Today the economics field has suffered a serious loss. Nobel Prize winner Milton Friedman, 94, has passed away. Friedman's influence on economic policy throughout the world over the last 25 years simply cannot be overstated. In the 1950s, Friedman (along with his Austrian counterpart, Friedrich Hayek) led a small intellectual current of contrarians at the University of Chicago against the mainstream liberal tide composed of John Meynard Keynes' followers. Friedman was one of the first to posit the radical notion that bigger government would only worsen the problems it set out to solve, and that free-market capitalism was the best path to prosperity. Everyone thought he was crazy at first, but during the 1970s many began to take him seriously, and by the 1980s his ideas were finally put into play, becoming the dominant creed in the Reagan White House and in Margaret Thatcher's Britain. Today his influence can be felt as far away as Eastern Europe and Russia, and even in India and China. His many contributions to economic theory include:
- That inflation is always caused by excess in the money supply.
- That the cause of the Great Depression was the Federal Reserve, not the free market; and that the reason the depression was so bad and so long was because of FDR's vast government interference through central planning.
- That government programs should be evaluated based on their results, not their intentions.
- That Congress will always find a way to spend all the money it takes in and then some, hence tax hikes are pointless because they only feed Congress more money to waste.
- That there's never a bad time for a tax cut, as this is the only way to shrink government (also known as "starving the beast").
- That insider trading should be legal.
- That no one knows how to better spend your money more wisely than yourself, and no one knows how to better waste it than someone other than you.
- That it makes little sense to try solving the problems of a society composed of selfish individuals by putting more power in the hands of society's most selfish individuals (politicans); thus, voluntary exchange, and not central planning, is the best way to go.
- That a free market is crucial to the maintainence of a free society; that economic freedom is vital to the social freedoms and civil liberties we enjoy.
You also can check out Larry Kudlow's post honoring Friedman here.
7 comments:
would you please explain to me why insider trading should be legal...i can go along with everything else but i dont understand that
Shut up Shane, and get off our blog.
I hate Shane, and I don't even know him.
Now ya'll, the whole idea of the blog is to spread the gospel of our ideas and debate them w/ others, not simply shut people out...
Shane does sound like a Savannah Christian name though, but that's okay.
Friedman's position on insider trading was probably one of his most controversial, so it makes sense why even many conservatives would question it.
Basically, to understand why libertarians think insider trading should be legal, you have to first understand that the role of the stock market is to coordinate the production of goods and services by telling us which companies are more profitable and which aren't.
Stock prices reflect the productivity (and thus profitability) of companies and the entrepreneurial judgments they make. Competition in stock markets enables investors and entreprenuers to ascertain the value of real investment. So insider trading should be allowed because it helps facilitate this competition by transmitting information more freely and quickly.
Forcing insiders to wait until they can "dump" the stock only temporarily protects shareholders from the inevitable results of bad business decisions. On the other hand, forcing insiders to wait until they can buy up more of the stock does a disservice to the market as a whole by tricking investors into thinking a company isn't as productive as it really is.
Simply put, governmental regulation can't improve on the workings of stock markets because it is the market that most directly informs us regarding the best use of resources, and the free flow of information is so crucial to its functioning that its pointless to try and legislate behavior that will happen anyway.
A more detailed explanation, much better than mine, can be found here.
Shane, comment more often. It makes us feel better when other people are reading.
It has come to my attention that "Shane" is in fact fellow Cadet Shane Murray, c/o '03, and one of the best basketball players in BC history.
We thought you were just some random guy. Our apologies. Your thoughts are welcome here any time buddy.
I HATE shane murray
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