Milton Friedman was one of the most influential economists of the last century. Friedman was a prominent advocate for free markets. Defying the economic orthodoxy of his day—the theories of John Maynard Keynes—Friedman developed a theory known as monetarism. Monetarism states that the government can ensure economic stability by regulating the amount of money in circulation. Let’s learn more about him! Or not. You have the freedom to choose.
By analyzing questions, you can see patterns emerge, patterns that will help you answer questions. Qwiz5 is all about those patterns. In each installment of Qwiz5, we take an answer line and look at its five most common clues. Here we explore five clues that will help you answer a tossup on Milton Friedman.
MONETARY HISTORY OF THE UNITED STATES
Friedman wrote Monetary History of the United States, 1867-1960 with fellow economist Anna Schwartz. The book advocated for monetarism and claimed that the Great Depression resulted from the Federal Reserve’s monetary policies.
CAPITALISM AND FREEDOM
Friedman’s 1962 Capitalism and Freedom advanced some of his most notable theses. Friedman viewed capitalism as a central aspect of America’s liberal society. Capitalism and Freedom advocates for free market reforms to various aspects of society. Among Friedman’s policies are an end to mandatory licensing for physicians, school vouchers, and a negative income tax.
THE CHICAGO SCHOOL
The Chicago School is an economic school of thought founded at the University of Chicago by the economist Frank Hyneman Knight. Milton Friedman was a student of the Chicago School and is closely associated with its free market beliefs.
NATURAL RATE OF UNEMPLOYMENT The natural rate of unemployment is a concept developed by Friedman and Edmund Phelps. The natural rate of unemployment is an equilibrium in the unemployment level. Friedman and Phelps argued that attempts to decrease unemployment beyond the natural rate would cause inflation. The theory challenged the orthodoxy of the Philips Curve: the theoretical negative relationship between inflation and unemployment.
PERMANENT INCOME HYPOTHESIS
One of Friedman’s central theories is the permanent income hypothesis. According to the permanent income hypothesis individuals spend money based on their estimate of their expected long-term average income. This is in contrast to Keynesian theory, which views consumption as dependent on after-tax income. There are policy ramifications for the permanent income hypothesis. If it is true, short-term increases in an individual’s income will not substantially change their spending habits.
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Quizbowl is about learning, not rote memorization, so we encourage you to use this as a springboard for further reading rather than as an endpoint. Here are a few things to check out:
Friedman’s theories have had an impact outside of America.
Milton Friedman advocated policies for all aspects of society, including the military.
Check out the Investopedia article on the Natural Rate of Unemployment for an overview of the subject.
For a brief primer on monetarism check out this video!
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