Bright Promises, Dismal Performance: An Economist's Protest

by Milton Friedman

The Nobel Prize winner writes here on current issues of prevailing concern to every American citizen and taxpayer, displaying the powers of analysis and expression that have made him one of the most widely respected economists in America. Edited and with an Introduction by William R. Allen.

Genres: Economics, Politics, Business

404 pages, Paperback

First published May 31, 1983

About the author

Milton Friedman was an American economist who became one of the most influential and controversial figures of the twentieth century, widely recognized for his profound contributions to monetary economics, consumption theory, and the defense of classical liberalism. A leading figure of the Chicago School of Economics, Friedman challenged the prevailing Keynesian consensus that dominated mid-century policy and instead placed monetary policy at the center of economic stability, arguing that changes in the money supply were the primary drivers of inflation and fluctuations in output. His groundbreaking permanent income hypothesis reshaped the study of consumer behavior by suggesting that individuals make spending decisions based on long-term expected income rather than current earnings, a theory that profoundly influenced both academic research and practical policymaking. Alongside Anna Schwartz, Friedman coauthored A Monetary History of the United States, 1867–1960, a monumental work that emphasized the role of Federal Reserve mismanagement in deepening the Great Depression, a thesis that redefined historical understanding of the period and helped establish monetarism as a major school of thought. His broader philosophy was articulated in works such as Capitalism and Freedom, where he argued that political and economic liberty are interdependent and advanced ideas like educational vouchers, voluntary military service, deregulation, floating exchange rates, and the negative income tax, each reflecting his conviction that society functions best when individuals are free to choose. Together with his wife Rose Friedman, he later brought these ideas to a global audience through the bestselling book and television series Free to Choose, which made complex economic principles accessible to millions and expanded his influence beyond academia. Awarded the Nobel Prize in Economic Sciences in 1976 for his achievements in consumption analysis, monetary history, and stabilization policy, Friedman became a prominent public intellectual, sought after by policymakers and leaders around the world. His ideas strongly influenced U.S. policy in the late twentieth century, particularly during the administration of Ronald Reagan, and found resonance in the economic reforms of Margaret Thatcher in the United Kingdom, both of whom embraced aspects of his prescriptions for free markets and limited government intervention. Friedman’s policy recommendations consistently opposed measures he regarded as distortions of market efficiency, including rent control, agricultural subsidies, and occupational licensing, while he proposed alternatives such as direct cash transfers through a negative income tax to replace complex welfare bureaucracies. His teaching career at the University of Chicago shaped generations of economists, many of whom extended his research and helped institutionalize the Chicago School as a major force in global economic thought, while his later role at the Hoover Institution at Stanford University provided him with a platform to continue his scholarship and public advocacy. Beyond technical economics, Friedman’s clarity of expression and ability to frame debates in terms of individual freedom versus state control made him one of the most recognizable intellectuals of his era, admired by supporters for his defense of personal liberty and market efficiency, and criticized by detractors who accused him of underestimating inequality, social costs, and the complexities of government responsibility. Despite the controversies, his impact on the development of modern economics was immense, reshaping debates about inflation, unemployment, fiscal policy, and the role of the central bank. His writings, lectures, and media appearances consistently reinforced his belief that competitive markets, voluntary exchange, and limited government intervention offer the most effective means of promoting prosperit

Reviews

[John · Rating 4 out of 5]

There is a surprising lack of good economic commentary these days. Noah Smith at Bloomberg is worth reading, but, otherwise, Paul Krugman, New York Times polemicist, has largely obliterated Paul Krugman, excellent academic economist, much as Darth Vader slew Annakin Skywalker.

It wasn’t always like this. There was a time when leading economists would write for a mass audience, commenting on the issues of the day, and applying economic principles to them. If you can find collections of these articles and read them in order, not only do you get a decent course in economics, but you also get a good education in America’s post-war economic history. These six books are a suggested guide.

Henry Hazlitt was a leading journalist who developed a keen interest in economics. His book Economics in One Lesson, first published in 1946, remains an excellent introduction to the subject for the general reader.

From 1946 to 1966, he commented on the economy for Newsweek in his ‘Business Tides’ column. These have now been collected together and are available in a book called, well, Business Tides. In it, Hazlitt covers the recession which followed World War Two, the recovery in the 1950s, and the boom of the mid-1960s which was already causing him concern by its inflationary nature in 1966.

Milton Friedman is one of the great economists. He worked both at the highest level of abstract, academic economics, and was also able to communicate economic ideas to a mass audience. His books Capitalism and Freedom and Free to Choose remain essential reading for anyone trying to understand the relationship between free markets and free people.

