Monday, July 20, 2015

Fwd: Friedman

'A few years ago, the prestigious economic publication, Journal of Economic Literature, dubbed the period from 1980 to 2005 "the age of Milton Friedman." Harvard University economist Andrei Schleifer described this era of greater reliance on free markets and privatization, as arguably the period of greatest economic advance for mankind in world history. It would be hard to argue against that. As freedom and free markets were on the march, more than 1 billion people worldwide, mostly in China and India, moved out of poverty. Tens of trillions of dollars of new wealth were created worldwide.

But the last decade could be described as the comeback of socialism. In response to the financial crisis, nations foolheartedly turned to central governments to steer them out of crisis. Government debt, spending and regulatory activity soared all across Europe and in the United States. The Keynesian model that government welfare spending as a "stimulus" came storming back in vogue — nowhere more so than in the United States.

Many countries, including Greece, Italy, Spain, Portugal and France — as well as the United States — experimented with quasi-socialist governments. Now the bitter price is being paid.

This more than anything else explains why the world is twisting in financial turmoil in recent weeks. Not just Greece, but at least a half a dozen nations appear to be on the verge of bankruptcy because they can't afford the social welfare states they have, and the bills are coming due. The socialists are getting hammered..

Shortly before he died, Milton Friedman lamented: The enduring lesson of the 20th century is that socialism is a failure and free markets are a success. But the politicians keep advocating just a little more socialism." That is precisely what is ailing the world economy today.'

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