...THE ECONOMIC THEORIES OF MILTON FRIEDMAN The Economic Theories of Milton Friedman Milton Friedman was one of the top and most influential economists whose conservative economic theories became influential during the last part of the twentieth century. This paper will explore his economic theories and how his policies were embraced by some conservative politicians but are not as widely adopted today. Milton Friedman would famously say “there is no such thing as a free lunch” (Moore 2012). What he meant was that everything comes with an opportunity cost. If the government spends money then that money must come from the private economy. He was an advocate of capitalism and his views helped revive modern capitalism in the latter part of the twentieth century. He was a proponent of the free market economic system and was opposed to government interference in the economy. Many of his theories have become accepted and lauded by modern day conservative politicians. Milton Friedman was born in Brooklyn, NY in 1912 to immigrant parents. He was awarded a scholarship to Rutgers University where he majored in mathematics. While at Rutgers he became interested in economics due to the poor state of the economy during the Great Depression. After graduating from Rutgers University he went on to receive his master’s degree from the University of Chicago and then on to Columbia University for his doctoral work (Academy of Achievement...
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...Milton Friedman Milton Friedman was born on the 31st of July 1912 and died on the 16th of November 2006. In 1938 on the 25th of June he got married to Rose Friedman and the years later, he won a Nobel prize for economics science in 1976. He was influenced by John Keynes, Friedrich Hayek and he influenced Margaret Thatcher, Gary Becker Matt Laar and many more. Milton Friedman believed in the free market, this is when there is little or no control by the government. The government only impact the market when necessary. The price people pay for items is agreed through the buyers and sellers. Another one of Milton’s theory’s is the ‘stockholder’ theory or otherwise known as the ‘Friedman Doctrine’. This theory means that the companies only responsibility is to increase profits for the owners as long as it doesn’t get the attention of fraud. According to this theory we will make decisions on how much to spend depending on how much income we believe we will have. An example of this is if we earn $150 a week we will only buy what is necessary. One of Milton Friedman’s famous quotes about the free market is “A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.” (Study.com)...
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...Milton Friedman Jordan Locke Economics 10 April, 2013 Jordan C. Locke 10 April, 2013 Period: 2 Ms. House Milton Friedman Milton Friedman once said, "If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”. Due to Friedman's many accomplishments and published works in the Economics field, I felt that he would be a great economist to write about. Milton Friedman was born in 1912, to two Jewish immigrant parents that lived in New York City. He earned his Bachelor's degree at Rutgers University at the age of twenty. He then went to the University of Chicago in 1933 to earn his Masters. In 1946, he earned his Doctorate at the Columbia University. He received the John Bates Clark Medal, honoring economists that had achieved the most outstanding levels of achievement by the age of Forty. He received the Nobel Peace Prize for his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy. He served as an adviser for President Richard Nixon, and he was the president of the American Economic Association in 1967. He retired from the University of Chicago in 1977, and became the senior researcher at the Hoover Institute at Stanford University. He was the premier spokesman for the monetarist school of economics and a pioneer in promoting the value of free market economics, when the position was not popular. Milton Friedman was...
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...Milton Friedman and Free-Market Capitalism Milton Friedman is known worldwide for his belief in defending free-market capitalism and his faith that it can proficiently and impartially distribute wealth throughout a nation. Most of Friedman’s peers are not able to put that same amount of confidence in the ability of the market as he. Friedman has suspicions of government interference in the business of a nation’s economy. These suspicions are based on his belief in a limited government and that a capitalist economy free of government interference would provide the best choices for a consumer. Instead of being so involved in the market, he believes that the government has a responsibility to keep a high standard of living through certain functions like defense, education, and public utilities and set certain laws regarding economic policy in order to keep in check the “game” of economics. (Friedman 25) Friedman suggests that the government pass “a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money.” (Friedman 54) Besides serving this purpose, Friedman believes the government’s interference is detrimental. Friedman’s Suspicions of Government Interference The United States government portrays the idea that without government intervention, society’s economic growth would stagger. According to Friedman, economic growth and stability are due to the reduction of government interference. Friedman has many reasons for why he believes...
