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The Lesson For Asia Is; If You Have A Central Bank, Have A Floating Exchange Rate; If You Want To Have A Fixed Exchange Rate, Abolish Your Central Bank And Adopt A Currency Board Instead. Either Extreme; A Fixed Exchange Rate Through A Currency Board, But No Central Bank, Or A Central Bank Plus Truly Floating Exchange Rates; Either Of Those Is A Tenable Arrangement. But A Pegged Exchange Rate With A Central Bank Is A Recipe For Trouble.

-Milton Friedman

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The Lesson For Asia

Milton Friedman

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The Lesson For Asia Is; If You Have A Central Bank, Have A Floating Exchange Rate; If You Want To Have A Fixed Exchange Rate, Abolish Your Central Bank And Adopt A Currency Board Instead. Either Extreme; A Fixed Exchange Rate Through A Currency Board, But No Central Bank, Or A Central Bank Plus Truly Floating Exchange Rates; Either Of Those Is A Tenable Arrangement. But A Pegged Exchange Rate With A Central Bank Is A Recipe For Trouble.

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Monetary Policy

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The Price Works So Well, So Efficiently, That We Are Not Aware Of It Most Of The Time.

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Hell Hath No Fury

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Doing Good With Other People's Money Has Two Basic Flaws. In The First Place, You Never Spend Anybody Else's Money As Carefully As You Spend Your Own. So A Large Fraction Of That Money Is Inevitably Wasted. In The Second Place, And Equally Important, You Cannot Do Good With Other People's Money Unless You First Get The Money Away From Them. So That Force - Sending A Policeman To Take The Money From Somebody's Pocket - Is Fundamentally At The Basis Of The Philosophy Of The Welfare State.

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Times Of Crisis

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In Response To A Suggestion That Total Free Trade Would End In Cheaper Foreign Products Flooding The Market And Causing Unemployment.

Saying It Is One Thing. Doing It Is Very Different.

The Stock Market And Economy Are Two Different Things.

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Political Leaders In Capitalist Countries Who Cheer The Collapse Of Socialism In Other Countries Continue To Favor Socialist Solutions In Their Own. They Know The Words, But They Have Not Learned The Tune.

And What Does Reward Virtue? You Think The Communist Commissar Rewards Virtue? You Think A Hitler Rewards Virtue? You Think, Excuse Me, If You'll Pardon Me, American Presidents Reward Virtue? Do They Choose Their Appointees On The Basis Of The Virtue Of The People Appointed Or On The Basis Of Their Political Clout?

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My Interest In Political Philosophy Was Rather Casual Until I Met Hayek.

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If You Do Not Force Political Freedom, Economic Freedom Will Be Stymied Sooner Or Later.

What Works For Sweden Wouldn't Work For France Or Germany Or Italy. In A Small State, You Can Reach Outside For Many Of Your Activities. In A Homogeneous Culture, They Are Willing To Pay Higher Taxes In Order To Achieve Commonly Held Goals. But "common Goals" Are Much Harder To Come By In Larger, More Heterogeneous Populations.

Individual Price And Wage Changes Will Not Be Prevented. In The Main, Price Changes Will Simply Be Concealed By Taking The Form Of Changes In Discounts, Service, And Quality, And Wage Changes, In Overtime, Perquisites And So On…. But To Whatever Extent The Freeze Is Enforced, It Will Do Harm By Distorting Relative Prices.

I Think That Nothing Is So Important For Freedom As Recognizing In The Law Each Individual’s Natural Right To Property, And Giving Individuals A Sense That They Own Something That They’re Responsible For, That They Have Control Over, And That They Can Dispose Of.

I Want People To Take Thought About Their Condition And To Recognize That The Maintenance Of A Free Society Is A Very Difficult And Complicated Thing And It Requires A Self-denying Ordinance Of The Most Extreme Kind

Because We Live In A Largely Free Society, We Tend To Forget How Limited Is The Span Of Time And The Part Of The Globe For Which There Has Ever Been Anything Like Political Freedom: The Typical State Of Mankind Is Tyranny, Servitude, And Misery.

What Would The People Who Sold Us Goods Do With The Money? They'd Get Dollars. What Would They Do With The Dollars? Eat Them?!

Making Prohibition Work Is Like Making Water Run Uphill; It's Against Nature.

