Saturday, April 19, 2014
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Les Friedman se sont trompés

BERKELEY – J'ai deux livres sur mon bureau : celui tout récent du journaliste Timothy Noah, The Great Divergence: America’s Growing Inequality Crisis and What We Can Do about It [La grande divergence, non traduit en français]et le classique de Milton et Rose Friedman, Free to Choose: A Personal Statement [La liberté du choix].A considérer ce dernier, il est évident qu'aujourd'hui les Friedman auraient bien plus de mal qu'en 1979 à dénoncer l'interventionnisme de l'Etat dans l'économie.

A cette époque, les Friedman ont formulé trois hypothèses sur le fonctionnement de l'économie. Elles pouvaient sembler plus ou moins vrai à ce moment là, mais elles apparaissent maintenant carrément fausses. Leur choix en faveur d'une faible intervention étatique reposait essentiellement sur ces hypothèses maintenant largement invalidées, car l'économie ne s'y plie pas.

Première hypothèse : les difficultés macroéconomiques sont dues à l'Etat et non à l'instabilité des marchés, ou plus exactement la régulation macroéconomique nécessaire pour parvenir à la stabilité économique est simple et facile à appliquer.

Les Friedman ont presque toujours formulé cette hypothèse sous sa première forme en disant que l'Etat est à l'origine de la Grande dépression. Mais si l'on creuse cette idée, on s'aperçoit qu'en réalité ils font référence à la deuxième formulation : chaque fois que l'instabilité des marchés menace de causer une dépression, l'Etat peut l'éviter ou susciter un redémarrage rapide simplement en achetant suffisamment d'obligations pour inonder l'économie de liquidités.

Autrement dit l'intervention stratégique de l’Etat pour assurer la stabilité macroéconomique doit être directe, mais minimale, les autorités veillant simplement à maintenir un taux de croissance constant de l'offre de liquidités. Pour les Friedman, l'intervention agressive et généralisée de l’Etat est totalement injustifiée, alors qu'elle est nécessaire aux yeux des keynésiens pour gérer la demande agrégée et nécessaire selon les partisans de Minsky pour faire face au risque financier.

Les véritables libéraux n'ont jamais cru que les Friedman défendaient réellement l'économie de marché et un système monétaire "neutre", au point que Milton Friedman et ses partisans monétaristes se sont fait traiter de "bandes de socialistes" par Ludwig von Mises, une expression qui a fait mouche. Mais quelle que soit la manière dont on la présente, l'idée que la stabilité macroéconomique n'exige qu'un minimum d'intervention de l'Etat est tout simplement fausse. Aux USA, le président de la Réserve fédérale, Ben Bernanke, a mis en œuvre des mesures friedmaniennes lors de la présente crise, mais cela n'a pas suffi à préserver le plein emploi ou à y  revenir rapidement.

Seconde hypothèse des Friedman : les effets économiques externes sont relativement limités, ou à tout le moins l'on y répond mieux avec des contrats que par l'intervention de l'Etat, parce que les inconvénients de cette dernière l'emportent sur ceux des effets externes auxquels la législation ne peut répondre avec efficacité. Ici aussi la réalité ne va pas dans le sens de La liberté du choix. Aux USA on le voit très bien dans le changement d'attitude à l'égard des erreurs médicales, les libéraux ne considérant plus les tribunaux comme le meilleur terrain pour traiter la question du risque et des erreurs médicales.

La troisième hypothèse, la plus importante, constitue le sujet du livre de Noah, La grande divergence. En 1979 les Friedman pouvaient affirmer en toute confiance qu'en l'absence de discrimination institutionnelle (par exemple les lois ségrégationnistes dans le Sud) l'économie de marché conduit à une distribution suffisamment égalitaire des revenus. C'est d'ailleurs ce qui a semblé être le cas (au moins pour ceux qui n'étaient pas victimes de discrimination légale ou de ses restes) durant toute la période qui a suivi la Deuxième Guerre mondiale.

Les Friedman affirmaient aussi qu'une protection sociale minimale pour ceux qui se retrouvent sans ressources en raison d'une malchance ou d'une imprudence et la suppression de toutes les barrières juridiques à l'égalité des chances conduiraient à la société la plus équitable possible. Les employeurs animés par la recherche du profit utiliseraient au mieux le talent et l'encourageraient, ce qui nous rapprocherait au mieux d'une société de liberté constituée de producteurs associés.

Mais ici aussi la réalité n'a pas répondu à l'espoir des Friedman. La fin de la prééminence américaine en matière d'éducation, l'effondrement des syndicats dans le secteur privé, l'émergence d'une économie fondée sur l'information dans laquelle le gagnant rafle toute la mise et le retour d'une sorte d'Age d'or de la haute finance se sont traduits par une distribution extraordinairement inégale des revenus avant impôt, ce qui tourne en ridicule le discours sur l'égalité des chances et va constituer un fardeau pour la prochaine génération.

