Daniel Moon

Milton Friedman reaction

The majority of what the panel of economists said went right over my head. I only
recognized a few terms here and there but as a whole, much of it didnt register for me. Even
when they were discussing Milton Friedmans contribution to economics, I couldnt really relate
any of it to what Ive learned. However, for the parts I did understand, I dug a little deeper. One
of the quotes from the first panelist was Everything in life is an application of price theory.
How price is affected by the fluctuations of supply and demand is one of the underlying
principles of economics. Its safe to say that it applies to everything we do on a daily basis. When
the concept of property was introduced, it yielded the need for financial security. This holds true
for people of all economic classes but its differentiated by purchasing power and behavior.
As far as supply and demand go, when a product or service is priced at a certain amount,
what naturally follows is the process of adjustment. If consumers deem a product or service is
overpriced, the demand for it will decrease. Similarly, if consumers believe a product or service
is priced at a bargain, its demand will increase. From the surface, it looks like a simple concept
but there are so many variables involved that its difficult to determine how exactly it pans out.
Friedmans approach to the unpredictable nature of economics was rather optimistic. One of the
panelists said Friedman was always enthusiastic and carried a positive attitude toward all of his
work. According to the panelist, Friedman was a very approachable person with whom anyone
could engage in an intellectual discussion.
The third panelist cited two of Friedmans written works; capitalism and freedom and a
theory of the consumption function as his favorite of Friedmans books. For the capitalism and
freedom book, some of the chapters look interesting and promising. Especially the role of
government in a free society, which reminds me of the financial crisis of 2008, the role of
government in education, which should tackle the issue of governmental intervention and how

big of a responsibility does the government hold when it comes to education. The book was
written in 1962 but the general principles would apply in todays world. A theory of the
consumption function explains the relationship between disposable income and consumer
spending behavior. Im not against the idea of reading either of these books but the language
would likely overwhelm me.
When I first heard Chicago school of economics, I simply assumed that it was the
economics department within the University of Chicago. Instead, it ended up being an economic
thought (it did originate from the University of Chicago, however). One of the main arguments
of this thought is that minimal governmental regulation makes for an ideal economy and that
letting the free market allocate resources within that economy is encouraged. Apparently this
contradicts John Keynes beliefs (a name I recognize from our class material). Basically, it comes
down to pro-governmental regulation vs anti-governmental regulation.
This begs the question, Does each individual know whats best for himself/herself rather
than what the government or intellectuals claim is best for them? Each persons utility or
measure of happiness is different. Id be inclined to agree that it should be up to each individual
to determine what maximizes his or her utility and while governmental intervention can be
beneficial in moderation, it shouldnt dictate how people spend or save their money, for example.
Intellectuals can guide the uninformed to make more sound economic decisions but in order for
each of us to maximize our utilities, we need to put in the work to figure out what we are really
looking for.