By Dan Kervick
Brad DeLong says he often wondered why Milton Friedman was willing to accept the need for government regulation in the world of money and banking, but not elsewhere:
In my rare coffees and phone calls with Milton Friedman, I found I could distract him whenever I was losing an argument by saying: “Why is it that the government needs to intervene and keep the flow of liquidity services provided to the economy growing along a smooth path? Why must there be a quantitative target achieved by government for the path of the liquidity services industry–commercial banking–when there must not be a quantitative target for kilowatt hours or freight-car loadings?”
By Dan Kervick
Paul Krugman is justifiably appalled at what he calls the “war on the unemployed”, the accelerating right-wing campaign to subdue, discipline and pauperize the jobless. Yet there is nothing new in this campaign. Economic conservatives and market fundamentalists have always tended to believe that the private enterprise system is both self-correcting and stringently just, and that unemployment results from a misguided combination of indulgent maternal do-gooding and inept government interference with the austere and efficient rectitude of market operations. The fundamentalists believe unemployment happens because artificial minimum wage laws prevent wages from falling as far as they need to fall to clear the labor market, and that unemployment insurance compounds the problem by seducing potential workers into an unsustainable, dead-end limbo on the dole when they should be swallowing their strong laissez faire medicines and the bitter wages that go with them. After all, if these dregs and flops were worth more handsome wages, then the Invisible Hand would have already dispensed those wages to them, right?