Milton Friedman QOTD: Economic Humility Edition

Sometimes we are reminded that brilliant people we disagree with were, indeed, brilliant. And if not brilliant, at least great writers. Today I stumbled on a Milton Friedman quote in a reprinted article from the 1970s about economists’ role in policy-making (available at Econ Journal Watch here). The Friedman quote is one of the two epigraphs, and speaks to the need to moderate the claims of economic policy and theory:

A major problem of our time is that people have come to expect policies to produce results that they are incapable of producing. …we economists in recent years have done vast harm—to society at large and to our profession in particular—by claiming more than we can deliver. We have thereby encouraged politicians to make extravagant promises, inculcate unrealistic expectations in the public at large, and promote discontent with reasonably satisfactory results because they fall short of the economists’ promised land.

Friedman wrote that in 1972, in “Have Monetary Policies Failed” (AER). The article begins amusingly enough with a reference to a passover Seder:

The topic for this session reminds me of the first of the four questions that the youngest male at the Jewish Passover Seder traditionally asks the head of the household: “Why is this night different from all other nights?” In like fashion, we are asked: “Are this recession and expansion different from all other recessions and expansions?”

Agree or disagree, Friedman certainly could write!

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1 Comment

  1. JeffL

     /  September 8, 2010

    Dan, you have a gift for finding relevant quotes. I can’t tell you much lately I’ve been wondering why Americans seem to think that the President is Superman. Whether the president is Democrat or Republican, he is not a superhero. You cannot simply demand he show up, fly around in a cape, and fix oil spills, economic troubles, racial divisions, etc.

    It seems to me that Americans are really incapable of understanding how complex and amorphous the economy really is. Which is actually a very good reason that people should read this blog, and others similar to it. They seem to think “the economy” is as clearly defined as, say, a broken air conditioner or a leaky faucet. All we need is to repair it and it will be fine.

    As we know however, the idea of fixing “the economy” is about as silly as trying to fix a lack of “adventurousness” in our public. Like “adventurousness,” “the economy” is a multiplex, distributed, amorphous set of beliefs and actions that don’t all line up. When some guy sells weed in his dorm room, he influences “the economy.” When a housewife suddenly reevaluates the importance of her housework, she influences “the economy.” When I make the trivial discovery that I can steal RAM from an old laptop, rather than buy some new RAM, I influence “the economy”. How exactly is the president going to shift all these things?

    Finally, (as I always like to rant off-topic in my comments to your posts) doesn’t this whole thing of getting the president to fix the economy seem incredibly SOCIALIST (dum dum dummmmmmm)?

    I mean, don’t we have this marvelous market economy because it’s supposedly robust against human interference? Isn’t its invisible hand supposed to lead us forward, *despite* our intentions? Why is it that when “the economy is bad,” all of a sudden the election of presidents hinges on their ability to manipulate our economic system?