The Strongest Argument For Free Enterprise Is That It Prevents Anybody From Having Too Much Power. Whether That Person Is A Government Official, A Trade Union Official, Or A Business Executive. If Forces Them To Put Up Or Shut Up. They Either Have To Deliver The Goods, Produce Something That People Are Willing To Pay For, Are Willing To Buy, Or Else They Have To Go Into A Different Business.

I Am A Limited-government Libertarian.

Limited Government

Complete Free Trade Is Not Politically Feasible. Why? Because It's Only In The General Interest And In No One's Special Interest.

Every Economist Knows That Minimum Wages Either Do Nothing Or Cause Inflation And Unemployment. That's Not A Statement, It's A Definition.

The Argument For The Free Market Is A Complicated And Sophisticated One And Depends On Demonstration Of Secondary Effects. I Have Confidence Market Efficiency Will Win Out.

Market Efficiency

The Fall Of The Berlin Wall Really Demonstrated Beyond The Shadow Of A Doubt That There Was A Bad System, And What Subsequently Happened In The Soviet Union, That That System Was A Failure.

Anything That Government Can Do, Private Enterprise Can Do For Half The Cost.

There's No Such Thing As A Free Lunch.

Ecological Crisis

The Invisible Hand In Politics Operates In The Opposite Direction To The Invisible Hand In The Market.

What's The Difference? How Can People Be So Inconsistent? Why Is It That Free Immigration Was A Good Thing Before 1914 And Free Immigration Is A Bad Thing Today? Well, There Is A Sense In Which That Answer Is Right. There's A Sense In Which Free Immigration, In The Same Sense As We Had It Before 1914 Is Not Possible Today. Why Not?

If China Don't Free Up The Political Side, Its Economic Growth Will Come To An End - While It Is Still At A Very Low Level.

People Who Intend Only To Seek Their Own Benefit Are “led By An Invisible Hand To Serve A Public Interest Which Was No Part Of” Their Intention. I Say That There Is A Reverse Invisible Hand: People Who Intend To Serve Only The Public Interest Are Led By An Invisible Hand To Serve Private Interests Which Was No Part Of Their Intention.

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I Know Of No Severe Depression, In Any Country Or Any Time, That Was Not Accompanied By A Sharp Decline In The Stock Of Money, And Equally Of No Sharp Decline In The Stock Of Money That Was Not Accompanied By A Severe Depression.

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Prohibition Is An Attempted Cure That Makes Matters Worse - For Both The Addict And The Rest Of Us.

I Start ... From A Belief In Individual Freedom And That Derives Fundamentally From A Belief In The Limitations Of Our Knowledge, From A Belief ... That Nobody Can Be Sure That What He Believes Is Right, Is Really Right ... I'm An Imperfect Human Being Who Cannot Be Certain Of Anything, So What Position ... Involved The Least Intolerance On My Part? ... The Most Attractive Position ... Is Putting Individual Freedom First.

George Stigler Was A Delightful Correspondent. In A Letter From London In 1948, After Remarking On The Inconvertibility Of The Pound And The Inedible, Still-rationed Food, He Concluded, "so Here I Am Losing Weight And Gaining Pounds.

It's A Moral Problem That The Government Is Making Into Criminals People, Who May Be Doing Something You And I Don't Approve Of, But Who Are Doing Something That Hurts Nobody Else.

The One Thing That’s Missing, But That Will Soon Be Developed, Is A Reliable E-cash, A Method Whereby On The Internet You Can Transfer Funds From A To B, Without A Knowing B Or B Knowing A.

You Cannot Be Sure That You Are Right Unless You Understand The Arguments Against Your Views Better Than Your Opponents Do.

I Cannot Disagree With You That Having Something Like 500 Economists Is Extremely Unhealthy. As You Say, It Is Not Conducive To Independent, Objective Research. You And I Know There Has Been Censorship Of The Material Published. Equally Important, The Location Of The Economists In The Federal Reserve Has Had A Significant Influence On The Kind Of Research They Do, Biasing That Research Toward Noncontroversial Technical Papers On Method As Opposed To Substantive Papers On Policy And Results

Every Person Shall Be Free To Do Good ' At His Own Expense.

The Way You Solve Things Is By Making It Politically Profitable For The Wrong People To Do The Right Thing.

How Do You Hold Down Government Spending?

Government Spending

The Great Depression In The United States Was Caused - I Won't Say Caused, Was Enormously Intensified And Made Far Worse Than It Would Have Been By Bad Monetary Policy.

