Monday, November 19, 2007

In The Shock Doctrine and Baghdad Year Zero Naomi Klein argues that the economic policies behind US foreign policy is the root cause of its problems in Iraq and elsewhere. She further argues that these policies are based on Milton Friedman and Chicago School economic models. Interestingly, Milton Friedman is said to be the "Economist who gave voice to the monetary theories which propelled the governments of Ronald Reagan and Margaret Thatcher".

There is an interesting interview with Milton Friedman billed as "his last interview the November before he died at his apartment in San Francisco overlooking the bay and the Golden Gate Bridge". In it he says:

NPQ | Even in the free market US, President Bush, at the height of his power, couldn't convince the American public to move toward privatizing Social Security.

Friedman | There is no doubt this aging issue will test the argument over the efficiency of the market versus political demands for government to step in.

On the question of whether inequality of the market might lead the less-well-off democratic majority to push for state control, I'm not so sure. The important issue is not how much inequality there is but how much opportunity there is for individuals to get out of the bottom classes and into the top. If there is enough movement upward, people will accept the efficiency of the markets. If you have [an illusion of] opportunity, there is a great tolerance for inequality. That has been the saving grace of the American system.

The Friedman's policy fails because it is hard to paint illusion of opportunity in societies where community is more important than the individual. When individuals talks to one another in coffee shops, tea houses, or chat rooms they quickly realize in world, dominated by multinationals and Wall Marts (aka Free Market) there is no opportunity.