Ninety-seven years ago today, Milton Friedman was born in Brooklyn to Jewish immigrants.
By the time he died in 2006, Friedman was a world-renown economist who was celebrated as the man who made free markets popular again.
The South Carolina Policy Council has a nice piece on Friedman in its Week in Review, including this highlight:
We can learn a lot from the lessons that Friedman taught us about economic growth and government actions. In his book Capitalism and Freedom, Friedman wrote:
“The Great Depression in the United States, far from being a sign of the inherent instability of the private enterprise system, is a testament to how much harm can be done by mistakes on the part of a few men when they wield vast power over the monetary system of a country.”
One of the major reasons for the severity of today’s recession are the Fed’s actions that artificially stimulated the boom period. During the recession of 2001, the Federal Reserve continued to lower interest rates to encourage more investment – from around 6 percent in 2001 to nearly zero in 2004. This helped boost prices, which led to a massive bubble.
When government entities begin to believe they can dictate economic directions, the path is set for more extreme downturns. South Carolina’s Legislature can learn from Friedman and end its ongoing effort to control the state economy. If we allow individual incentives and motivations to lead, recovery will come about at a faster pace.