle and working classes to live like the nobles of old - but with plumbing, deoderant, and YouTube.
Growth is important, not because it allows us to consume more of the same things, but because it means new things get invented that change our lives for the better. And most of these new things end up making ours a more, not less, equal society.
Milton Friedman may have been all about efficiency, but growth is the real driver of progress. The Chinese realize this, so it's time we did too. That's why I believe growth should be the focus of the new liberal economic policy framework, which should focus on making people's lives qualitatively different, instead of quantitatively more efficient.
Bonus Reading Guide
1. An article in Slate compares Battlestar Galactica to Star Trek and finds the latter inferior. "Trek characters weren't allowed to have flaws or conflicts," the author writes, making them "stilted and predictable." Now, I do love Battlestar Galactica's character-driven, conflicted style. But I don't want my entertainment to only show human flaws and weakness. Sometimes I want to see human beings rising to the occasion, being more than we ever thought they could be. Such things do happen in real life - the Declaration of Independence, the Apollo moon landings. That's what Star Trek gave me, week after week, and that's why I'll always miss it.
2. Speaking of people named Friedman...The world's highest-paid journalist, Mr. Thomas Friedman, is certainly no Milton in the brains department. Read in this article how, every month or two for the last three years, he's been saying that the Iraq conflict would be decided "within six months." And this fool is the accepted authority on everything from war and conflict to oil politics to globalization. Sheesh.
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