May 24, 2004
Milton Friedman on the EU
Via Carnival of the Capitalists
I posted this comment to an entry at Insults Unpunished (on Milton Friedman's view of the European economies):
Waynetta said:
The main clincher though, is that all this untramelled growth will have to stop one day anyway. We are destroying the planet with our current ways and storing up a horrible mess for our grandchildren. Where would that fit in with Americans’ God-given role to lead the world into a better age?
I used to think that growth was impossible forever. After all, the 50,000 (or whatever) km string that circumscribes the globe will never get bigger. Finite resources, right? Well, right and wrong. True, there is so much coal, and so much bauxite, and so much crude oil. But growth is a measure of efficiency and velocity of capital. Capital is not just "folding money" as my Grandma used to say, it is the fungible representative of everything, from diapers to skyscrapers to gasoline.
If a euro is put to work 10 times in an hour instead of 1, it is ten times more efficient. Just think about this forum. There is essentially no additional cost to me to address Waynetta's claims, who lives 10,000 km from me. I don't know her postal address, I don't have to walk or drive to a post office, I don't have to employ a courier, I don't have to petition Ferdinand and Elizabeth to give me an exploration fleet. Just type a few keystrokes (in my underpants!) and click "Post It!"
To fetter the formation of capital is simply to make it less efficient. Which means in the long run higher costs and lower standard of living for those in that locus. I am not claiming that there should be no fiscal management. Managing money supply and placing a cost on the use of that money are crucial. In that vein, I advocate some regulation and oversight, such as building codes, airline industry vetting, and generally being watchful for markets which lose the word "free" as an adjective.
Waynetta, I sincerely believe that European workers (all Europeans really) would benefit from hearing more of "Go get 'em tiger!" and less of "Lions, tigers, and bears, oh my!" from their government representatives. And I say this with the same sentiment as MF above: "I wish them well".
Posted by nopundit at May 24, 2004 10:07 AM