Asymmetrical Information

While I agree with your assertion that Galbraith is readable, but not necessarily factual, I cannot agree that he was not influential. JKG worked with many different presidents and was a key advisor to John F. Kennedy even on topics outside of economics.

JKG was politically influential under the Keynesian administrations. Friedman was influential in reversing course and proving empirically the flaws of the Keynesian arguments.

It would indeed be good if you'd noticed that I didn't equate them as economists, but instead ranked them as "publicly-accessible, politically-oriented" economists. As this is a distinction you also make in your post, I'm puzzled to see you totally miss it in mine.

As public intellectuals, they were considered something of a pair -- in no small part because they often debated each other. As influencers, Friedman was heavily influential with Reagan, Galbraith with Kennedy. Friedman's series "Free to Choose" is considered a response to Galbraith's series "The Age of Uncertainty." And I could go on. The comparison is apt -- you're making a different point, which has its place, but isn't a rebuttal nor evidence of error on my part.

As an addendum, if I were talking about economists qua economists, I obviously wouldn't have ranked either one above Keynes.

Galbraith wasn't much of an economist, but he was a terrific reporter. "The Affluent Society" showed, with example after example, how much better the private sector does at providing goods and services than the public sector. Galbraith himself, for reasons that I've never grasped, thought this was a reason to expand the public sector.

According to Paul Krugman, John Kenneth Galbraith was a "policy entrepreneur" rather than a genuine economist. Later Krugman coined the term "pop economist" to describe people on both sides of the aisle who aren't economists but who are good at convincing the general public that they are.

An analogy in music would be a singer like Andrea Bocelli, who is widely believed by tv viewers to be an opera singer, but the mention of whose name would cause a genuine opera lover to roll his eyes.

Krugman compared Galbraith to Stephen Jay Gould, who was beloved by the middlebrow liberal public, but of whom the great evolutionary biologist John Maynard Smith said that his ideas were regarded by professionals in the field as too confused to be taken seriously.

On page 14 of the paperback edition of his book *Peddling Prosperity* (Norton:1994) Krugman says of Galbraith: ". . . Galbraith's influence never reached into the actual determination of policy. John F. Kennedy brought him into his administration, but kept him as far from economic policy as possible by making him Ambassador [sic] to India".

(Given the excellence of his earlier work in economics, and his acumen in exposing the meretricious nature of the work of people like Galbraith, it is sad that Krugman himself, under the influence of Bush Derangement Syndrome, has become a pop economist.)

Jane, you're starting to misrepresent others to a startling degree. If you were a lawyer with a client, I could understand it, but this is starting to look like intellectual dishonesty. I expect that out of the powerline types, but you've been better than this.

"As an addendum, if I were talking about economists qua economists, I obviously wouldn't have ranked either one above Keynes."

Oh, o b v i o u s l y.

Who was the greater economist, von Hayek or Friedman?

Anybody care to venture a top ten or top twenty of the 20th century list?

The lists that Google produces include both geniuses like Keynes, Schumpeter, Sraffa, Kalecki, Kenneth Arrow, and Ronald Coase and BS artists like John Kenneth Galbraith and Herman Daly*. I'm looking for a clean, honest, politically unbiased list.

*http://www.marginalrevolution.com/marginalrevolution/2006/03/poll_of_the_gre.html

I consider myself fortunate to have seen Milton Friedman speak in person. I was a grad student at Stanford (in engineering) when he spoke on campus one evening. It was early 1978. The usual protests were organized, and this dimunitive man spoke to a somewhat hostile but (to their credit) open audience. His initially cold reception gave way to a unique time when you could see the audience was actually listening to what he was saying. What a speaker! he spoke with intellectual honesty, conviction, and vision. You sensed something was happening not only at the podium, but in the audience itself.

During the Q&A session, professor after professor came to the microphone to refute him. But it was they who were easily refuted. Soon, cheers were coming from the audience when he concluded his responses. He entered as prey, but he exited as a lion. I left with a group of friends, deeply affected by what we had just witnessed. It has left a very personal memory with me.

He had the unique combination of skills and intellectually gifts to simultaneously be analytically insightful about economics, a great philosopher about freedom, and a powerful communicator in his own soft spoken ways.

As Jane has noted, it is incredibly rare to find someone so respected inside and outside of economics.

Milton Friedman, you'll always be with us.

Larry

"...a great philosopher about freedom."

What nonsense. Look, for just an example; Friedman never gave up on coercive central banking, while Hayek cogently expounded on privately-issued commodity-based competitive currencies, to include some important implications of digitial information technology about a decade before the PC really started going to work. In this context, to call Friedman "a great philosopher about freedom" is like ignoring the theoretical work of the Wright Brothers in order to salute Samuel Langley.

