Jesse Walker at Reason magazine points out something very inconvenient for Naomi Klein, whom I discussed recently at this blog:
Let’s just zero in on the contrast Klein draws between utopian theories and real-world practice. It’s a fair argument if you apply it properly: that is, if you look at the consequences of Friedman’s policy prescriptions where they are put in place. It makes sense, for example, to look at how Friedman’s ideas about denationalization and free trade fared in Chile after they were put into effect. It doesn’t make much sense to look at Blackwater’s contracts in occupied Iraq, because — try as Klein might to pretend otherwise — they don’t have anything to do with Friedman. (And of course, it’s important to examine the ways Pinochet’s Chile deviated from Friedman’s economic ideas as well as the ways it embraced them.)
Exactly.
At the same time, you have to consider how Friedmanism fared everywhere some portion of it was applied, not just cherry-pick the most unappealing regimes that experimented with it. If the only place that adopted any of Friedman’s economic ideas was Chile, then Klein might be onto something when she suggests there’s a connection between libertarian economic policies and deeply un-libertarian ideas about torture, censorship, surveillance, and state-sanctioned murder. But the most sweeping free-market reforms of the last 40 years were not adopted in Pinochet’s Chile, Thatcher’s UK, or anyplace else addressed in Klein’s book. They were enacted by the New Zealand Labour Party in the 1980s. Far from fusing economic liberalization with political repression, the Labour government expanded civil liberties: It adopted a bill of rights, decriminalized homosexuality, improved the treatment of the native Maori. And while Pinochet signed on to the CIA’s war against the Latin American left, New Zealand strained its relations with Washington by making itself a nuclear-free zone, a policy that effectively barred the U.S. Navy from New Zealand ports. By Klein’s logic, these are all effects of Friedmanomics.
One would not expect Ms Klein to respond to this other than with smears. It turns out that she more or less ignored the devastating review of her book by Johan Norberg at CATO recently, did not address his very serious accusations of widespread inaccuracy or misrepesentation. To repeat: it is not just her views that are a problem – I am sure some leftists argue in good faith – but her actual, repeated lying, fabrications and errors that are so easily corrected and yet she cannot be bothered to do so. That is one reason why I loathe so much of this sort of writer. It is a sort of contemptuous attitude towards simple fact-checking that I cannot abide. So Friedman did not support the Iraq war after all? Well, whatever, he might as well have done, seems to be her attitude.
The point that Jesse Walker makes about the varied effects of free market ideas is important. Yes, some repressive regimes around the world may have found it convenient, for whatever reason, to claim they had signed on to the package, as Chile did. But then remember that even former London mayor Ken “friend of Hugo Chavez” Livingstone once argued that he had borrowed the idea of road-charging from the great Chicago professor. In different times, very different types of political leader, such as Richard Nixon, claimed to be Keynesians, just as, right now, a lot of people are scurrying to claim to be in favour of tougher regulations (see Guy Herbert’s comment immediately below this one).
Klein tries to draw an equivalence, in a muddied way, between those leftists who deny that Marx can be blamed for the horrors done in his name and those of us who point out it is absurd to try to blame free market thinkers from what is happening now. Well the reason, Ms Klein, why Friedman et al cannot be so blamed is that what is happening now is not an example of laissez faire capitalism. Re-read that slowly, Ms Klein: what is happening now is not a case of laissez faire. Just to spell it out for those who have not been following this debate: the central banks responsible for setting interest rates are state bodies; the US home loan agencies such as Freddie Mac that underwrote risky mortages are ultimately state bodies; the legislation forcing banks to lend to risky groups is state activity; the Basel and other bank capital rules that have arguably encouraged the irresponsible use of credit derivatives are state rules, and so on. With the exception of Lehman Brothers and some of the Icelandic banks, not a single large financial institution has been allowed to go bust, as a private company would in a free market. Not one.
In all seriousness what are you expecting? These books aren’t ‘textbooks’ – they’re ‘documentary books’ in the same way that ‘Sicko’ is a ‘documentary film.’
They’re not meant for and don’t stand up to serious criticism – they’re bought by people who already believe the content so they can put them on their bookshelves to indicate they’re a true believer, and so they can flick through them now and again to revalidate their worldview.
Reviewing propaganda is just a waste of time.
