For any crazy Cats still interested in catallactics…

An Austrian school take on Milton Friedman via a book review of ‘The Last Conservative’:

Milton Friedman: The Last Conservative

By Jennifer Burns

Farrar, Straus and Giroux, 2023; x + 587 pp.

Imagine that you come across this about the “education premium” on someone’s blog: “By going to college, you are more than tripling your chances for success in after life.” The statement is buttressed by a calculation of the extra lifetime earnings that a college degree will provide. Wouldn’t you think that the author is an economist? In fact, the author was a high school student, and he wrote this in 1927, before ever studying economics. As you will by now have guessed, the precocious student was Milton Friedman.

Jennifer Burns, a professor of history at Stanford, makes clear in her outstanding biography that many of Friedman’s characteristic intellectual traits were present at a very early age, as the anecdote above illustrates, and that these remained constant throughout his long life. Much of Friedman’s work in economics consists of statistical analysis, though of course carried out at a far more sophisticated level than his fledgling high school effort. As an undergraduate at Rutgers, he was trained in statistical analysis by Arthur Burns, a young professor whom Friedman idolized. Burns introduced Friedman to the method of business cycle research of his own teacher, Wesley Clair Mitchell, and also stressed the importance of Alfred Marshall’s Principles of Economics, a text that was to remain a touchstone of sound economics for Friedman. Years later, Friedman made original contributions to statistical theory. He helped develop “sequential analysis” and together with L.J. Savage worked on the analysis of utility and risk. “Although never lionized as part of Friedman’s Chicago gang, Savage was one of the few people whom Friedman openly called ‘a genius’ and their short-lived collaboration proved fertile for both.”

Friedman’s commitment to statistical analysis led him vehemently to oppose the economics of Ludwig von Mises and Friedrich Hayek, whom he regarded as the purveyors of a priori, “unscientific” theorizing. Although Friedman and Hayek were friends and colleagues at the University of Chicago, and Friedman admired Hayek as a political and social thinker, “when a motion was raised to grant Hayek a courtesy appointment in economics—generally an honorific with no real power—he was not a supporter.” Hayek’s Austrian economics was not empirical enough for Friedman.

Of course, Friedman’s views on economics were not confined to methodology. From his graduate years at Chicago, he had firm ideas about policy as well, and these he absorbed from Frank Knight and Henry Simons. Both supported a competitive market, but they sharply differentiated between the “real” economy and the monetary and banking system. In the former, competition, firmly regulated by antitrust enforcement, was the order of the day, but not so in banking, which required centralized control by the government. To deal with depression, monetary expansion was required. This position too is at odds with the Austrian School, which views with alarm the machinations of the Fed.

Burns explains the views of the Chicago School on banking in this way:

“Galvanized by [FDR’s 1933] bank holiday, Chicago’s economists swung into action, drawing up the ‘Chicago plan’ for banking reform. . . . It shows clearly that Chicago economists, despite their neo-classical orientation, carved out a large role for the federal government in meeting the emergency. Chicago’s leading price theorists did not argue that the Depression was a necessary correction, or that economic activity would magically return to a desirable equilibrium. . . . Within ten days after the bank holiday began, the memo urged a significant expansion of federal power to meet the crisis. Broadly, it said that the federal government should attempt to increase the price level by around 15 percent. Specifically, it should take over the banking system, pass legislation breaking up the savings and lending functions of banks, and end the gold standard.”

Friedman absorbed the lessons of the Chicago economists, and emphasis on the need for monetary expansion to deal with depressions was a leitmotif of his career. Most notably, in A Monetary History of the United States, coauthored with Anna Schwartz, he blamed the severity of the Great Depression on the Fed’s contraction of the money supply:

“How did money affect business cycles? Friedman and Schwartz had an answer they considered definitive: money mattered. . . Friedman knew the book would have an impact. He knew it was the best work he had ever done, or would ever do. . .