Friedman has a place in history, but he can't hold a candle to Hayek, or Mises (who published the authentic philosophical counterweight to "Das Kapital" in "Human Action"). It does no one any good to get carried away with this.

This post serves as a near perfect example of my last sentence too far theory of blog posting, to-wit: By their last sentence many posters, having run out of substance, resort to personal barbs or taunts.

"Anyone who would compare... can only have a gaping hole in their economic education."

That covers the vast majority of us unfortunately. With the benefit of a lot of hindsight, I'm just beginning to grasp the importance and relevance of the study of economics, which is why I read sources like this blog. Thanks for some good work Jane, and kudos to most of the peanut gallery, too.

For Megan to pontificate on the merits of economists is sort like somebody who attentively watches hospital soap operas to rate surgeons.

"Anybody care to venture a top ten or top twenty of the 20th century list?"

As a non-economist, who has a interest in the subject, I find Thomas Sowell's books to be both readible and enlightening. I don't know if he has done much to advance the subject, but he has certainly made it more accessible to the general public, and deserves a lot of credit for that.

ezra: As an addendum, if I were talking about economists qua economists, I obviously wouldn't have ranked either one above Keynes.

Well, considering that Keynes created the field of macroeconomics, this isn't exactly saying much (regardless of whether one agrees with Keynes or not).

Billy Beck: Friedman has a place in history, but he can't hold a candle to Hayek, or Mises... It does no one any good to get carried away with this.

I'm not sure it does much good to slam Friedman by complaining he wasn't as committed to liberty as somebody else. Friedman was very effective at championing the brand of liberty he believed in, and he made a lot of libertarian ideas more acceptable to the mainstream, perhaps more successfully than anybody else. I hardly think you can fault him for disagreeing with you, or for not championing ideas you believe in but that he did not.

You Galbraith proponents should be forced to read "The New Industrial State" in public and defend its loonier passages.

My favorite is how General Motors was as of the 1960s utterly unstoppable, how it had so much market power and the ability to influence the clueless public through advertising (among other things) that NO COMPANY COULD EVER EVER EVER EVER compete against it.

Dumbest g.d. thing on economics I have read in my entire life. Anyone taking him seriously after he produced that pile of crap is a gibbering fool.

Milton Friedman's charm and generosity of spirit are evident in this interview with him and his wife Rose.

Here is what he had to say about J.M. Keynes:

Was Keynes a "natural economist"? "Oh, yes, sure! Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in 'The General Theory of Employment, Interest and Money,' set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!"

http://www.opinionjournal.com/editorial/feature.html?id=110008690

If I had one wish about education it would be that everyone would learn a few basics about economics. If they did we wouldn't have Lou Dobbs peddling pernicious protectionist nonsense on CNN every night.

Chester, unfortunately Galbraith wasn't the last of the dummies. Remember when Japan was going to eat our lunch and put us all out of work? The solution was supposedly for the US to adopt an "industrial policy", whereby the government would subsidize favored export oriented industries.

Now there is a big panic over Chinese imports and the balance of trade with China. I leave it to you experts to explain why that is mostly a pseudo-problem.

Free markets require prudent rules concerning both interest rate policy and lending regulations - these are the boron rods of the economy that prevent the fissile reactions of overvaluation and oversupply resulting in deflationary implosion. Never before have the global imbalances been so great, US pension plans so underfunded, and valuations and supply so excessive. Does the macroeconomy have its own set of quantative mathematical laws predictive and descriptive of the this fissile process?

