Tuesday, May 21, 2013

Robert Solow contrasting Keynes and Friedman

"After all, why should there be another Milton Friedman in the future when none had appeared before him? I suppose the likeliest candidate for that role in the past was J. M. Keynes. He, too, had an extraordinarily sharp and quick mind, according to all reports of contemporaries, and appears to have had the same facility—and joy—in debate. But there is a vital difference: Keynes was not an ideologue. Of course he took strong positions, and had no lack of self-confidence. But Keynes avoided extremes, and changed his mind often. The usual complaint was that he was too flexible. There was a joke that a group of 12 economists would have 13 opinions on any significant issue, because Keynes would have two. You would never read Friedman’s name into that sentence."

- Robert Solow, May 2013, "Why is there no Milton Friedman today?"

29 comments:

  1. Is there really no Milton Friedman today though?
    There lots of videos and articles by people like Paul Krugman and Joseph Stiglitz, George Akerlof and Robert Shiller as well as all the people who have contributed to INET. Could it be the case that it Milton Friedman's day he was unique and that today there are more like him so to be unique is less common?

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    1. Krugman's probably a good comparison, although I'm not sure if he's at Friedman's level or not. He's still relatively young - perhaps some day. One reason why Friedman (and Keynes for that matter) were considered such giants is that they were great polemicists but they also made major contributions to the science. This isn't to say that Krugman hasn't - of course he has. But I'm not sure if his contributions are on the level of Keynes and Friedman. Stiglitz's contributions are substantial but he's got a lower public intellectual profile than Keynes, Friedman, or Krugman.

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  2. ~But Keynes avoided extremes, and changed his mind often.~

    Yet he never changed his mind on many subjects, including negative eugenics (for a start) - his constant obsession with making sure the "least good" don't reproduce is an attitude we find despicable today.

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  3. I must say that it is always fun to poke holes in hagiographic descriptions of people such as Solow's of Keynes.

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  4. To The Libertarian Standard Bearer: But this has very little to do with Keyne's economics though.

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    1. Best not to feed the trolls. I did in an earlier post today and he's already back for more.

      I wonder if I repeatedly tag him as spam the system will automatically block him.

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    2. Calling me a troll won't take away from the facts of the case. You see, facts are stubborn things.

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  5. That's simply incorrect. His views on human fecundity are directly tied to his views on economics. In fact, when Keynes stated things like "it is the poorest and least intelligent part of the population which reproduces itself most rapidly" (which is also the sort of language you find in cases like _Buck v. Bell_) it was directly tied to his neo-Malthusian notions regarding the right road to human prosperity and the way to allocate resources for such. The guy was quite possibly the last of the Victorian pessimists in fact (who as a class obsessed over just how terrible things were now that the masses weren't dying in such great numbers before from cholera).

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  6. I think it's worth mentioning that Friedman certainly did change his mind over time. He developed his strong small-government positions over a period in his life, changing from more of a moderate to the influential figure we know him as today.

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    1. Sure, that process of changed is reflected in Friedman's writings over the course of his career (as would be the case with anyone).

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  7. To state what may be a brutally obvious and brutally trivial fact...John Maynard Keynes and Milton Friedman partly owe their recognition to media technologies that were introduced during their lifetimes.

    Although John Maynard Keynes died before colour-TV became widespread, he wrote a lot for the newspaper. He also had another advantage that is common to so-called "great leaders" throughout world history: a certain kind of magnetism and effect upon people. Although I wasn't fond of the late Steve Jobs, there was a term coined (and used by people that adored and disdained Apple alike) to describe Steve Jobs's effect on people: a "Reality Distortion Field".

    There are other terms used by social scientists and other people who look deeply at "Great Leaders" that have a similar meaning to "Reality Distortion Field". (I.e., charismatic authority.)

    John Maynard Keynes apparently had a similar effect upon some of the people who met him in person and knew him personally.

    But Jack Cunningham makes a good point, one that relates to the issue of technology and the media that I mentioned earlier. I think that John Maynard Keynes was also partly lucky that he was more recent than some other great economists that communicated with the public back in their day (his teacher, Alfred Marshall, did write frequently to newspapers in 19th century Britain, but the world hadn't quite realised how interconnected it was becoming yet). That's another explanation for why Keynes also sticks out in the general public's knowledge today.

    In Milton Friedman's case, he actively chose to sell himself, but also had the advantage of colour-TV. (On another note - somebody ought to do research on films and documentaries that implicitly or explicitly involve economics.)

    Perhaps if he had sold his message later, perhaps the "novelty" of an economist engaging with the general public wouldn't have been as strong. I think one could argue that Friedman very nearly "missed the boat" for using the medium of TV to sell his message.

    But as for Akerlof, Krugman, Shiller, and Stiglitz...although they are accomplished scholars, the "novelty" may have worn off in their case. And no disrespect is intended to any of them or their achievements, but I don't get the sense that they have a "Reality Distortion Effect" (or something similar to that) upon many members of the general public.

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    1. Friedman had the advantage of being an engaging speaker.

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  8. It's ridiculous to say that Keynes avoided extremes, of course he didn't. Look at all his ranting against the evils of the rich and the evils of accumulating wealth.

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    1. Give us examples of this ranting

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    2. "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

      "The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods."

      "When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease ... But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight. "

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    3. Doesn't seem like a 'rant' at all; just seems like 'something current disagrees with'.

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    4. Yeah, that's Keynes ranting at his finest. The fact that his anti-capitalism was tied in with his anti-semitism also ought not be surprising (since the two tend to go hand in hand).

