01 December 2006

Those Who Knew Them: Milton Friedman 1912-2006

We at www.asadodo.com wish to apologise for the tardiness of this tribute to Nobel-winning economist, Milton Friedman, who died last week. Unfortunately Geraint Swann, the economist we contacted with a view to producing an obituary, was engaged in a series of television appearances and unable to deliver his comments until today.

Milton Friedman, at least he always paid for his meals"Why was Milton Friedman famous?", you may ask. It's a very good question. After all, he didn't appear on television very often. He certainly didn't host any top-rated, vaguely business-related programmes on BBC2. And he didn't look good in a school-marmish way on Newsnight. So what was the point of him? Well, he was deeply involved in the development of two of the most vital items in the economic toolkit today. The first, the spanner or monkey wrench in the toolkit, if you will - the item with which governments were to grab their economies by the nuts and twist - was monetarism. The second - the screwdriver with which the layperson can probe deep into the economic toaster in the hope of loosening some crumbs of knowledge - was the oversimplistic analogy.

So what is monetarism? Well, let me make an oversimplistic analogy. Imagine the economy is like a balloon and the money supply is like the air inside it. Monetary theory says that if you keep blowing into the balloon then it will keep inflating and ultimately burst. Now you may be thinking, "But surely the economy is nothing at all like a balloon, surely its like lots of people exchanging goods and services both here and abroad", and you'd be right. But that has never stopped an economist. Milton's great genius was to flog his balloon theory to political leaders and right-wing dictators across the globe. The fact that the price was massive unemployment and the destruction of industry didn't matter at all. For economists it's the theory that matters, not the practice, and Milton was one of the greatest economists of all.

These days, of course, monetarism - like Milton - is seen as a bit old-fashioned. Instead of Professor Friedman's strict prescriptions, most economists reckon that to run things properly you need a bit of monetary control and a bit of Keynesian pump-priming but most of all the ability to be on your horse and out of town before anyone realises just how badly you've cocked everything up.

The As A Dodo team add: Milton Friedman died on 16 November 2006. It is understood that his brain decided that the blood supply (B0)to his body was resulting in undesirable and necessary economic effects such as walking around and breathing. Accordingly steps were taken to reduce B0. The success of this programme was obvious, the incidental failure of several vital organs and total loss of life being simply the proper effects of the invisible hand of the market and a sacrifice necessary for the proper functioning of the bodily system as a whole.

A memorial service for Milton Friedman will be held by the society of British TV economists in the Dragon's Den Studios on Tuesday. In memory of the great man, lunch will not be free.