Great Depression

With Some Notable Exceptions, Businessmen Favor Free Enterprise In General But Are Opposed To It When It Comes To Themselves.

The Problem In This World Is To Avoid Concentration Of Power - We Must Have A Dispersion Of Power.

I'm In Favor Of Legalizing Drugs. According To My Values System, If People Want To Kill Themselves, They Have Every Right To Do So. Most Of The Harm That Comes From Drugs Is Because They Are Illegal.

Germany's Problem, In Part, Is That It Went Into The Euro At The Wrong Exchange Rate That Overvalued The Deutsche Mark.

Now That I'm 60, Every Morning I Look In The Mirror And Say, "i Don't Know Who You Are, Stranger, But I'm Gonna Shave You Anyway".

We Have A System That Increasingly Taxes Work And Subsidizes Nonwork.

Plato Assumes Somehow That Government Is A Way In Which You Put Unselfish And Ungreedy Men In Charge Of Selfish And Greedy Men. But Government Is An Institution Whereby The People Who Have The Greatest Drive To Get Power Over Their Fellow Men, Get In A Position Of Controlling Them. Look At The Record Of Government. Where Are These Philosopher Kings That Plato Supposedly Was Trying To Develop?

Is It Really True That Political Self-interest Is Nobler Somehow Than Economic Self-interest?

Underlying Most Arguments Against The Free Market Is A Lack Of Belief In Freedom Itself.

It Is Taken For Granted That Workers Should Receive Their Pay Partly In Kind, In The Form Of Medical Care Provided By The Employer. How Come? Why Single Out Medical Care? Surely Food Is No Less Essential To Life Than Medical Care. Why Is It Not At Least As Logical For Workers To Be Required To Buy Their Food At The Company Store As To Be Required To Buy Their Medical Care At The Company Store?

The Big Issue Is Whether The United States Will Succeed In Its Venture Of Reshaping The Middle East. It Is Not Clear To Me That Using Military Force Is The Way To Do It. We Should Not Have Gone Into Iraq. But We Have.

I Think A Major Reason Why Intellectuals Tend To Move Towards Collectivism Is That The Collectivist Answer Is A Simple One. If There's Something Wrong, Pass A Law And Do Something About It.

The Benefits Of A Tariff Are Visible. Union Workers Can See They Are "protected". The Harm Which A Tariff Does Is Invisible. It's Spread Widely. There Are People That Don't Have Jobs Because Of Tariffs But They Don't Know It.

No Major Institution In The Us Has So Poor A Record Of Performance Over So Long A Period As The Federal Reserve, Yet So High A Public Reputation.

See, If You Look At The Drug War From A Purely Economic Point Of View, The Role Of The Government Is To Protect The Drug Cartel. That's Literally True.

A Crackpot Theory. Instead Of Saying Labor's Exploited, As Marx Did, Kelso Says Capital's Exploited. It's Worse Than Marx. It's Marx Stood On Its Head.

If You Pay People Not To Work And Tax Them When They Do, Don't Be Surprised If You Get Unemployment.

To The Free Man, The Country Is The Collection Of Individuals Who Compose It, Not Something Over And Above Them... He Recognizes No National Goal Except As It Is The Consensus Of The Goals That The Citizens Severally Serve. He Recognizes No National Purpose Except As It Is The Consensus Of The Purposes For Which The Citizens Severally Strive.

Reality Ensures That The End Of History Will Never Come.

Pick At Random Any Three Letters From The Alphabet, Put Them In Any Order, And You Will Have An Acronym Designating A Federal Agency We Can Do Without.

There Is No Place For Government To Prohibit Consumers From Buying Products The Effect Of Which Will Be To Harm Themselves.

So Long As Large Sums Of Money Are Involved - And They Are Bound To Be If Drugs Are Illegal - It Is Literally Impossible To Stop The Traffic, Or Even To Make A Serious Reduction In Its Scope.

The Economic Miracle That Has Been The United States Was Not Produced By Socialized Enterprises, By Government-unon-industry Cartels Or By Centralized Economic Planning. It Was Produced By Private Enterprises In A Profit-and-loss System. And Losses Were At Least As Important In Weeding Out Failures, As Profits In Fostering Successes. Let Government Succor Failures, And We Shall Be Headed For Stagnation And Decline.

