Economy & Budget

Milton Friedman, Blue Collar Intellectual

The popularity of economists inversely correlates to the health of the economy. Dismal times make the dismal science suddenly exciting, joyous, and even sexy.

This was certainly true during the 1930s and the 1970s. Those tough times, very much analogous to our own, made rock stars of John Maynard Keynes and Milton Friedman. That the applied prescriptions of the latter worked, and those of the former did not, has something to do with actual work, i.e., labor. Only people who don’t work in the real world could stubbornly tether themselves to theories that don’t work in the real world.

The central theme of my new book “Blue Collar Intellectuals: When the Enlightened and the Everyman Elevated America” is that both the intellectual and the everyman is better off when the two strive for an understanding of, and a conversation with, the other. Our present troubles stem in no small part from economists largely separated from the economy.

Take the examples of Keynes and the prolonged Great Depression, on the one hand, and Friedman and the eighties’ abrupt reversal of seventies’ stagflation, on the other. The thirties proved that economic theory divorced from experience is dangerous, if not to the theorist’s reputation then at least to the rest of us. The eighties showed that theory grounded in experience tends to succeed, if not in the minds of professors then at least outside of them.

John Maynard Keynes, the scion of an economics professor and social gospel do-gooder, was schooled at tony Eton and bucolic Cambridge. He toiled primarily in government and academia but not, significantly, in private enterprise. Keynes cavorted with the Bloomsbury Group, an avant-garde clique dedicated to free love and command economies.

Rahway, New Jersey, where Milton Friedman grew up, is about as far away from all that as it gets. Friedman was raised atop various in-home family businesses. He scooped ice cream at his parent’s parlor and sold fireworks by the roadside. He earned a state scholarship to Rutgers, where he waited tables for a meal, sold tradition-mandated white socks and green ties to freshmen door-to-door, and partnered with Barnes and Noble in a book-buy-back venture at semester’s end.

Milton Friedman wasn’t born in the University of Chicago department of economics. He succeeded there in part because he had participated in the economy.

This isn’t to say that Friedman’s days as an Encyclopedia salesman served his career better than his knowledge of mathematics or that Keynes would have been better off had his father scooped ice cream rather than taught economics. It is just to point out that people shielded from the repercussions of their ideas can afford to push bad ideas. Only in a field drowning in theory could Friedman’s common-sense wisdom that “the only relevant test of the validity of a hypothesis is comparison of its predictions with experience” be considered controversial. 

Our economy now suffers from experts without experience. They are more Keynes than Friedman. The economic authorities derive their authority from outside the economy rather than from within it. They are play-by-play announcers accustomed to watching the game rather than the color commentator offering wisdom from his playing days. Paradoxically, it seems that the less one has participated in business, the more one thinks oneself equipped to order the affairs of businessmen. 

Washington overflows with masterminds eager to tell private enterprise what to do without the slightest sympathy for what private enterprise actually does.

There’s the community-organizer-in-chief; his Treasury Secretary Timothy Geithner, a third-generation Ivy Leaguer who grew up in Asia and Africa but seems wholly ignorant of America; Austan Goolsbee—the name alone tells you that he was Skull and Bones—who replaced a Council of Economic Advisors chair that went back to Berkeley and was succeeded by one who came from Princeton; and their cheerleader Paul Krugman, the former Enron advisor whose work in the media-academia-government nexus puts him as far away from normal Americans as one can be while still living in America.

Blue collars suffer in this economy’s blues. The lack of blue-collar intellectuals does much to explain the suffering of both the economy and the blue collars. To loosely paraphrase working-class heroes Archie and Edith, Mister we could use a man like Milton Friedman again.

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  • attymike

    I would be reluctant to vote for a major politician who did not have experience as both an employee and a business owner or manager.

    Economists have a reputation for being able to make good  predictions.  That is how they achieve their prestige.  However, their predictive ability is simply overrated.  They are learned in their field, but their ability to predict is suspect. 

    Economists are similar to clinical psychologists, who are also learned in their field, and are presumed to be able to predict huiman behavior; which is also suspect.  The psychologists’ own literature makes it clear that their predictive abilities are limited; but it is very difficult for the public to see that literature.

    Thus, we have people who, due to their learning in their field, are supposedly better than the masses at predicting the future.  That is a myth, and we have fallen for it.

    In order to understand business, and predict what it takes to stay in business, you have to have worked in the field and know something about it.  Anyone who thinks that an economy can be centrally controlled and micromanaged by desk jockeys obviously knows nothing about economies; regardless of his or her knowledge of econometrics and finance.

     
        Atty. Mike Agranoff, Ellington, CT
          

  • Leroy_Whitby

    Only in a field drowning in theory could Friedman’s common-sense wisdom that “the only relevant test of the validity of a hypothesis is comparison of its predictions with experience” be considered controversial.  

    _____________________________________

    Let’s apply that to the Keynesian policy of increased deficits and spending to stimulate demand and end an economic depression.

    1930 to 1941 under Hoover and Roosevelt: Complete Failure.

    2008 to 2011 (and counting) under Bush and Obama: Complete Failure.

    Keynes was wrong.

  • joesolargenius

    This article by Mr. Flynn is right on the money in concerns to having an experienced working person overseeing economic policy instead of an out of touch desk jockey whose ideas come from a similar type person.
    America is a business as well as a country and needs to be managed in a lot more responsible manner than it has for the last twenty years.

  • MICHAELNLA

    Excellent piece!

    All anyone has to do is look at Obama, whose only private sector job expericence was working behind the counter at Baskin Robbins and who didn’t have ANY executive job experience before he entered the Oval Office.

    Then compare Obama’s presidency to Reagan’s.

    Not to worry, in 11 months we’re gonna correct our mistake at the polls  & come January 20, 2013, we’re gonna remove the Marxist in the Oval Office & cancel “Amateur Hour” at the White House.

    Fool us once. Shame on you. Fool us twice. Shame on us.

    NOBAMA 2012…Because Americans can’t afford 4 more years of Obama’s incompetence, lack of leadership & Marxist “spread the wealth around” & “class warfare” B.S.
    “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”
    Winston Churchill

    Read more: http://www.brainyquote.com/quotes/quotes/w/winstonchu164131.html#ixzz1gzsKaHNL

  • Concerned4America

    I like cliches. Sometimes they contain an important truth in digestible form.

    If you laid all the economists in the world end to end they could not reach a conclusion.

    There is nothing sadder than a beautiful theory left lying bloody and beaten in the street by a gang of brutal facts.

    Insanity is doing the same thing over and over and expecting a different result.

  • Concerned4America

    In any other field a model that has not been validated by comparing its predictions to reality is considered useless or at best viewed with suspicion.

  • Cool_Hand_Luke

    Thanks for the article. Milton Friedman brings back fond memories of the Reagan Revolution.
     
    Friedman was an economic adviser to President Reagan and his imprint on the greatest economic growth till that time was immense.
     
    Gone were the Carter years of malaise and the misery index. Ushered in were years of optimism and job growth that put millions of Americans back to work and a feeling of greatness about the country again.
     
    “I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.”
     
    Milton Friedman

  • kazzer66

    You forgot Alan Krueger, one of the current clueless, from Princeton, proponent of minimum wage increases, that serves on the White House Council of Economic Advisers.