There was a front-page story in the WSJ the other day telling how the heads of big banks were brought into a Bush-administration meeting and told that they could either sign up to allow the US government to invest in them, or lose their banks. While this seems more like a Mafia moment than like Hitler’s National Socialists’ industry meetings, no one should treat any actions/stances taken by the Bush administration — in this case, partial communization with fascist implications — as necessarily having anything to do with the free market or laissez-faire economics, either,
I don’t think reviewing leftists’ works is a waste of time.
From time to time we need to be reminded that there is no such thing as an honest leftist. If there were any, some of them would be candid enough to say that they want people to get enslaved, get poor, get sick, and die.
Even leftists of convenience rather than core ideology, like the government employees who are (so far 99.98%) virtually the only ones opposing Question 1 on the ballot in MA, could use a reality check on their propaganda. Newsbimbos are far too poorly prepared and/or incompetent, and their editors far too often dishonest, to fill this function. A review divorced from quotidian distractions is all that’s left to fill the void.
But she’s not attacking the “Free Market”, she’s attacking “Friedmanism”, which is the underlying cause behind this crisis and provides much of the intellectual cover for the bailout montrosity. Not really sure what point you are making here.
**
Anyway, the only relevant comparison to make regarding Chile is with other right-wing Latin American military dictatorships that did not embrace Friedmanite policies i.e. Argentina where inflation hit 10,000% To any fairminded observer this would mean case closed about their effectiveness relative to Keynesian/Peronist policies.
Totally agreed with your conclusion. This is not a failure of free markets, this is failure of State Interference (however subtle that may have been).
Why does anyone outside the lefty echo chamber take this creature seriously. She is the child of American limousine liberals who made their way to Canada during the Vietnam war and were given access to highly paid jobs in the National Film Board – a government entity.
She attended St. George’s school in Montreal a private school frequented by children of psychiatrists, university professors and the like-minded whose upper level students’ claim to fame was feeding LSD to the younger ones.
Subsequently Naomi took time off from having her fingernails wrapped and hair coiffed to protest a G-8 meeting in Quebec where she led a street gang along with Svend Robinson, at the time a socialist MP, in smashing plate glass windows of shops in the main shopping district. Svend has his trousers torn in the melee and was paid six thousand dollars in compensation for the grievous bodily harm his pants had suffered. Svend was later disgraced and resigned from politics after stealing a sixty-five thousand dollar ring at a jewelery expo.
Naomi has fared much better producing screeds like No Logo and the present tome and publishing regularly in The Guardian. Not bad for an unprincipled airhead.
Depends on how much time you have. I believe that debunking crap ideas, calling out liars and charlatans is a good idea if it can be done without getting in the way of other matters that you think are more important. Think how much better certain aspects of world affairs would be had the various lies about capitalism, etc, been nailed down at the time.
It might be easy to adopt a sort of studied sang froid in the face of all this nonsense, but I am afraid such a pose is not good enough. Facts have to be faced: the ideas of open markets are being challenged by a number of forces, and if we don’t at least try to respond, we don’t deserve to be taken seriously.
Gabriel: Friedman’s ideas and those of classicial liberalism are more or less the same, so I don’t see the relevance of your point. Sure, one might go into the subtle differences between say, the Chicago and Austrian forms of free market exegis, but in the mind of Naomi Klein, Will Hutton or Gordon Brown, Friedman = capitalism.
Gabriel: “But she’s not attacking the ‘Free Market’, she’s attacking ‘Friedmanism’…”
…as if a mushwit like Klein knows the difference and is remotely concerned with it.
{sigh}
Good point.
These people all probably believe that Tony Blair epitomised laissez-faire as well. Does that mean you are going to rush to defend Blair as well?
No. The point is, in my view Friedman was pretty much a consistent defender of laissez faire, although not quite as radical as say, a Murray Rothbard, for example. We are getting into a rather pointless semantic issue here. When Klein uses the word Friedmanite, she quite clearly is talking about the application of strong free market ideas.
The idea that Milton Friedman’s ideas, as Gabriel rather oddly put it, are behind the current crisis is wrong. He was not in favour of creating credit bubbles, au contraire. The man who wrote about the dangers of inflation can hardly be accused of supporting what has happened.
Coming next: Friedman
was responsible for global warming.
Toronto has become a forcing-house for a certain kind of far left self-proclaimed “intellectual”. It has given us Naomi Klein (married to Avi Lewis, who left the CBC to join Al-Jazeera, as did his news director Boss Tony Berman recently); the Guardian gives space to Heather Mallick—perhaps the nastiest columnist in north America; and Margaret Atwood, doyenne of the Toronto literary set, and the most over-rated writer in the English-speaking world. If anyone thinks that these people represent mainstream Canadian thought, they are sadly—and dangerously—mistaken. They represent about 100,000 like-minded media types at most.