The Same Thing Will Happen In China That Happened In Chile. Political Freedom Will Ultimately Break Out Of Its Shackles. Tiananmen Square Was Only The First Episode. It Is Headed For A Series Of Tiananmen Squares. It Cannot Continue To Develop Privately And At The Same Time Maintain Its Authoritarian Character Politically. It Is Headed For A Clash. Sooner Or Later, One Or The Other Will Give.

Japan Has Introduced Fiscal Stimulus Five Times In The Past Seven Or Eight Years And Each Time It's Been A Failure And That's Not A Surprise. Fiscal Stimulus Is Not Stimulating In And Of Itself.

World Trade Depends On Differences Among Countries, Not Similarities. Different Countries Are In Different Stages Of Development. It Is Appropriate For Them To Have Different Patterns, Different Policies For Ecology, Labor Standards, And So Forth.

Only Government Can Take Perfectly Good Paper, Cover It With Perfectly Good Ink And Make The Combination Worthless.

Socialism, In The Traditional Sense, Meant Government Ownership And Operation Of The Means Of Production. Outside Of North Korea And A Couple Of Other Spots, No One In The World Today Would Define Socialism That Way. That Will Never Come Back.

Even The Most Ardent Environmentalist Doesn't Really Want To Stop Pollution. If He Thinks About It, And Doesn't Just Talk About It, He Wants To Have The Right Amount Of Pollution. We Can't Really Afford To Eliminate It - Not Without Abandoning All The Benefits Of Technology That We Not Only Enjoy But On Which We Depend.

. . I Think The Adam Smith Role Was Played In This Cycle I.e. The Late Twentieth Century Collapse Of Socialism In Which The Idea Of Free-markets Succeeded First, And Then Special Events Catalyzed A Complete Change Of Socio-political Policy In Countries Around The World By Friedrich Hayek's The Road To Serfdom.

The Only Reason Free Markets Have A Ghost Of A Chance Is That They Are So Much More Efficient Than Any Other Form Of Organization.

Congress Can Raise Taxes Because It Can Persuade A Sizable Fraction Of The Populace That Somebody Else Will Pay

There Have Been Unions Based On Gold Or Silver, But Not On Fiat Money - Money Tempted To Inflate - Put Out By Politically Independent Entities.

What Does It Mean To Say That Government Might Have A Responsibility? Government Can't Have A Responsibility Any More Than The Business Can. The Only Entities Which Can Have Responsibilities Are People.

When A Private Enterprise Fails, It Is Closed Down; When A Government Enterprise Fails, It Is Expanded. Isn't That Exactly What's Been Happening With Drugs?

Look, For Example, At The Obvious, Immediate, Practical Example Of Illegal Mexican Immigration. Now, That Mexican Immigration, Over The Border, Is A Good Thing. It's A Good Thing For The Illegal Immigrants. It's A Good Thing For The United States. It's A Good Thing For The Citizens Of The Country. But, It's Only Good So Long As Its Illegal....

The Internet Moves Us Closer To "perfect Information" On Markets. Individuals And Companies Alike Can Buy And Sell Across Borders And Jurisdictions Wherever They Find The Best Match Of Supply And Demand.

It Is Most Attractive About The Us To People And Countries With Wealth Is That It Can Provide Security, Insurance Really, Against Political Instability. Nobody Is Afraid That The Money They Place In The Us Is At Risk Of Expropriation Or Of In Some Other Way Being Taken Away. For This Safety, The Wealth Holders Of The World Are Willing To Accept A Lower Rate Of Return.

If You Spend Your Own Money On Yourself, You Care How Much You Spend And How Well You Spend It. If You Spend Your Own Money On Someone Else, You Care How Much You Spend, But You Don't Care How Well It Is Spent. If You Spend Someone Else's Money On Yourself, You Don't Care How Much You Spend, But You Do Care How Well It Is Spent. And Finally, If You Spend Someone Else's Money On Someone Else, You Don't Care How Much You Spend, And You Don't Care How Well It Is Spent. That Is Government.

It Is My View That What Is Important Is Cutting Government Spending, However Spending Is Financed. A So-called Deficit Is A Disguised And Hidden Form Of Taxation. The Real Burden On The Public Is What Government Spends (and Mandates Others To Spend). As I Have Said Repeatedly, I Would Rather Have Government Spend One Trillion Dollars With A Deficit Of A Half A Trillion Than Have Government Spend Two Trillion Dollars With No Deficit.

I Do Not Believe There Is A Natural Resource Economics. I Believe There Is Good Economics And Bad Economics.

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Bruce Beresford

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