“The book’s centerpiece was its stunning analysis of the Great Depression. Friedman and Schwartz’s data showed a precipitous 33 percent decline in the quantity of money during what they called ‘the great contraction.’ They convincingly argued that this lack of money transformed an unremarkable dip in the business cycle into a crisis of global proportions. . . . A Monetary History of the United States dwelled with the intensity of a psychologist upon the differences between the New York bankers George I. Harrison and Benjamin Strong Jr., men holding the power to redirect history itself. The absent hero was Strong, who died just before the crash. Examining Strong’s earlier career, Friedman and Schwartz argued that he would have reacted to the liquidity crisis with ‘strenuous and appropriate measures to head it off’ . . Harrison acquiesced to a policy of monetary inactivity. The Fed stood by as money drained from the banking system and the economy collapsed.”

Strong was Friedman’s hero, but he was Murray Rothbard’s villain. Rothbard blamed Strong for the inflationary expansion of bank credit during the 1920s, which led to an artificial boom that, as the Austrian theory of the business cycle shows, must inevitably collapse. Rothbard developed his analysis in his magisterial America’s Great Depression (1963), but Friedman did not respond to it.

Why did these two major economists differ on the causes of the Great Depression, though both agreed, albeit in contrasting ways, that money matters? The answer is that methodology also matters, and this is the chief point I’d like to emphasize in this review. Methodology may strike some, eager to get down to practical issues, as arid and abstract, but it has consequences of the utmost importance.

The Austrian theory of the business cycle is based on a priori reasoning, which is then used to help interpret historical events. People often find the notion of a priori truth puzzling, but what is important for our purposes is not an account of why such reasoning is true, but rather the fact that if you start with an a priori true axiom and reason validly from it, your conclusion also is true. Friedman’s method is entirely different. His account of the business cycle is based entirely on statistical evidence, correlating changes in the quantity of money with employment and output. What this ignores is that statistical correlations do not by themselves suffice to establish causation. Friedman viewed theory in instrumentalist terms, seeing it as a way to generate predictions that could be experimentally tested. The intrinsic significance of the theory was of little or no concern to him, and even a theory with false assumptions could still be useful. “Friedman considered the realism of a theory’s assumptions beside the point. . . Analytically, it wasn’t important if a business owner actually tried to maximize profits. It was only important that collectively, businesses could be understood ‘as if’ they were trying to do so. . . Friedman was also comfortable with the idea that observation could never be truly neutral; the investigator had always a selection bias of some sort. The way out of the trap was a relentless focus on problem-solving. After observation came prediction.” It isn’t clear why Friedman imagined that bias would not also affect how predictions were interpreted. False assumptions combined with selection bias does not seem like a recipe for success.

05/24/2024
David Gordon, The Misesian

I suppose it had to happen. Invited for pleasant visit & later dinner at daughter’s house. All went very well until I foolishly asked granddaughter whether her lectures at university had been disrupted by demonstrators for the Pallie cause.

Well – she launched into a passionate defence of the demos. I immediately put both palms up and said “Stop!” indicating that I had contrary views and this should be explored at another time. Well…guess what…that caused an even more passionate tirade. The steamroller had gathered steam and could not be stopped. So I figured that I might as well try to wrest control of the mad machine.

Counter arguments (have you actually seen the photos and videos of the 7 October atrocities?) did not even penetrate the stream of consciousness that ensued. But I persisted – particularly as I was accused (in so many words) of being an unfeeling moron.

One of the more annoying accusations was that I (& others like me) was totally ignorant of the equally pernicious (so she reckons) abduction & rape of the Christian Nigerian girls by Islamic guerillas. It didn’t help that Mr. Corporate (my son-in-law) agreed with her. Of course, I said, I am aware of these atrocities. “What are YOU doing about it ??” was her absurd accusation.

You get the picture. The outraged but ignorant adolescent. But the situation for Israel and Jews throughout the world is far too significant to protect adolescent pride, so fellow Cats, I launched into a fairly heavy response with resultant tears from the granddaughter (& bewilderment from the boyfriend) and a tearful departure to her room.