The funny thing is Klein gains rather a lot of support on the LPUK blog where her attempted rebuttal of the Cato rebuttal was reproduced:
http://lpuk.blogspot.com/2008/09/kleins-shock-doctrine-revisited.html
This might seem OT but it isn’t really.
My wife is a Russian graduate. Now in the 80s when Gorby attempted to see clearly through the murk that was the Soviet economy he discovered something very nasty. The whole system collapsed when everyone realised that nobody had the slightest idea what anything was actually worth. That was the point at which the wheel finally came off thed Lada.
Now the only realistic determinant of value is what someone is prepared to pay for it or in short a free market. What worries me about these bail-outs and whatnot is that they distort the market. Of course markets can get out of hand (tulip bulbs and dot coms and all that) but the market will eventually come to it’s senses. It doesn’t when the politicos are meddling.
Just look at the longest-running tragi-comedy in British industrial history – BL – Rover – whatever. A disaster elongated by government. So what are HBOS shares worth then? Depends doesn’t it. Depends not on what HBOS are doing or their assets it depends on what Gordon is up to. Gordon and his magic piggy-bank.
Nick, Klein’s attempted rebuttal backs up my point. She hasn’t a clue what she is talking about.
Friedmanism =/= Friedman. The fact is that the Thatcher/Reagan Friedmanite revolution, instead of taking apart the Welfare State/GreatSociety, papered over the massive deficiencies of the English/American socio-economic model by unleashing a whirlwind of cheap goverment subsidised credit and we’re now reaping the shitstorm. (As it happens, Pinochet’s reforms, i.e. of pensions, were far more admirable, especially when one considers that he came to power with >5000% inflation, not 25%.)
When Klein – who is a wicked and malignant human being – says that Friedmanism as a real historical political movement and not a bunch of words on paper*, caused this financial crisis, she is telling the truth. The proper response on the part of the Right is to point out the flaws as well the considerable achievements of the Friedmanites and demonstrate how more free market reforms are necessary.
Remember, Ms. Klein believes that no such thing as a Free Market is actually possible. It’s up to us to show her that she is wrong, not defend a Chicago economist who talked a whole lot of pernicious crap about central banking policy.
* Also c.f. “Friedman’s ideas and those of classicial liberalism are more or less the same“, but I’ve belaboured this point quite enough here.
Gabriel, I agree with you that contrary to certain myths, Reagan/Thatcher etc did not overhaul the welfare state, or at least not significantly. But it is odd to suggest that their solution was to “paper over the cracks” with cheap money. For a start, Mrs Thatcher was gone from power in 1990 in part due to a blazing row wth her finance minister, Nigel Lawson, on this very issue. I have searched in vain for any of Friedman’s writings where he could be said to condone using low interest rates to pump an economy up. Everything he wrote and said tends to the opposite.
You still are making a mistake here. “Friedmanism” may, to you or me, mean a particular school of thought of what causes inflation and deflation; in the eyes of Ms Klein, it means free market economics. She does not differentiate it from the Austrian school, which is some respects is quite different. Some of your points are quite correct but she would not take them on board because she brackets all the various strands of classical liberal economics under the same heading.
I take you’re point. However, I think the Miss Klein is right in viewing political movements by their actions and achievements, not by the best intentions of idelogues. “Friedmanism” is perhaps the wrong appelation because it implies a greater fidelity to his ideas than is actually the case, I’d probably go for “neoliberalism”.
I think a fair assessment of this movement deminstrates successes and mistakes. Helping Pinochet sort out the country that Allende immensely f**ked up is not one of them. Greenspan’s tenure as head of the Fed most definitely was.
As for your wider point that Klein is willfuly and consistently dishonest, you are right. There is almost certainly no point in having a debate with her.
Leftists will say anything (claiming that Milton Friedman supported going into Iraq is mild by their standard). Remember they reject “capitialist” morality and hold there is no such thing as “objective” truth – only what is good for the cause (that is the only “truth” the only “morality”).
As for Milton Friedman, he is a complex mixture of good and bad even on Central Banking (no apology for using the present tense about a man who is dead – it is common in history, including the history of thought).
