It is a short and sweet piece addressing the Pinochet regime, the Chicago boys, and Naomi Klein’s “Shock Doctrine” myth. Stephens suggests that the implementation of Friedman’s economic ideas in Chile led to better building codes and fewer fatalities than January’s 7.0 Haitian earthquake:

In “The Shock Doctrine,” Ms. Klein titles one of her sub-chapters “The Myth of the Chilean Miracle.” In her reading, the only thing Friedman and the Chicago Boys accomplished was to “hoover wealth up to the top and shock much of the middle class out of existence.” Actual Chileans of all classes—living in the aftermath of an actual shock—may take a different view of Friedman, who helped give them the wherewithal first to survive the quake, and now to build their lives anew.

An excerpt from Carden:

There is an implicit contract between an author and a reader. An author who makes strong, controversial claims must get the facts straight and tie those facts together with a clear, convincing theoretical framework. Sadly, Klein does not live up to her end of the bargain. Where her claims demand evidence she offers impressionistic associations. Where her claims need critical evaluation of theories of economic development we are treated to moralistic crusading which seem to assume that the “best” model of a virtuous, prosperous society is self-evident and that the only thing standing in the way is a group of blinkered ideologues and evil people shouting quotes from Capitalism and Freedom to one another rather than listening to those who are blessed with Truth. Where her thesis needs plausible, detailed analysis whereby Klein’s claims are established, we get the assertion that Margaret Thatcher started the Falklands War so she could crush British unions, one of what Tyler Cowen (2007) called “a series of fabricated claims.”

Heckman [MFI supporter] also approached what should probably be called the Friedman myth, for instance as articulated by Amit and Rothenberg [MFI detractors]. This is the myth that Friedman was an authoritarian liberal. Sahlins made a classic anthropological observation that symbols are indeed false — and that their falsehood is irrelevant. So the Friedman myth may be a myth, a false story, but it is still subjectively true for the people who believe it.

The post goes on to discuss Friedman’s legacy as relates to his association with authoritarian regimes, noting that:

Assuming for the sake of argument that Friedman was not culpable as an abettor of oppressive government, what is the response to the symbolic-mythical argument? The latter argument is that inasmuch as Friedman is a symbol of authoritarian liberalism, and this has bad associations for many, many people in the world, is this itself a strong or decisive argument for not naming the Institute after him? It seems to me that the answer is No: If there is a myth that you think is wrong, and you (i.e. the University) do not have yourself to fear repercussions of opposing that myth, then you should oppose that myth. By taking the name of the Milton Friedman Institute, the University can say, we do not support the further propagation of this basically wrong story about one of our highly acclaimed scholars.

Check it out here.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy.

Obama’s plan to do the same thing, his shiny new stimulus plan, was discussed by University of Chicago economists last month . The video is available here.  It’s a fascinating and occasionally humorous look at the real economics of the stimulus plan, and in particular our audience may be interested in Robert Lucas’s mentions of Milton Friedman at approx. 33:00 and 37:30.

“Since I was an impeccable liar and rarely got caught,” Naomi recalled, “our fights were less about actual transgressions ….

The casual reader’s eye may slip past this statement. However, to those aware of her lack of journalistic integrity, it rings a bell.  Now I understand from where her skill derives, why and how she learned to capitalize on it.  As she entered the journalistic profession, she no doubt realized that this skill would pay off enormously – as have yellow journalists before her.  It’s only too bad that few are listening to the voices attempting to set the record straight.  We encourage our readers to investigate history and economics for themselves, and read the counterpoints mentioned above, before buying Klein’s Doctrine.

(and if you need a cheatsheet, check this out (PDF))

Goals of MFI:

The Milton Friedman Institute will serve two important functions. First, it will preserve and indeed significantly enhance Chicago’s economics programs by supporting the research of some of its best faculty and help us to compete in recruiting top scholars of various vintages. Second, the Friedman Institute will encourage interaction across some of the best and most exciting areas of research related to economics.

On naming the institute after Friedman:

Milton Friedman joined the Economics faculty in 1946 and remained closely associated with the University throughout his life. He received every honor an economist can be awarded…. There was no point in his career when he was not regarded as one of a handful of scientific leaders in his field. To portray him as anything else misses completely his intellectual stature among economists, including economists like Paul Samuelson who differed with him on various issues. Describing Friedman’s contributions as merely “technical” completely misses their ambition and influence on the discipline of economics. It is most appropriate that Friedman be honored by the University.

Why should markets be a concentration at the MFI?

Market economies are pervasive. As a consequence, economics as a discipline studies the role of markets in the allocation of resources and uses markets as an analytical tool. In assessing empirical and policy implications, we develop and use models that typically, but not always, include markets; and we consider the incentives of individuals, groups and institutions as they interact. …

Dismissing our research ambitions as the naïve and uncritical embracement of free market ideology misses the point, and it reflects simplistic and uninformed criticism of economic research that is currently done on campus. We are proud of our openness and are only too happy to compare it to that of other departments and disciplines on campus.

I encourage you to read the entire statement (PDF).

The Friedman Institute will increase the scale at which Chicago economics will operate, giving us a better chance of competing with the other top schools for faculty and students. The Friedman Institute will help us compete in the marketplace for ideas.

And what economist — Chicago or otherwise — could argue with that?

Read Levitt’s full commentary here.

The Institute is named for Milton Friedman, AM’33, who taught at Chicago for a significant portion of his academic career and is considered by many to be the leading economist of the 20th century.  It will provide resources for University faculty and visiting scholars to engage in research endeavors that cross and transcend traditional academic boundaries. “We see Friedman Institute as a means to encourage interaction across some of the best and most exciting areas of research in economics and related disciplines,” said Lars Hansen…. “It will give us a way to continue to learn about the best new research in a variety of areas and to seek cross-fertilization among important subfield of economics.”

The new issue is not online yet, but when it is, it will be here.

Although his thesis appeals to some scholars and media outlets, it is as false as any claim can be.  To say that we have been living in a laissez-faire system, as Sanders claims, is to ignore everything relevant about our current regulatory system.  Today Cato Unbound published economics professor Lawrence H. White’s discussion of “What really happened.” An excerpt:

The actual causes of our financial troubles were unusual monetary policy moves and novel federal regulatory interventions. Regulatory distortions intensified in the 1990s. Poorly chosen public policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.

We can group most of the unfortunate policies under two main headings: (1) Federal Reserve credit expansion that provided the means for unsustainable mortgage financing, and (2) mandates and subsidies to write riskier mortgages. The enumeration of regrettable policies here is by no means exhaustive.

Professor White’s article is a summary of a more thorough briefing paper on the economic crisis, which we encourage everyone to read before believing Sanders’ bilge wholesale.

*It should also be noted that Sanders holds a BS in a non-economic field and does not hold a higher degree in that area (or any other area).