Milton Friedman will eventually be regarded as the worst economist ever. Ninety percent of his work will be regarded with the same distain that we now have for phrenology, Darwinism and bell-bottom pants.
Friedman was at his heart a utopian globalist. His free market, free trade, libertarian economics was simply the flip side of communist economics. Karl Marx and Friedrich Engels were fervent supporters of free trade because they knew it would destroy organized, productive societies and lead to revolution and tyranny. They were honest and enthusiastic about the effects of free trade: the rich would get richer and the poor would get poorer. Eventually there would be economic chaos, starvation, revolution and the destruction of successful societies. They cheered for free trade.
Friedman made his economic reputation by being anti-Keynesian and proclaiming that government could not micro-manage the economy by spending. (Did Alexander Hamilton ever claim such a thing?) Then in his masterwork, Friedman examines monetary policy and proclaims that drastically changing the money supply in a short period of time will lead to economic ruin (either increasing it, or in the case of the Great Depression shrinking it.) Something Hamilton knew, but the Keynesians forgot.
Having made his academic mark, Friedman then goes on to be the unabashed unfettered supporter of free trade and free markets. With a religious conviction of the invisible hand of Adam Smith, all things according to Friedman will work out in the long-run. But as George Stigler said, in the long run, we will all be dead, so why not worry about the short run?
In his monetary history, Friedman makes no mention of tariffs being any cause of the Great Depression. The Smoot-Hawley tariff is not listed in the index. However, in Capitalism and Freedom, he says of the tariffs, “which some scholars regard as partly responsible for the severity of the subsequent depression.” They may have said that, but Friedman knows this is false, and yet he disingenuously promotes a falsehood to further his economic utopia.
Friedman ignores the economic history of the United States as a protectionist economy created by Alexander Hamilton, enlarged by Henry Clay, and defended by Abraham Lincoln. In personal correspondence with me, Milton Friedman says that Alexander Hamilton wanted to do away with tariffs between states, which is true. But, Hamilton understood that there was difference, equalizing living standards between Massachusetts and Maine and equalizing living standards between Maine and Manchuria.
Within a protected economy, the nation becomes collectively wealthier because outflows of capital are kept to a minimum. In addition, the value of labor goes up raising the living standard of the average American, while the value of capital goes down. Full-blooded, non-nationalistic capitalists (such as The Wall Street Journal) detest this and editorialize for the unrestricted international flow of capital. An investment made in a machine in Shanghai will produce a higher rate of return than an identical machine in Manchester because the labor to run that machine is cheaper.
The result of unrestricted flows of capital and free trade is always the destruction of the middle-class and the creation of a confederate society: a slender group of very wealthy people, an impoverished middle-class and a vast number of slaves, or semi-slave laborers. This is America’s future with free trade and mass immigration.
Friedman argued that there would not be any negative effects from free trade to developed economies because the value of currencies in foreign countries would rise as an economic restraint on the importation of goods. In addition, the workers in the foreign countries would attain higher living standards.
Nothing like that has happened. China and other countries have not allowed their currencies to float, instead they have accepted enormous debt from the U.S. government and now have a stranglehold over both the manufacturing life-blood of the nation and could crash the U.S. economy by selling off the their U.S. obligations.
Milton Friedman was born in America and lived in America, but he was never an American economist. Fundamentally, he was European or globalist economist who like Marx and Engels traded in utopian theories. If millions were laid off in America and reduced to penury, it did not matter to Friedman because everything would be better, eventually ... in the very long run, maybe.
Friedman never understood the importance of the nation-state, the United States, its history or its law. For him, economics was simply the aggregate decisions of millions of independent entities called human beings. They were never citizens of a country with a common language culture and interests. They were only consumers out to buy a television at the lowest global price. No economist’s ideas or personal selling of those ideas has done more damage to the United States, its economy or its citizens than those of Milton Friedman.
The free market economists are now in a woeful position. The economy is growing because the U.S. is in a gigantic buying binge based on credit and foreign debt. But the middle-class is shrinking and the misery is not even measured among the lowest income groups who are stung by painful loss of high-paying manufacturing jobs and a flood of massive legal and illegal immigrants. It was not suppose to work out this way. All boats were supposed to rise.
The free market economists defending Friedman throw the gross national product figures at the public and show a low unemployment rate, but somehow that is cold comfort to a worker at nine dollars an hour who formerly was employed at twenty-two. The overwhelming statistic is that the mean wage in the United States has grown much faster than the median wage. That is, the rich are growing richer and the middle class is getting poorer. This does not even begin to measure the level of unemployment and misery among those at the lowest economic levels. According to the New York Times, over half of African-American males without a college degree are unemployed.
Milton Friedman was a charlatan whose accurate work on monetary policy allowed his credibility to push the economic snake-oil of free trade. The United States has now reached an economic crisis of catastrophic dimensions. Americans must, and will, reject free trade and restore its economy to the protected economy of Alexander Hamilton.
Paul Streitz, Co-director
CT Citizens for Immigration Reform
email@example.com or firstname.lastname@example.org
Mr. Streitz is author of Oxford: Son of Queen Elizabeth I, The Great American College Tuition Rip-off and America First, Why Americans Must End Free Trade, Stop Outsourcing and Close Our Open Borders. He is also a graduate of the University of Chicago Business School with an MBA in marketing and finance, but he has since recanted his free trade beliefs.