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...Milton Friedman’s America Reviewing the video from Milton Friedman has given quite an insight on how he feels about what America was, what America has become, and what America should be. He focuses his ideas around legal and illegal immigrants and how the laws affect America when dealing with them as a working class. In some sense, the comments that he made were a bit insulting, while on the other hand, the comments were a bit amusing at best. These views are view that I would expect a comedian to address in stand-up than what I would expect a public speaker to verbalize to bluntly. He starts be addressing how immigrants today differ from the immigrants from a few decades ago. He states that in the 40’s the immigrants were welcomed because they came to America looking to work and were willing to take the jobs that no other American wanted. These jobs included agriculture and other labor intensive jobs. He then continued by saying that illegal immigrants were the ones that would take on these jobs, but as states began to legalize immigration, it made possible the ability for immigrants to come to America and become civilian who are able to stay at home and receive a check legally. He is against this because he feels that now immigrants are coming to America legally to get a free check instead of coming to America illegally to earn a living. I don’t believe he is saying to drive immigrant out by making immigration illegal. However, he is saying that illegal immigrants...
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...Education for the Future A student in today’s education system could easily find themselves with a heavy work load, and very little free time due to an aggressive national push for improvement. Beginning at surprisingly early grade levels, students are rushed through their days at school in a blur of mandatory material and then loaded up with even more work to take home to their families. This daily process can take a heavy toll on both the families and teachers that are trying to provide good educational support for their students. Even in two parent households, if both parents are working, the ability to maintain a regular home life and keep up with homework can be very difficult. In spite of these issues, the need for better education persists. K-12 schools now more than ever before, have the ability to organize study materials in a way that would allow more efficient use of both student’s and teacher’s time. All K-12 schools can, and should, offer well-designed internet study options; as well as flexible in school technology that is both user friendly and directly supported by qualified teachers. The first thing to consider is that the technology and communications networks needed to support a more efficient education process already exist. Computers and mobile devices are constantly improving ways to integrate into every aspect of our lives. The U.S. Census Bureau reported that 78.9% of households in 2012 had computers and of those households 74.8% of them had internet...
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...Dr. Milton Friedman 1. The Social Responsibility of Business Is to Increase Its Profits." that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution In 1970 Milton Friedman wrote that "there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." That's the orthodox view among free market economists: that the only social responsibility a law-abiding business has is to maximize profits for the shareholders. The most successful businesses put the customer first, ahead of the investors. In the profit-centered business, customer happiness is merely a means to an end: maximizing profits. In the customer-centered business, customer happiness is an end in itself, and will be pursued with greater interest, passion, and empathy than the profit-centered business is capable of. 2. Friedman is careful to note that the corporate executive has direct responsibility to his employers, the shareholders. He is also careful to argue that this is not necessarily the manager's sole responsibility; there is, after all, the duty to conform to the basic rules of the society. It is not clear if the latter is a moral responsibility or a social responsibility--i.e., if it is a duty the manager...
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...to go see the play “Chicago Boys” at the Goodman Theater. The Goodman Theatre takes a strong stand in supporting the new plays of working playwrights. “Chicago Boys” introduces a fictional story based around economist Milton Friedman during the early 1970’s when Chile found itself in a state of political unrest. The plot follows Joe Nelson (Derek Gaspar), considered to be Friedman’s protégé and during the first moments of the play he truly admires the theories and ideas Friedman has built his economic foundation on. As the play progresses we see how Joe’s original thoughts on Friedman’s motives begin to change as he experiences a country where the economic system is starting to rupture. Joe floats between his own ambitions and representing the great mind of Milton Friedman, who is having problems of his own back in Chicago with protesters. Milton Friedman was a very arguable figure. The economist spent more than thirty years teaching at the University of Chicago, and was even awarded the Nobel Prize for Economics in 1975. During the outlashing in Chile during the mid-70’s, Friedman gave several lectures expressing economic freedom, which lead to civil unrest among citizens in Chicago. “Chicago Boys” is loosely based around the ideas and theories Friedman believed while examining a fictional story through the eyes of a young man. I was not the only one however. You know your show isn’t doing too well when a large portion of your audience leaves during intermission. ...
