The latest Ideas Matter update from Max Borders highlights a video of Nobel Prize-winning economist Gary Becker discussing his Nobel Prize-winning colleague Milton Friedman:
Beware of economists on TV and in the paper. Most of them are soothsayers. Most of them don’t practice economic science with humiity. And most of them rely too heavily on theory, as Gary Becker says that his teacher, Milton Friedman, warned against. Why should we believe Friedman and Becker?
What was so great about Milton Friedman is that he insisted on a close relationship between theory and evidence. This, after all, is how science proceeds. It should be no different for social sciences, despite some of the inherent vagaries and imbedded assumptions in these fields.
That is how Friedman was able to make such quick work of Keynesian theory. The evidence just didn’t support what Keynes had put forth. Of course, Hayek and the Austrians criticised Keynes on separate theoretical grounds and much of that critique holds today. But Friedman’s contribution was to look at the way the world actually works — in as much as possible.
