America Needs a New Milton Friedman
Milton Friedman had many ideas that I disagree with, and others that I think haven’t stood the test of time. But there’s no denying his influence over the world of economics; he was one of the field’s greatest popularizers and explainers. Friedman’s 1980 television series, "Free to Choose," introduced a combination of basic economics and libertarian political ideology to a generation of Americans. With books such as “Capitalism and Freedom” and “Free to Choose: A Personal Statement” (co-authored with his wife Rose), he became one of the country’s premier public intellectuals. For many Americans, the face of Milton Friedman is still the face of economics.
But the world has moved on from 1980. Many of the free-market policies Friedman advocated were implemented, though doubtless not nearly as many as he’d have liked. Though some politicians are still pushing for yet more Friedman-inspired reforms, there are indications that many of the biggest gains have already been reaped. Meanwhile, economists now generally favor as much or more government intervention in the economy as the general public. This doesn’t mean Friedman was wrong -- it just means that there is probably little left to gain from having economists go out into the world and persuade people to embrace free markets.
Economics has also changed. The kind of simple supply-and-demand analysis that people learn in their Econ 101 courses -- which economists call price theory -- is no longer at the forefront of academic thinking. More complex theories are now the norm, and these new theories often require very different intuition and very different conclusions. Even more importantly, the whole discipline of econ has shifted away from theory and toward empirical studies.
We need a new Milton Friedman for this new age. Economics and the world have both changed, but public discussion is still too often based on the ideas of the 1970s and 1980s. Many writers are trying to remedy that situation, and educate the world about the new paradigms and the new ideas. But someone with Friedman’s academic pedigree -- he won the Nobel in 1976, and was hugely influential within the discipline -- would have more credibility than any writer.
A number of prominent economists are already spreading post-Friedman ideas. Thomas Piketty, whose book "Capital in the 21st Century" became an unlikely bestseller, has highlighted the problem of inequality. George Akerlof and Robert Shiller, both of whom have Nobels, have written several books explaining how free markets can break down. Richard Thaler has written about behavioral economics, Dani Rodrik has questioned the reigning orthodoxy on free trade, and Joseph Stiglitz has questioned almost every premise of standard economics.
Then there’s Paul Krugman. Through his blog, op-eds, books and public appearances, Krugman has achieved a level of popularity probably not enjoyed by any economist since Friedman. As a Nobel winner, he has unquestionable academic bona fides. He is unrivaled in his ability to use economic theory, both simple and complex, to explain policy issues in a way the public can understand. Like Friedman, Krugman seamlessly integrates economic theory and political ideology, though Krugman’s politics are far more enthusiastic about the role of government. Tyler Cowen, another legendary popularizer of econ (and a Bloomberg View columnist), wasn't exaggerating in 2013 when he called Krugman the closest thing we have to Milton Friedman today.
But I think we need more. Krugman is invaluable, but his style of analysis is firmly rooted in theory. Empirical economics has mostly taken over the discipline, but relatively few people outside the profession have a good idea of the findings emerging from the new paradigm. From the minimum wage to welfare to immigration and more, evidence-based econ is revolutionizing economists’ understanding of policy. The public needs to be told about that, and to get an idea of what the evidence is saying.
We need a Milton Friedman of empirical economics. This should be someone with an unquestioned academic pedigree, who is also good at boiling down a complex academic literature in ways laypeople can understand. Someone who can sit in front of both a camera and a keyboard, patiently but entertainingly explaining the world of empirics to the world at large.
One obvious candidate is the Massachusetts Institute of Technology’s David Autor, whose own celebrated work tries to make sense of the big trends affecting labor markets and growth, and who is probably the most lucid and concise explainer I’ve seen. Though he now seems to be occupied by research, there might come a time when he’s ready to turn to a more public-facing role. Other possibilities include the University of California-Berkeley’s David Card and Princeton’s Alan Krueger, both of whom have done famous, pioneering work in empirical economics, and both of whom are very clear and concise in both academic talks and interviews. Berkeley’s Alan Auerbach, a highly respected economist who has also done extensive policy work, is another candidate.
It’s also possible that the Milton Friedman of empirical econ hasn’t emerged yet. It could be a famous theorist who decides to shift to more data-driven topics when talking to the public. It could even be someone who hasn’t yet attained top status in the profession.
Whoever it is, the world needs him or her. So much interesting work is being done in empirical economics that the public needs to hear about it from someone at the forefront.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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