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...Milton Friedman started the documentary Free to Choose part-3 Anatomy of a Crisis with the genesis of the Great Depression of 1930. Friedman articulated it was the Wall Street Crash on October 29, 1929 better known as “Black Thursday” that began the trickledown effects on the United States economy. Friedman claimed that bellied up businesses and bank failures in the south and mid-west of the United States contributed to the Great Depression. Friedman believed that it was not deemed a crisis until failures reached New York. One casualty the Bank of the United States in New York, New York was in jeopardy of bank failure. Friedman express that although the Federal Reserve Bank of New York whose primary functions are to prevent and or assist banks from bank failure was unsuccessful regarding the Bank of the United States dilemma. With several attempts Federal Reserve Bank proposed that the Bank of the United States merged with other local banks. By doing so a guarantee fund for depositors would cover the Bank of the United States loss and keep it afloat. Ultimately the Bank of the United States shut down December 10, 1930 due to competition from surrounding banks and racism. Friedman goes on about how the Federal Reserve Bank and their unwillingness to create new money by purchasing government securities at a grand scale. Friedman conveyed that the bank failure of the Bank of the United States would have been handled differently and fitting during that time if a Benjamin Strong...
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...their homes (Wheelock 2008). The money supply had fallen 35%, prices plummeted by about 33%, and more than one-third of banks in the United States were either closed or taken over by other banks (Parker 2010) . Milton Friedman and Anna Schwartz, in their 1963 book A Monetary History of the United States, 1867–1960, call this massive drop in the supply of money “The Great Contraction.” Monetarists, including Friedman, argue that the Great Depression was mainly caused by this monetary contraction, poor policy-making by the American Federal System, and continued crisis in the banking system. While there are many credited theories that provide an explanation for the Depression, this essay will focus on Monetarism and John Maynard Keynes’s argument for government stimulus in order to combat the economic downturn. Causes For The Great Depression In their book A Monetary History of the United States, 1867–1960, Friedman and Anna Schwartz stated that the Depression began with America’s weak banking system (Friedman et al. 1971). From 1930-1933, 10,000 banks closed. The majority of the U.S banks were small institutions. The Fed did not expect these small banks to have such a large effect on the money supply, causing the banks to heavily rely on their own resources. Friedman and Schwartz point out that the series of bank failures that occurred beginning in October...
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...Topic: The Great Depression, continued Read: In Fed we Trust, chapters 1-4 1. Define the term gold standard. Should we return to it? The gold specie standard arose from the widespread acceptance of gold as currency. No, The gold standard limited central banks from printing money when economies needed central banks to print money, and limited governments from running deficits when economies needed governments to run deficits. It was a devilish device for turning recessions into depressions. The answer is that some people aren't worried about depressions. Some people are worried about inflation. 2. Who was J. Pierpont Morgan? What was his role in stopping the Panic of 1907? John Pierpont "J. P." Morgan (April 17, 1837 – March 31, 1913) was an American financier, banker, philanthropist and art collector who dominated corporate finance and industrial consolidation during his time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric. After financing the creation of the Federal Steel Company, he merged in 1901 with the Carnegie Steel Company and several other steel and iron businesses, including Consolidated Steel and Wire Company owned by William Edenborn, to form the United States Steel Corporation. - The Panic of 1907 was a financial crisis that almost crippled the American economy. Major New York banks were on the verge of bankruptcy and there was no mechanism...