Veterans Day and 22 November 2006: The Corrected Maximum Growth Saturation Day.
Posted at 2006-11-18 16:36:50 by theeconomicfractalist The Quantum Fractal Hypothesis, Theory, and Laws of Saturation Macroeconomics. Science: ' an operating process that looks for patterns and organizes them as theories or laws .....' The real science of Quantum Fractal Saturation Macroeconomics is defined by composite asset valuation saturation curves. The valuation saturation curves are organized in a precise and elegant mathematical repetitive fractal order intrinsic to and optimally self-assembled by the causal self-balancing oppositional major elements of the nonstochastic macroeconomic universe. This new paradigm view of the macroeconomy may provide monetarists, macroeconomists, and national banking reserve and regulatory agencies a new framework in assessing and controlling macroeconomic dysequilibria incurred by the major money expansion parameters of interest rate policy, lending policy, governmental debt, and perhaps the investment asset area of equity classes. The latter of these elements consumes much, adds little to the real economy, and is ultimately a source of amplified instability and devolution near the end of great credit cycles. Malinvestment in equity paper assets - rather than facilitated investment in savings, innovative or improved domestic products and services, national infrastructure, and domestic factories - ultimately subtracts from the available creative investment money that produces sustaining and linchpin domestic wages. Imprudent policies and practices involving the aforementioned elements leads to overvaluation, overproduction, over supply, over borrowing, and malinvestment. With the rate limiting factors of one: wages of the masses which are both dependent on and supporting of the whole system and two: ongoing accumulating debt load which ultimately limits and contains dynamic and useful consumption, the excesses created by the money expansion elements necessarily causes or leads to a final asymptotic saturation state where money growth is exactly balanced by asset devolution, debt default, and money contraction. After asymptotic saturation,interconnected and progressive asset deflationary collapse rapidly occurs proportional to the accumulative preceding excesses in debt, over supply, and money expansion. It may be that paper equities representing an amplified derivative of companys' profits, assets, potential earning powers, and debt loads - now considered as an asset class with useful economic purpose - are the most illusive and destructive of all malinvestment areas, unnecessarily amplifying money destruction during the asset deflationary phase. The empirically derived mathematical law for maximal quantum fractal growth is: X/2.5X/2.5X :: 159/398/398. 24 November 2006 is the 398th trading day of the ideal 2.5 X third fractal maximum growth. 24 November 2006 is the final Ideal Maximum Saturation Day for the 14 trilliondollar Composite Wilshire - (secondary to its March 2000 all time high.) Kindly visit: The Economic Fractalist. Lammert.....Addendum and correction: Veteran's day, while a holiday for this veteran, was not a trading holiday. The 398th day for the Wilshire is 22 November 2006. The 16th day of the concurrent and final 8/20/16 day growth fractals for the ten year note, 30 year bond, and CRB is 22 Novembr 2006. The 58th day of the 29/73/58 day fractal for GM is 22 November 2006. 22 November 2006 is the ideal final saturation day for the Wilshire secondary to its March 2000 alltime high. Lammert.

Milton Freidman was capable (demonstrated) mathematical brilliance as well as shrewd inferences from data. Read some of his "minor" papers...and you will see that he could bring it in the academic of academic work. He was not just a popster.

Do you think Krugman will heal when Bush leaves office?

I kinda miss him.

-dk

For all his many gifts, this: "Under a fiat system, the currency name – dollar, frank, mark, etc. becomes the ultimate monetary standard, and absolute control over the supply and use of these units is necessarily vested in the central government. In short, fiat currency is inherently the money of absolute statism. Money is the central commodity, the nerve center, as it were, of the modern market economy, and any system that vests the absolute control of that commodity in the hands of the State is hopelessly incompatible with a free-market economy or, ultimately, with individual liberty itself.

Yet, Milton Friedman is a radical advocate of cutting all current ties, however weak, with gold, and going onto a total and absolute fiat dollar standard, with all control vested in the Federal Reserve System.* Of course, Friedman would then advise the Fed to use that absolute power wisely, but no libertarian worth the name can have anything but contempt for the very idea of vesting coercive power in any group and then hoping that such group will not use its power to the utmost. The reasons that Friedman is totally blind to the tyrannical and despotic implications of his fiat money scheme is, once again, the arbitrary Chicagoite separation between the micro and the macro, the vain, chimerical hope that we can have totalitarian control of the macro sphere while the "free market" is preserved in the micro. It should be clear by now that this kind of a truncated, Chicagoite micro-"free market" is "free" only in the most mocking and ironic sense: it is far more the Orwellian "freedom" of "Freedom is Slavery.""--from Murray Rothbard.

should also be well considered in re: our recently departed friend, Milton Friedman.

link: http://www.lewrockwell.com/rothbard/rothbard43.html

Megan,

"His [Friedman's] permanent income hypothesis has made similar contributions to consumption theory."

This is exactly the perfectly farsighted and efficient market behavior which you decried below when ridiculing the notion that Clinton's raising taxes and cutting the budget deficit led to increased economic activity by actors (businesses and consumers) anticipating lower interest rates in the future.

There you claimed firms were so short sighted that they would not take into account lower longterm interest rates 10 years in the future.

Yet Friedman claims consumers will not increase consumption in response to tax cuts (deficit spending), because they know that their income has not increased, since those tax cuts will have to be made up with tax increases in the future. According to Friedman consumers only respond to increases in their lifetime income. Talk about perfect foresight.

Actually, I as you think economic actors can be very short sighted. But you should be consistent in your arguments.

Jane wrote: "Galbraith was a very, very good writer, but he was not a very good economist."

Jane, not only was Galbraith a great economist he was also a better writer and more original thinker than you could ever hope to be.

from editor (Dreck): Based on this comment, perfectly without substance, we submit that "Price" is a far inferior and more disturbed intellect than any commenter on this page

Interesting rant toward Friedman here:

www.huffingtonpost.com/jeff-dorchen/hey-dead-milton-friedman_b_34509.html