The liberal yin to Friedman’s free market yang was Paul Samuelson. Like Friedman, Samuelson worked at both the highest level of academic, economic abstraction, and in communicating his views to a wider audience. If you studied economics at college, the chances are that you used either Samuelson’s textbook Economics, or a more recent version by William Nordhaus which carries it on.

Between 1966 and 1981, both men wrote columns for Newsweek (Friedman continued until 1984). Many of these can be found in four books, now sadly out of print, but still attainable for a reasonable price. An Economist's Protest picks up Friedman’s columns from 1966 to 1974 with Bright Promises, Dismal Performance taking them up to 1982. For Samuelson, The Samuelson sampler and Economics from the Heart respectively cover the same periods. The two men, good friends in real life, offer differing perspectives on a period which covered the end of the post-war Golden Age, Stagflation, and the rise of Reaganomics. The economics of Friedman eclipses that of Samuelson.

Like Samuelson and Friedman, Gary Becker was a Nobel prize winner in economics. Again, he was a first rate academic economist who applied economic principles to a variety of fields, from the family to crime to education.

From 1985 to 2004, he wrote a monthly column for Business Week. The first eleven years worth are collected in The Economics of Life. This was a period when, following the experiences of the 1970s, macroeconomic intervention was frowned upon and a consensus of sorts had formed around free markets. Reflecting this, Becker’s columns focus more on microeconomic issues such as crime and discrimination. Here you get accessible distillations of the often math heavy academic work which won him his Nobel prize and made him one of the most influential economists of the last three decades. Every Freakonomist is following in Becker’s footsteps.

These six books offer a course in both economics and the economic aspects of post-war U.S. history. They also offer a window on a time when debate about these issues was, perhaps, less shrill than it is now. It was also, probably, more fruitful.

[Steven H · Rating 5 out of 5]

ANOTHER COLLECTION OF FRIEDMAN'S "NEWSWEEK" COLUMNS

Milton Friedman (1912-2006) was an American economist who taught at the University of Chicago (and was the leader of the "Chicago school"); he received the Nobel Prize in Economics in 1976.

He wrote in the Preface to this 1983 book, "When my... publisher... pressed me for permission to bring out an updated collection of my columns for Newsweek, I was amazed to find that I have written more than 275 columns since starting my tri-weekly column in 1966---half of them since an earlier collection ('There's No Such Thing as a Free Lunch')... was completed. I recalled with amusement my initial concern that I would soon run out of subjects to write about. No such thing. The problem has rather been an embarrassment of riches generated by the course of events... The same principles and fallacies recur, always in a new and frequently deceptive guise."

He suggested that a governmental agency such as a consumer protection agency "might work for a brief period of time, but after the initial, faddish interest in the project dies down, the producers will move in with pressure for exemptions and other special rulings." (Pg. 23)

He argues that when a corporate executive decides to take action for reasons of "social responsibility," he is "taking money" from the stockholders, the employees, or the consumer. "He has the right to promote what he regards as desirable moral objectives only with his own money." (Pg. 31) He also asserts that, even with discrimination, African-Americans are better off under our present system than they would be under alternative kinds of systems, "and changing the system isn't going to eliminate people's prejudices." (Pg. 53)

He distinguishes between being "pro-free enterprise," and being "pro-business" (which, he notes, always in practice means "pro-EXISTING business"). He notes that tariffs are anti-free enterprise, but pro-existing business. (Pg. 130)

He admits that corporations DO exert "too much power." But he adds that they typically exert that power "by their ability to influence government rather than through the marketplace." (Pg. 133) He states that a private enterprise system differs most from a government-controlled system in that a business can make a profit OR A LOSS, whereas "If Amtrak loses money, it is more likely to get a larger appropriation from Congress than to be forced to change its ways." (Pg. 177)

The continual rise of government spending persuaded Friedman "to be in favor of tax reductions under almost any circumstance." If a tax cut threatens bigger budget deficits, "the political appeal of balancing the budget is harnessed to reducing government spending rather than to raising taxes." (Pg. 221) He later states again, "I favor tax cuts...at any time for any excuse in any way." (Pg. 296)

After describing the failure of central planning in Britain, he suggests that "The real issue is not planning vs. no planning, but what kind of planning, by whom, for what purpose." (Pg. 284) He says that the "economic miracle" that has been the United States was not produced by socialized industries, "it was produced by private enterprises in a profit-and-loss system." (Pg. 366)

Friedman's pointed opinions are always presented more concisely in his columns, than in his. Fans of him, or of a free market, will enjoy this collection.

[Russell Choy · Rating 4 out of 5]

Good introduction to Friedman - I’m limited in my understanding of course. Serves much the same purpose as Sowell’s Dismantling America: to compile Friedman’s column essays into a bunch for easy reading and in this regard it succeeds. But, for the same reason, it doesn’t have a central argument and I can’t really fault it for being this way.