Il y a une génération, au moment de sa publication on ne pouvait exclure que le programme politique exposé par les Friedman dans La liberté du choix soit une bonne solution. Un gouvernement peu interventionniste, n'offrant qu'une protection sociale minimale, des tribunaux efficaces et des liquidités en volume toujours croissant conduiraient à une société relativement égalitaire et prospère, sans chômage, offrant les mêmes chances à tous. Mais cela ne s'est pas passé ainsi, tel n'est pas le monde dans lequel nous vivons.

Traduit de l’anglais par Patrice Horovitz

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  1. CommentedLudwig van den Hauwe

    But note that Milton Friedman (with Anna Schartz) in 1986 published a paper "Has Government Any Role in Money?" in the Journal of Monetary Economics in which he came perhaps as close as he ever did to the viewpoint of the "real libertarians", as you call them, by concluding that "leaving monetary and banking arrangements to the market would have produced a more satisfactory outcome than was actually achieved through governmental involvement." The view of these "real libertarians" is that we are experiencing the present troubles because of credit expansion and interest rate manipulation engineered by the central banks (among other forms of intervention) and that the true solution is to be found not at the level of monetary policy, but at the level of institutional reform, in particular the abolishment of central banks and the establishment of free banking. It is quite understandable that academics at leading universities cannot afford to risk their reputations by discussing such revolutionary proposals, given that these are poltiically totally infeasable in the forseeable future anyway, but I haven´t heard any one good theoretical argument refuting the views of the free bankers. The free banking argument is a particular application of Mises´ more general argument tending to demonstrate the impossibility of socialism; prices are bottom-up social phenomena and when you start manipulating them (or trying to do so) in a top-down fashion, the result can only be chaos and economic discoordination.

  2. CommentedDarko Oracic

    Milton Friedman criticized central banks for creating economic instablity by overreacting. Central bankers tend to overreact because they lack both knowledge and patience. No other theory describes better what has happened in recent years. Both the Fed and the ECB overreacted to high inlation (caused by previous overly expansionary policy), raised interest rates too high and caused the Great Recession. The fact that leading economists don't see the obvious reflects the sorry state of today's macroeconomics. We miss Milton Friedman dearly.

    1. CommentedCraig Hardt

      Actually, Darko, the great recession happened because of artificially high prices in the U.S. housing market stemming from the financial innovation known as mortgage-backed-securities (MBS). As interest rates were low, investors looked for higher yields both in emerging markets and in bond-like securities created to satisfy demand for these supposedly less risky (relative to equities) assets. Unfortunately, as ratings agencies continued to offer high credit ratings on these MBS, most failed to realize that mortgages were being handed out like candy to home buyers completely incapable of staying on top of their overpriced mortgages. When the inevitable crash in housing prices happened, investors were suddenly left with huge amounts of valueless MBS. Due to another financial innovation (credit-default swaps) they were usually highly leveraged in these untenable investment positions. The result was the collapse of the financial markets around the world, and subsequently, the great recession.

      Central banks raising interest rates had nothing to do with causing the great recession. In fact, had the raised interest rates earlier on during the housing boom, it may have limited exposure in the financial markets to MBS as more investors would have put their money in traditional bonds.

  3. CommentedJonathan Lam

    Gamesmith94134: Re-Capturing the Friedmans

    “Alas, that did not happen. And it did not happen because the world described by the Friedmans is not the world in which we live.”

    Friedman did give credits in the monetarism that small-government libertarianism in stimulating the economy in selling bonds to produce growth and stabilize the social development. The theory on liquidity and sustainability came across the margin of affordability made the resources finite and perpetuity on growth should aligned with its modifications like inflation and deflation to adjust the pace of growth. However, our government sees monetarism as the tool to eliminate inflation and deflation; and the recent social safety net like education and medical shifted to commercialism that broke line; since then, the government attempt to shift its cost to the public. Later, the sub-prime rate lending to house laid a heavy load on the government when the economy was overly stimulated with lesser employment or out-sourced from the factories, which caused the stagnated labor cost and created a downward spiral in the margin of affordability that the most middle class supports and grows on.

    At first, the suppression of recession by cutting interest rate and reality of the support of the margin of affordability, our government lied about the reality of the sub-prime housing debtors which relied on the inflated price of their house to sustain its margin of affordability. The capitalization of the real estate market collapsed after the halt of inflation and stagnated labor cost and job positions were out-sourced.

