# An Economist's Protest By Milton Friedman **URL:** **By** Alan Reynolds **Published:** January 1, 1974 --- “In short, this is a masterful collection of readable essays by a man who will surely have as much impact on the next century as Marx had on this.” Establishment economics cannot ignore Milton Friedman any longer, because he is willing and able to battle on their terms. Sure, he says, poverty is a social problem: so why does the government impose regressive taxes, set mini-mum prices on basic commodities and their transportation, and prohibit people from working without a license? Sure, macroeconomics is a science: but it can be scientifically demon-strated that the monetarist model predicts nomi-nal income better than the Keynesian model and that neither works well enough to justify discretionary government authority. This sort of approach drives purists up the wall, but it has considerable strategic value. Like the proverbial donkey, you have to get the opponent's attention before you can straighten him out. Playing this game, however, requires a mastery of "logarithmic functions," "stochastic magnitudes" and other fancy stuff. As a result, much of Friedman's best work is inac-cessible to the general reader. In his _Newsweek_ columns, Friedman has provided an invaluable popu-larization of his ideas. This book is a compilation of these brief essays, arranged chronologically within twelve topic categories. Many of the columns are exercises in applied theory; it is fascinating to check Friedman's forecasts against what has happened since: e.g. "… under the cover of the price controls, inflationary pressures will accumulate, the controls will collapse, inflation will burst out anew, perhaps sometime in 1973, and the reaction to inflation will produce a severe recession (Oct. 18, 1971)." See the "naive" quantity theory in action—Friedman provides ample data—then decide. Since the volunteer army is currently being sabotaged and bombarded (by those who prefer the simple bargain of stealing people), Friedman's six pieces on the draft are by no means obsolete. No other individual had so much impact on the decision to end the draft. We must not lose the ground that was won so hard. Those who don't already know can learn from this volume why a 10 per cent prime interest rate is not high at all, after six months of 10 per cent inflation, and why such nominally-high interest rates are a sign of loose—not tight—monetary policy. Those too completely convinced by Melchior Palyi's _The Twilight of Gold_ can also learn why price-fixing between dollars and yen, or between dollars and gold, is no more desirable than any other form of price-fixing. Others may be surprised to discover how Social Security, and other "humane" endeavors, soak the poor. The two Friedmanite proposals that have drawn the most fire from libertarians—the voucher plan and the negative income tax—are here defended. Both may best be seen as transitory devices which maximize consumer choice and market forces and minimize bureaucratic power and expense, within the constraint of public support for statist goals. Such devices are, by libertarian criteria, potentially better than the existing mess—though perhaps equally subject to abuse. The problem is getting from where we are to where we would like to be without self-defeating dislocations (eliminating farm subsidies, for example, might cause an undeserved drop in the value of farms). Those who know Friedman only through these pragmatic measures will be shaken by his passionate rejec-tion of egalitarian measures and notions in "Homogenized Schools." In short, this is a masterful collection of readable essays by a man who will surely have as much impact on the next century as Marx had on this. Even those who are not Friedmanites will find it a useful source of facts and insights. _Reviewed by Alan Reynolds / Economics (219 Pages) / BFL Price $2.95_