Happy 100th Birthday, Milton Friedman

Alas, the great man is no longer around to celebrate his centennial, but his ideas remain and seem to be more relevant than ever.

Euro Notes: That Single Currency Is Doomed?

I had my doubts about this entire enterprise, because - as you recall - Milton Friedman predicted that the euro wouldn't survive its first recession.  Of course, perhaps the idea itself of forcing all those nations into a single currency was "an incredibly stupid idea in the first place."  In a nutshell, just look at Greece and Germany.

The 2012 Index of Economic Freedom Is Out

We're not doing so well?  The US is out of the top tier at #10. What would Milton Friedman say?  By the way, the top tier rated "Free" consists of Hong Kong at #1, followed by Singapore,  Australia, New Zealand, and (the first non-Asian country on the list) Switzerland.  Taiwan is #18.  C'mon, guys, we can do better than that.

Classic Milton Friedman

Harvard econ prof Greg Mankiw has an intriguing post on what Milton Friedman might say to the Occupy movement.  Get a load of the dipstick in the first video who asks, "Isn't it necessary to forcibly redistribute wealth?"  Um, NO.  Note too how courteously Friedman disassembles these young clowns who have more idealism than sense.

The 2011 Index of Economic Freedom

Here are the top 3 nations in this year's Index of Economic Freedom:

1. Hong Kong
2. Singapore
3. Australia

You notice who's not up there?  Ummm ... yeah.  The U.S. finished barely in the top 10 at #9.  What would Milton Friedman say?  Here is some commentary.

In Terms of Economic Policy, WWMFD

What would Milton Friedman Do?

Nerd Analysis: Free-Market Economists Consider The Financial Crisis

Free-marketeer scholars from Princeton, Columbia, Chicago, and Stanford weigh in.  Definitely worth a read.  Here's a blurb (my emphasis in boldface):

Every economist I interviewed agreed that ballooning American and European debt poses a huge threat to long-term prosperity. The debt will be paid either through inflation, which would make everyone poorer, or—a far better scenario—through economic growth that would increase both individual and government revenues. Unfortunately, by increasing taxes and imposing the wrong regulations, Western governments are hindering entrepreneurship and hence growth, Cochrane [that's John Cochrane of the University of Chicago -- MM] says.

As in the 1930s and 1970s, so today: crises are a serious problem, but misguided economic policy makes them worse. After the 1930s, only war production could overcome the negative economic consequences of the New Deal. After the stagflation of the 1970s, it took the bold leadership of Margaret Thatcher and Ronald Reagan to reorient the West toward free markets and prosperity. How long will it take this time before governments understand that overreacting to the crisis and imposing disproved Keynesian remedies will dampen and delay economic recovery?

Euro Notes: Is the Euro a Dead Currency Walking?

Some economists think so. Milton Friedman 1, euro 0?

Tragedy or Farce? the Greek Bailout Spawns Violent Protests

I don't even know how to tackle this. Greece is a prostrate mess of debt and bad accounting. That's bad enough. Now it's getting a massive bailout from EU members who are (understandably) angry at having to help out their wayward colleague. And now the Greeks are furious that the bailout will mean they must take up harsh austerity measures.

What, did they think there would be no pain?

Here is an interesting pair of quotes, though:

1) Vaggelis Gettos, 24, is just as alarmed at the burden being heaped on the young by austerity measures expected to be announced today, and has pledged to resist them in more protests this week against what he sees as a plot to impoverish Greece.

“We will live much worse than our parents,” he said. “Why should we be made to pay for their mistakes?”

2) Economists regard the bloated civil service with its jobs for life and generous pensions as a cancer consuming the country’s resources. The older generation, the experts grimly concur, turned the state into a giant cash machine to be plundered at will.

That's right -- it's a plot to impoverish Greece. Yeah, right. As if the Greeks hadn't dug their own grave with their utterly reckless, irresponsible actions that are now threatening to wreck the Eurozone!

But I have to concur with the core of Vaggelis's complaint: we're going to have to pay for the massive financial sins of our fathers, and our children will too.

The sheer finger-pointing acrimony of the Greek catastrophe (there's a good Greek word!), though, has been ludicrous on all sides, from Greeks bringing up the Nazis to Germans suggesting that Greece sell off some islands to pay off their debt.

So it seems that Milton Friedman was right when he predicted that the euro currency would not survive its first real recession.

ObamaCare and Constitutional Challenges

This is not at all surprising, and note that a significant number of states, with Wyoming and Idaho leading the charge, are taking their own measures under the Ninth and Tenth Amendments.

The Tenth Amendment, you'll recall, says this: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Here is an analysis by a constitutional law prof in the WaPo. Blurb:

But the individual mandate extends the commerce clause's power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company. Regulating the auto industry or paying "cash for clunkers" is one thing; making everyone buy a Chevy is quite another. Even during World War II, the federal government did not mandate that individual citizens purchase war bonds.

If you choose to drive a car, then maybe you can be made to buy insurance against the possibility of inflicting harm on others. But making you buy insurance merely because you are alive is a claim of power from which many Americans instinctively shrink.

Indeed. Here's a thought from another law professor. As for that individual mandate, I think it's a monstrosity. "Get your laws off my body"! (And shall I remind you of this great passage from Solzhenitsyn? as quoted by The Milton Friedman?)

UPDATE 1: Great quote from the governor of Wyoming, Dave Freudenthal:

"For decades we have shared increased frustration dealing with the federal government and its agencies. What started out as a leak in the erosion of state prerogative and independence has today turned into a flood. From wolf and grizzly bear management, to gun control, to endless regulation and unfunded mandates – the federal government has become far too powerful and intrusive."

And so it begins. It's shaping up to be a battle royale over whether states are sovereign in their own rights, as stated in the Constitution, or if they are only prostrate satrapies of a massive, meddling, even coercive central federal government leviathan.

UPDATE 2: Reuters is reporting the following:

Bills and resolutions have been introduced in at least 36 state legislatures seeking to limit or oppose various aspects of the reform plan through laws or state constitutional amendments, according to the National Conference of State Legislatures.

"There's going to be a big free-for-all lawsuit about this," said Michael Bird, legislative counsel for the NCSL.

Was Milton Friedman Right About the Euro?

Back in 1999, Friedman famously predicted that the euro currency would not survive the first major European recession. Is he right?

The current convulsions on the continent, seen most spectacularly with the debt bomb in Greece, seem to hint yes, economics' Uncle Miltie was onto something.