Tami and I were talking about various things Yemen, and we drifted onto the topic of economics. I, of course, had several opinions to offer on the subject:-) I mentioned my two fantasies about this place, that someone would admit that even if the state of Israel had never been formed, this place would still be a mess, and the related point that it is the Yemenis that have screwed this place up and that they are the ones that will have to fix it. I doubt I’ll hear those things…
We continued talking and I brought up the example of Estonia and how well they are doing. It’s one of my favorite stories. After they were separated from the Soviet Union, they were a mess and dirt poor. The leader (whose name escapes me at the time) knew he had to do something, so he started reading. Fortuitously, he read Milton Freidman’s “Capitalism and Freedom,” thought that it made a lot of sense, and started to implement the polices that Milton outlined. His advisors told him that no one does these things, certainly not unilaterally, but the leader was too politically naive to understand why some people (and interest groups) would be against these policies. The end result has been a dramatic improvement in Estonia’s economic status. It is now called the Baltic tiger…
Tami recoiled a bit at the mention of Milton, and I asked her why. “I dunno, it just sounds like anarchy to me…” That seems to be a pretty common perception of him and I’m not too sure where it comes from. Early on in his career, when asked what was needed for strong growth in a country he responded, “Free trade, sound monetary policy, and freedom.” Late in his life, when asked the same question he replied, “Rule of law, rule of law, rule of law.” Milton was a strong proponent of a functioning government. It was needed to secure the rights of the citizens. This is a basic libertarian principle, but many people seem to ignore or forget it. There is a big difference between libertarians and anarchists.
If nothing else, we should all give thanks to Milton Freidman for setting down what sound monetary policy is. His analysis of the great depression showed how critical the Federal Reserve is in avoiding, or at least minimizing, depressions and fighting inflation. Thanks to his economic insights, we have not had another massive depression. Odds are that we will never have another as long as his monetary policies are followed. Regardless of your political leanings, you have to like that…