Jeff Madrick’s *Age of Greed*

by on June 13, 2011 at 1:17 am in Books, Economics | Permalink

Here is my review, along with Diane Coyle’s review of Tim Harford, and here is an excerpt (from the most negative part of my review):

…I found numerous points to object to. The chapter is titled “Milton Friedman, Proselytizer,” and there is a good deal of (fascinating) information about Friedman’s early years as a “fanatically religious” Jew. One is left with a picture of Friedman as a rather clever but irresponsible simplifier and dogmatist. There is not a comparable discussion of Friedman’s role in insisting on good empirical work and the testing and falsifiability of economics propositions, his building of the University of Chicago department with first-rate scholars and future Nobel laureates, and the numerous times he changed his mind on economic issues, including on monetary theory and policy. Friedman was much more a scientist and a skeptic than this essay lets on.

There are also particular errors and omissions. The discussion of Friedman’s desire to eliminate social programs does not mention that he wanted to replace them with a guaranteed annual income. It is wrong to claim that “the instability of velocity is what finally undid monetarism in the 1980s” when volatile interest rates were a much bigger problem, and in open economies such as Switzerland the exchange rate became the issue (monetary velocity moves in strange ways but it does so slowly). Few economists would agree with Madrick’s claim that “Friedman and Schwartz . . . made little advance over what was already known” or that their Monetary History had little empirical basis. Contrary to Madrick’s view, it is now widely accepted that inflation—or at least ongoing inflation, as Friedman made clear—is always a monetary phenomenon. These aren’t mere accidental oversights; they contribute to a systematic downgrading of Friedman’s legacy of scholarly depth and impact.

1 Mal June 13, 2011 at 2:34 am

The discussion of Friedman’s desire to eliminate social programs does not mention that he wanted to replace them with a guaranteed annual income.

Interesting. I did not know that.

Is there a particular level of minimal annual income that was proposed/promoted? Who are the present-day adherents of a guaranteed annual income?

Is the whole thing actually a good idea? At what level?

So many questions…

2 Andrew' June 13, 2011 at 5:39 am

Was it some kind of Georgist expedient?

I think we’d do better legalizing barter, understanding barter as an ‘inferior good.’

3 Geoff June 13, 2011 at 10:13 am

In both “Free To Choose” and “Capitalism & Freedom” I remember he discussed the idea of negative income tax as an alternative to programs like social security, which would be calculated based on witholding allowance. I don’t recall him going into specifics as to how the funds would be distributed. If you haven’t read those two books, I highly recommend them, despite both of them being a little dated at this point.

4 Hondo69 June 13, 2011 at 7:22 am

An excellent book on this:

In Our Hands by Charles Murray

5 Bill June 13, 2011 at 7:41 am

I following your link and found that the he IMF has its own book review section.

Link to: How to Cut Government Spending

6 NNM June 13, 2011 at 7:47 am

Albert Einstein was also a fanatically religious Jew for a period of his youth. It did not seem to affect his reasoning abilities as an adult.

Also, at the risk of being a chauvinist, Madrick not only misrepresents Friedman, he misrepresents Judaism. Judaism is a religion in which one can be both a “fanatic” and also a doubter, skeptic, and mind-changer (cv the Talmud).

7 mac June 13, 2011 at 9:26 am

Dr Cowen, you are very kind in your review. It sounds like this guy took a page out of Naomi Klein’s narrative on Friedman.

8 Lance June 13, 2011 at 9:38 am

I don’t believe Friedman was an Orthodox Jew past the age of 13. Ebenstein’s biography of Friedman reports that he was a strong agnostic starting around the age of 13.

9 TGGP June 13, 2011 at 10:32 am

I had also heard that he was irreligious from an early age. Interesting to hear that at one time he wasn’t.

What is Madrick’s degree in? Looking him up on Wikipedia, he has been an economics journalist but apparently was visiting professor in the humanities.

10 albert magnus June 13, 2011 at 10:44 am

Professor, have you considered writing a book on Milton Friedman? You seem to know a lot about him, you like to write books and you are an economist. I’m sure you could get some people help research things for you.

11 Jeff June 13, 2011 at 11:56 am

If you want to know what Milton Friedman thought, it’s easy enough to find out. His books Capitalism and Freedom and Free to Choose are both quite accessible, and you can find any number of his other writing online very easily. There are also a bunch of videos available on YouTube.

So why should anyone care what Jeff Madrick thinks?

12 Cahal June 13, 2011 at 2:46 pm

Doesn’t ‘inflation is always and everywhere a monetary phenomenon’ completely contradict the NAIRU? Am I missing something?

13 Jim S June 14, 2011 at 12:16 am

Friedman may have proposed the negative income tax, but those who claim to have inherited his mantle reject it violently.

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