Milton Friedman, Economist

Note: It has been quite some time since I wrote about comparative economics, so this piece is simple for me and for my non-economist friends.

Friedman was a breakthrough economist that challenged the status quo of Keynesian Economics. Before Keynes (John Maynard Keynes, 1883 - 1946), economists toiled in a sea of complexity that grew exponentially with population growth and international trade. The simple economic model of Adam Smith (1723 – 1790) was useful in explaining many basics of economics. However, time and complexity overwhelmed economists until Keynes sorted it out.

Keynesian economics was the guiding hand for quite some time, but valuation of international currencies during a jump in international trade created questions with few or no answers.

To answer those questions, Milton Friedman (1912 – 2006) created many answers. Mostly in inflation, full and partial employment, and monetary policy, Friedman for a time turned traditional economics on its head. He had answers for the Great Depression and its compounding results that others did not. Much of his theory rested on monetary theory and valuation of currencies. His theories guided central banks in policy setting and helped repair global stagflation of the 1970’s and 80’s.

But that was pretty much the limit of his influence. The bulk of economic theory still rests with Keynes. Many economists thwarted original Keynesian theory and warped government policy accordingly. The bad reputation of Keynesian economics stems from those efforts by others. Returning to a purer form of Keynesian theory improved our understanding.

Friedman’s work helped augment policy tools for setting monetary policy in times of high unemployment, inflation and transition among those conditions. His currency valuation work – monetary theory – helped manage international trade and payment settlements among foreign currencies. So, we maintain loyalty for Friedman fans, but also give proper due to Keynes.

International Economics is a field reliant on open, free markets. Protectionism via tariffs is discouraged. This is the field of economics that helps us understand how competitive advantage among nations works to mutual advantage of the global community. It is complex. Understanding the complexity is vital if global economics is to function for the greatest gain of people the world over.

March 9, 2018