    Secondly, the cut of the support from the middle class in the financial make most capital market search on the short term investment and commodity market, it made the capital market worse that it went to the emerging market nations for a short term investment and lesser for the local development after the local real estate market turned sour.

    Thirdly, Americans, the consumers of the world, were heavy in debts after the credit exhausted. Then the flight of cash flow toward the emerging market nations took the credits with them when the banks are insoluble and bankrupted. Our government bailed them out with trillions of bonds that FED loaned with low interest. Then, the argument on the sustainability and liquidity is greatly disrupted by the margin of affordability that our government took its liberty to marketing the capitals of social goods like education and medication to fit its budgets.

    Perhaps, what we talk about undercutting the recession or depression, government participates in shifting the cost of social goods to its publics and deforming the nature of the business cycles like inflation, recession that made monetarism works on its own merits. I certainly said we deserve a depression locally and globally if we subjectively let monetarism works to adjust to all claims including government’s too.

    May the Buddha bless you?

  4. Commented Elizabeth Pula

    Here's a link to a super little interview that adds a bit of aspects and in depth perspective to DeLong's super little article:http://www.washingtonpost.com/blogs/ezra-klein/post/how-economists-have-misunderstood-inequality/2012/05/03/gIQAOZf5yT_blog.html

  5. Commented Elizabeth Pula

    Absolutely excellent analytical report, and methodology report on EPI.org.Written by Lawrence Mishel and Natalie Sabadish-05/02/2012
    http://www.epi.org/publication/ib331-ceo-pay-top-1-percent/
    The report is comparison of top 350 CEO salaries and options etc. to production workforce since the 1970's and through 2011- As factual as can be available from as reliable sources as possible.

  6. Commented Elizabeth Pula

    The only problem today is that we are no longer dealing with market economies. There is no egalitarian distribution of income because we are dealing with various systems of organizational rotating exploitation. Economies are only one activity of the systems.

  7. CommentedLanny Arvan

    "But, whatever its packaging, the belief that macroeconomic stability requires only minimal government intervention is simply wrong. In the United States, Federal Reserve Chairman Ben Bernanke has executed the Friedmanite playbook flawlessly in the current downturn, and it has not been enough to preserve or rapidly restore full employment."

    The above seems to be a closed economy analysis. Don't we need as well an open economy perspective and consider what European (and Asian) central bankers have done? Perhaps in the 1930s, a closed economy analysis was sufficient. How can one believe that now? I'm no fan of Milton Friedman, but were he alive today wouldn't he be talking about global monetary policy?

    He would then lose on the point that the right stabilization was straightforward and minimal, but he could still win on the idea that if the central bankers coordinated in the right way they could restore things.

  8. CommentedPaul A. Myers

    What now seems desirable is that government through fiscal and other policy techniques maintain a constant level of growth of demand that would result in a steadily growing employment base. Monetary policy should be a subordinate tool used to attain the overall goal.

    A very overlooked aspect of government regulation and programs is that government is the big instrument of risk reduction. Risk reduction is crucial to stable growth and provides the social framework in which private capital can earn its best rate of return. The striking example of government's role in risk reduction was the great success of postwar government-sponsored mortgage finance, which was possibly the single biggest contributing factor to sustainable, stable economic growth.

    That the Bush administration so recklessly supported the undermining of this pillar of stability still does not get the level of opprobrium that it so richly deserves, probably because so many other failures have crowded this failure to the sidelines.

    The policy architects of the modern Republican party have used Friedmanism as a pretext to undermine the effectiveness of government in what too often is just a cheap arbitrage against public policy and public welfare.

    Everything around us in the economic sphere says that Keynesian demand management works and that over-reliance on monetary policy as a silver bullet doesn't. And way too many Democrats in Washington DC simply don't grasp the Keynesian framework; they think the chairman of the Federal Reserve is the sole official responsible for the prosperity of the American economy. Then of course we could start talking about Europe....

  9. CommentedKonrad Kerridge

    The Author understates his points. Perhaps because he is a product of and immersed in US-based economic thinking and perhaps is targeting US readers. I believe there are few non US educated serious economists (perhaps a few, say in the UK) who would still argue that the points that Friedman made provide the most useful economic framework. To most, this is an old discredited paradigm of economics. To many economists outside of the US, I suspect that the importance and omnipresence of market failures means that they are central to any new paradigm of economics. Additionally, I suspect that the dominant non-US view is that 'laissez faire' economics CREATES inequality and can also create poverty when and where growth is inadequate, which is frequently. Finally I suggest that Freidman's view that economics and politics can be separated and that only minimal government involvement is required in markets is anachronistic. Government failures are acknowledged as are market failures but it perhaps is not useful to think of them as such separate entities in such an interwoven system.

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