Visits to my daughter’s house are fast becoming too treacherous.Thankfully, daughter and son-in-law understood our position. But daughter did offer the comment as we left….”She is SO like you!”

I assume that was a compliment.

Watching the Mariners v Victory game last night and Mariners doing what they’ve dun for most of the season .. WIN .. They are a very slow starting mob and if you don’t bury ’em in the 1st half you are in trouble and last night they did it again .. Victory dominated the 1st half without scoring, controlled most of the 2nd half but only one goal to show for it ..
Then Mariners equalized just before the final whistle and took over in extra time for, what ended up, a convincing win …
And a season never to be repeated .. Premiers. A League winnas & Asian Cup winnas (can’t be repeated cos that wuz the last ever Asian Cup with all Asia wide competitions to be re-worked/re-vamped for next season) ..
Wonder what Fitba Oz will have to say, if anything, about “security” deciding discretion was more appropriate than valour when the crowd “invaded” the pitch after the final whistle .. ha ha ..!

The less said about the Eels the better .. duuuuuuuuuuuuuh!

Following on from dickless’s salivations about rubber chickens:

Donald Trump supporters overwhelmed the Washington Hilton Saturday for the Libertarian National Convention in Washington, D.C.

Not all party faithful in attendance were pleased with the convention’s offer to Trump to speak, which energized the small party’s usually relatively sleepy convention but left party members greatly outnumbered by supporters of the president.

Some attendees distributed pink kazoos to party members with instructions to interrupt Trump’s speech during statements the aspiring musicians disagreed with.

Libertarians Hand out Kazoos to Convention Attendees to Protest Trump (breitbart.com)

Libertarianism has some good points but on balance it is pie in the sky bullshit contrary to human psychology. Where’s dottie?

Anyway the libertarian’s go at Trump shows them to be amateurs compared to the demorat scum:

Biden’s Special Counsel Wants New Gag Order to Stop Trump Critiquing FBI. (thenationalpulse.com)

Mark Latham was interviewed on Brent Bultitude’s Sunday morning program at 10am (a regular event and worth listening to). Latham was asked about Greenwich’s defamation suit against him which wrapped up on Friday. Latham said something really astonishing: Greenwich was funded by Climate 200, Simon Holmes à Court’s mob which put the Teal bunch of hags into parliament. Latham is a climate realist and pro coal and nuclear so it is not surprising. As well as Court here are some of the other woke rich fuktards who support Climate 200:

Political donations teals: Climate 200 the big money behind independent candidates (smh.com.au)

Go Grandma!

—–

Steve Inman:

Road Rage: Old couple teaches young couple a lesson
https://rumble.com/v4xe875-road-rage-old-couple-teaches-young-couple-a-lesson.html

Mistakes and lessons from the voice referendumThe result on the voice was a disaster for the country and a tragedy for First Australians. It’s time to confront what went wrong, before we all start forgetting what really went on.
By frank brennan
From Inquirer
May 25, 2024
13 minute read
115
The result of the 2023 referendum on the voice was a disaster for the country and a tragedy for First Australians. A week after the 40:60 loss, the key Indigenous leaders who had dealt with the Albanese government during the campaign broke their silence and issued a powerful statement saying:
“Aboriginal and Torres Strait Islander peoples are in shock and are grieving the result. We feel acutely the repudiation of our peoples and the rejection of our efforts to pursue reconciliation in good faith. That people who came to our country in only the last 235 years would reject the recognition of this continent’s First Peoples – on our sacred land which we have cared for and nurtured for more than 65,000 years – is so appalling and mean-spirited as to be utterly unbelievable a week following. It will remain unbelievable and appalling for decades to come.”
There has been little appetite for public discussion about lessons to be learnt from this abject failure. Some of the key proponents saw nothing wrong with the process and the wording of the proposed change. They think racism played a key part in the result. For example, the key Indigenous leaders claimed, “It is clear no reform of the Constitution that includes our peoples will ever succeed. This is the bitter lesson from 14 October.” If they’re right, there will be no point in attempting again constitutional recognition of First Australians.
But they may be wrong – and I hope they are. There may be a prospect of future constitutional change but not with the process that was adopted and not with the wording that was proposed in 2023. It’s time to begin the conversation about past mistakes, before we all start forgetting what went on.
Since the disastrous referendum result, Labor stalwarts with a strong commitment to Indigenous rights like Paul Keating and Peter Garrett have publicly lamented the basic errors made during the 2023 campaign. Several Aboriginal leaders who were members of the government’s Referendum Advisory Group have admitted there was a need for a more inclusive process and more precise wording of the proposed change to the Constitution.

