Tuesday 25 October 2016

Reviews of Milton Friedman's economics idea (2)

Milton Friedman covered many fields about economics during his academic career life, he was even involved in many important policy making decisions and worked in public services several times. There is a core in his academic researches and public service career, which is small government.

The idea of a small government was very crucial at the time, as the second world war just ended and America soon went into the cold war with the Soviet Union and fought in several hot wars, including the Korean War, the Vietnam War. When a country enters a war, the government has to grow larger in order to collect resources from the national scale to fight the war, especially when facing a strong enemy.

However, once the government has grown bigger, it is very difficult to turn it back. As we can see Britain has such a government, some parts of its welfare system have inherited from the wartime government, for example, the national health service. Milton Friedman often suggested a smaller government could benefit more people and in addition, he argued that central banks do not necessarily become very active in the economy, they should use moderate monetary policy to control the price and watch the economy growing slowly and stably.

In addition, Milton Friedman had many other interest economics ideas and policy designing, such as "negative income tax", allowing illegal drugs to be sold in the market, abolishing conscription, privatizing and etc.


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