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    5. Oh FFS, this is always the most pointless debate but I'll bite:

      Keynes was not an 'anti-capitalist'; in fact he wanted to save capitalism from socialism and marxism, which he dismissed. Though he was able to criticise capitalism (instead of placing it on a pedestal as libertarians do, which is IMO the extreme), it did not make him an 'anti-capitalist'.

      And Keynes made some remarks about Jews early in his life but changed his mind later on.

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    6. I agree that he wanted to save Capitalism in a form. He wanted a very controlled form of Capitalism because he believed it was better than other more extreme-left forms of Socialism. When he said he wanted "socialisation of investment" to control aggregate demand, he meant the volume of investment not the direction (though how can those things be decoupled?). But, he was still extremely anti-capitalist in other ways, as the above quotes show.

      Incidentally, I'm not saying that "The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life" is not deplorable. I agree with Keynes that it is. But, Keynes clearly wrote these words not to criticize that concept, but rather to criticize the rich in general. What evidence is there that many rich people love money as a possession, you only need to read a little about what they do with it to doubt that. I'm sure Keynes realized that this accusation applies to very few people, but he wrote the words above anyway in an attempt to justify attacks on the rich.

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    7. Keynes was an anti-capitalist and his rather noxious comments about Jews were made throughout his life. In fact, the guy gave the Boston Brahmins a run for there money when it came to conceited parochialism.

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    8. If by anti-capitalist, you mean anti-free market, anti- "let the market do everything by itself" then yes, he was one

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    9. Issac, yes certainly, but, he was much more than that. Even few of the left-wing parties in Europe today , who are the most left-wing politicians left in the developed world, would propose the "socialisation of investment".

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    10. I think you are not putting that phrase in context. They would propose it if they got a true meaning of what "socialization of investment" means. A good example of this socialization of investment is Eisenhower's Highway project.

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  9. Interesting, Deirdre McCloskey makes the opposite observation about Friedman: she attests him to have resisted a rigid view quite frequently. Am I wrong to think that Solow really, really didn't like Friedman? This essay strongly reminds me of his TNR essay about Friedman/Hayek/MPS where he sais much the same things (I was under the impression that I actually had already read his main points there).

    Tyler Cowen makes a similar observation as you, Daniel Kuehn, about Krugman as the new Friedman: public intellectual, but "only" worth his one Nobel, not the three or four Friedman's contributation are actually worth (his estimate).

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    1. I was honestly more interested in what Solow had to say about Keynes here than what he had to say about Friedman. I imagine, like anyone, Friedman was a mix and it kind of depended on the angle that you look at him from.

      I do find it quite plausible that Keynes was better than Friedman (and most people) on this count. Reading Keynes it's usually quite clear that he can see the value in many sides of a problem. I'm not a Friedman expert but from my experience with him this is less the case with him.

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    2. Yeah, the Cowen appraisal (not surprisingly) was the best of the bunch.

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    3. Yes, I think I understand that. But still, it is interesting that Solow would write an essay that explicitely has Friedman or a lack thereof as its predetermined subject that is more interesting in what it has to say about Keynes. Now, I can imagine that Solow was deeply involved in the (Neo-)Keynes/Friedman/Hayek debates or whatever (though, frankly, I do not know) and that he has some old ax to grind (this seems rather obvious, IMHO). But still, he is a Nobel price winning economist, one would think he could give a deeper (not necessarily more favorable) assessment of Friedman than implying that he was a dork, and that Keynes was awesome - which might be true, but was neither the question, nor (as Solow himself says) the answer, so there.

      I am really not convinced that Tyler Cowen was "the best of the bunch"? Why? Sometimes I have the impression that he had one moderately exciting idea some time ago about this whole great stagnation business, and is repeating it over and over again. His whole essay is nothing more than an exercise in applpying his basic ideas about that topic to innovation in economic thought. Even the wording is the same as always ("low hanging fruit" and all that). I found his essay profoundly boring, by now someone should be able to write this kind of Cowen piece by putting together random parts of his old blog entries.

      In general, I had the weird impression that the authors were not exactly passionate about the topic, but would rather prefer to talk about something else. but that's really just an impression.

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  10. Friedman was a great self-promoter, an ideologue,and his lasting contributions vastly overstated. He cannot hold a candle to Keynes. Friedman's monetary aggregates view has no takers today, not even among monetarists. His permanent income hypothesis can be viewed as banal (trivially true) or significantly wrong. His monetary history view of the Great Depression is also flawed. lastly, NAIRU or the so-called, much touted prediction of the inflation of the 1970s was a) not really original (the idea of the Philips curve trade-off has been cautioned against by Philips himself apart from others before Friedman and in a theoretical sense Joan Robinson had laid the groundwork without of course mathefying it), b) the prediction of inflation was a case of stopped clock being right in the sense that Friedman was always and everywhere warning against inflation, including in 1983-85!! Insofar as theoretical contribution of the NAIRU framework was concerned, it was already presaged in more subtlety and complexity by Keynes, who noted the inherent contradiction between full employment, price stability, and free labor bargaining, and Joan Robinson among others.

    Let us compare that to Keynes--whose a) original contributions to probability are still valid, b) the General Theory is being mined even today for new nuggets. He was a successful investor, success manager of a endowment, helped run war finance, edited a journal, was the architect of the postwar international monetary framework that delivered a quarter century of unprecedented growth and prosperity among many other things. Friedman was a pygmy in comparison. It is a joke to compare them.

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