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...Milton Freidman was born in 1912 in Brooklyn, New York. Freidman was the youngest of four children and even though his parents worked, the income was very little. However, there was always food on the table and the family atmosphere was very supportive. Freidman attended public schools along with his sisters and in 1928 he graduated from high school at the age of sixteen. His father died during his senior year of high school. Friedman wanted to attended college even though it meant he would have to pay for it by himself. Luckily for Friedman, he was awarded a scholarship from Rutgers University. Friedman enjoyed mathematics and he went to school with the intentions of becoming an actuary (a person finds ways to manage potential risks), instead of what he is now famous for, economics. During his four years at Rutgers, he specialized in mathematics and went as far to taking a few actuarial examines. However, shortly after, he became interested in economics and eventually ended with a major in both actuary and economics. In Freidman’s autobiography, he mentions two men who helped him better understand economics. Arthur Burns, one of the men mentioned, was teaching at Rutgers while completing his doctorate for Columbia. “Burns shaped my understanding of economic research, introduced me to the highest scientific standards, and became a guiding influence on my subsequent career” (citation). Homer Jones was the other individual who had an impact on Friedman’s life. Jones...
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...The Social Responsibility of Business is to Increase Profit What is the social responsibility of a business? Is it to increase profits as American economist Milton Friedman argues? Is it to make decisions that benefit and protect society? According to the Dictionary of Finance and Investment Terms, social responsibility is the “principle that businesses should actively contribute to the welfare of society and not only maximise profits”. In my view the statement ‘the social responsibility of business is to increase profit’ is true to an extent, however, I believe a corporation’s responsibilities extend beyond just maximising profits. The ‘Narrow View’ argues that profit maximisation is the only objective for a business. Theodore Levitt wrote, “in the end business has only two responsibilities- to obey the elementary canons of face-to-face civility (honesty, good faith and so on) and to seek material gain” Levitt’s opinion could be perceived as realistic to an extent, however, I believe he doesn’t take into account the negative side-effects that business activities can have on society. Friedman strongly rejects any concept of corporate social responsibility that would deter a business’s primary goal of profit maximisation. Furthermore, he argues that only people can have responsibilities, not an artificial being such as a corporation. If an artificial being such as a business was to have responsibilities, however, than I would find it appropriate that it would be inclined to...
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... Abstract Since the Affordable Care Act insurance laws have changed drastically. The question today is do insurance companies make a profit off their customers? In this paper I will discuss Freidman’s goal of the firm. Milton Freidman felt as though the goal of the firm was to keep the shareholders at the front line of their decisions. When an insurance company decides what they are going to do to target their customers they make sure that they are going to have a profit so that the shareholders are happy. Another aspect of this paper is going to be on whether or not the government should have a role in the goal of the firm rights of those involved seem to be taken away. The Goal of the Firm The Friedman goal of the firm is that they take the shareholder into consideration when it comes to a profit. He believes that the sole purpose of the goal is to make sure that profits are maximized so that a portion of that profit can be provided to the shareholders, especially if there is a risk in the investment of the company. Not only does Friedman believe that the goal of the firm is to gain a profit for the shareholder but to not have any social responsibilities. In his book Capitalism and Freedom Friedman talks about totalitarianism, which is where the state has control over all aspects of the public and private sector. This is what happens when a company focuses on the "community" rather than the profits that can be made. ...
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...purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money." [Lindbergh]. When the President signs this act [Federal Reserve Act of 1913], the invisible government by the money power -- proven to exist by the Monetary Trust Investigation -- will be legalized. The new law will create inflation whenever the trusts want inflation. From now on, depressions will be scientifically created. [Lindbergh2] I believe Lindbergh, a Democrat, had foresight into the possible dangers that were realized later with the Great Depression. He was justified in his belief that the Federal Reserve could not maintain stability with the financial market. MILTON FRIEDMAN The late economist did not support the Federal Reserve system and wanted it abolished. During a 1996 National Public Radio interview, he said "The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933." Ben Bernanke made a speech...
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