‘Let’s all have the humility to admit our mistakes, regroup, forgive the hurts, and move on, seeking the due constitutional recognition of First Australians.’

Celebrating his 80th birthday, Keating gave a broad-ranging interview in The Australian Financial Review published on February 21, 2024, declaring that the voice referendum was “a mistake from the start”. He disclosed that he had told Marcia Langton and Megan Davis back in 2016 that he opposed the constitutional route. He said, “A lot of clever Aboriginal people have wasted a lot of years on this issue.”
Responding to the interview, Langton said: “Paul Keating was right. We should have proceeded to legislate the voice concept of regional Indigenous representation and joint decision-making before a referendum.” Mick Gooda repeated his criticism of the “crash or crash through” approach adopted by Anthony Albanese and key Indigenous advisers like Noel Pearson who, during the campaign, had attacked Gooda as a “bedwetter” for wanting to investigate alternative wording of the referendum proposal.
Shortly thereafter, Garrett’s observations were published in The Weekend Australian. He thought it was “a very disappointing result, particularly for Aboriginal people who had championed the voice – but not entirely unexpected, given the fact that it was opposed very early on by the alternative prime minister”. Garrett observed: “(Peter) Dutton’s act was highly regrettable. Mr Albanese probably in hindsight should have said, ‘If we don’t have the support of the Opposition Leader, it’s pretty clear that it can’t succeed.’ He didn’t want to disappoint many people who felt that it should have been put anyway, including the Indigenous leadership. That was probably a mistake in hindsight.”
When putting my own suggested wording for the constitutional change in February 2023, I was not claiming the legal acumen to decide single-handedly the ideal wording of the Constitution. I was putting forward a suggestion I thought was consistent with the architecture of the Constitution, with what had been proposed by the Referendum Council in 2017 and with the limits on the voice that its proponents were claiming could be imposed by the parliament.

My suggestion was a new section 127 of the Constitution: “There shall be an Aboriginal and Torres Strait Islander Voice with such structure and functions as the Parliament deems necessary to facilitate consultation prior to the making of special laws with respect to Aboriginal and Torres Strait Islander peoples, and with such other functions as the Parliament determines.” By putting this suggestion, I was hoping to pressure the Albanese government to widen its circle of consultation, providing at the very least a transparent parliamentary committee process open to recommending changes to the wording.
I was also hoping to pressure members of the Liberal Party to come on board with a tighter provision that would be seen to be more consistent with the Liberal Party’s philosophical approach and objections, in so far as such objections were philosophical and not simply the result of a deliberately negative spoiling strategic approach to being in opposition.

https://www.michaelsmithnews.com/2024/05/saviour-blm-whacko-compares-george-floyd-to-jesus.html

Words fail me….

Reading “Spitfire” by John Nichol

“After D-day, hardened troops were distinctly unimpressed by the French lagers on offer, so the Spitfire came to the rescue. A Mark 1X, fitted with pylons under the wings to carry bombs or fuel tanks was modified to carry beer kegs. If the Spitfire flew high enough, the cold air ensured the beer was ready for consumption as soon as it landed. (Page 328.)”