Milton Friedman did indeed claim that the contraction of the money supply was one (of several) causes of why the Great Depression was so bad in the United States – so it understandable for Ben B. and the rest of these toads to say “well Milton Friedman would have supported our bailouts”.
But Milton Friedman also wrote (many times) that it would have been better for the United States if the Federal Reserve system had never been created, AND that it should be got rid of. He also held (late in his life) that the Montary Base should be fixed – NOT increased in line with the “price level”.
“But you are dodging the main issue Paul – what about when bank credit (M3) is expanding anyway and the inevitable crash comes, what does Milton Friedman adivce then? Are we not in the world of buying up securities or even helecopters dropping money randomly”.
Perhaps.
I do not feel that Milton Friedman would have supported the current bailout orgy, but that may simply be because I liked the man and do not wish to believe he would have been such a shit.
Leftists will say anything (claiming that Milton Friedman supported going into Iraq is mild by their standard). Remember they reject “capitialist” morality and hold there is no such thing as “objective” truth – only what is good for the cause (that is the only “truth” the only “morality”).
As for Milton Friedman, he is a complex mixture of good and bad even on Central Banking (no apology for using the present tense about a man who is dead – it is common in history, including the history of thought).
Milton Friedman did indeed claim that the contraction of the money supply was one (of several) causes of why the Great Depression was so bad in the United States – so it understandable for Ben B. and the rest of these toads to say “well Milton Friedman would have supported our bailouts”.
But Milton Friedman also wrote (many times) that it would have been better for the United States if the Federal Reserve system had never been created, AND that it should be got rid of. He also held (late in his life) that the Montary Base should be fixed – NOT increased in line with the “price level”.
“But you are dodging the main issue Paul – what about when bank credit (M3) is expanding anyway and the inevitable crash comes, what does Milton Friedman adivce then? Are we not in the world of buying up securities or even helecopters dropping money randomly”.
Perhaps.
I do not feel that Milton Friedman would have supported the current bailout orgy, but that may simply be because I liked the man and do not wish to believe he would have been such a shit.
Johnathan: You say ” … legislation forcing banks to lend ….” is one of the main elements of the mortgage meltdown problem. What specific legislation are you referring to ? Lending agencies like Countrywide weren’t exactly looking to turn anyone down. I liked Klein’s book. Yes she goes a bit overboard in some of her analogies but what author doesn’t. If we can’t read all sides of an issue then how valid are our own opinions? I take many of the comments presented on this thread to be enormously biased . More attacks than arguments.
Johnathan: You say ” … legislation forcing banks to lend ….” is one of the main elements of the mortgage meltdown problem. What specific legislation are you referring to ? Lending agencies like Countrywide weren’t exactly looking to turn anyone down. I liked Klein’s book. Yes she goes a bit overboard in some of her analogies but what author doesn’t. If we can’t read all sides of an issue then how valid are our own opinions? I take many of the comments presented on this thread to be enormously biased . More attacks than arguments.
Johnathan: You say ” … legislation forcing banks to lend ….” is one of the main elements of the mortgage meltdown problem. What specific legislation are you referring to ? Lending agencies like Countrywide weren’t exactly looking to turn anyone down. I liked Klein’s book. Yes she goes a bit overboard in some of her analogies but what author doesn’t. If we can’t read all sides of an issue then how valid are our own opinions? I take many of the comments presented on this thread to be enormously biased . More attacks than arguments.
No need to repeat yourself three times!
The legislation was introduced, as far as I know, in the late 1970s, later updated, which required banks to ensure that their criteria for lending did not freeze out certain racial, ethnic and other groups from the mortgage market. While noble in princinple, the laws, as is so often the case, meant banks no longer could be as tough on the standards required to get a loan.
As for my points about Ms Klein, your remarks are daft; the review I linked to gives a detailed, fair, and consequently fierce take-down of her book’s many errors, mistakes and distortions. Of course I am “biased”; I am a defender of liberalism and capitalism and Ms Klein is a clear foe of both. So she gets the hard treatment. What do you expect? A basket of flowers?
Who here actually thinks that any of us 9 -5ers has any real say in what happens. Corporations rule it all. Attacking Klein as opposed to proposing soloutions is a waste of time.
If I do not pay the taxes you poor helpless 9-5’ers vote for me to pay, armed men in blue will come and drag me off to jail. Yet when I steadfastly refuse to buy any Microsoft products, strangely no Microsoft Cops show up on my doorstep to punish me for my defiance.
Your world view is a delusion, good sir.