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December 28, 2006
Skousen on Friedman
Mark Skousen ends his tribute to Milton Friedman with this quip: Well did Chicago colleague George J. Stigler say of these two economists: "All great economists are tall. There are two exceptions: John Kenneth Galbraith and Milton Friedman." Cute. But Stigler, if he actually made the quoted statement, was not in fact speaking well. He was committing (perhaps deliberately, for comic effect) the logical fallacy of denying the antecedent. Specifically, Galbraith (tall, but a poor economist) would be an exception to the statement: “All tall economists are great economists” (or equivalently, “If you are a tall economist, then you are a great economist”). Galbraith can’t be an exception to the statement that “All great economists are tall,” because that second statement doesn’t rule out any number of poor economists also being tall. (Note the implication: because the second statement doesn’t imply that the tall Stigler must be a great economist, it doesn’t flatter Stigler the way it is supposed to!) On a more serious note, Skousen makes the following remark: Free-market economists such as Ludwig von Mises and Friedrich Hayek failed in their attempts to dislodge Keynesianism because they refused to do any empirical work. Skousen should know that Hayek did some empirical work, though it is fair to say that both Mises and Hayek offered mostly theoretical arguments and non-statistical historical claims against Keynesian theory. If they had offered statistical analysis, would they have succeeded in stemming the Keynesian tide? Doubtful. Serious empirical work (by the standards of the day) was done by other Hayekians, such as Lionel Robbins in The Great Depression (1934) and Philips, McManus, and Nelson in Banking and the Business Cycle (1937). Those efforts didn’t stem the tide either. Posted by Lawrence H. White at 05:38 PM in Economics
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The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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