Tuesday, July 31, 2012

The Milton Fountain

A few weeks before our wedding, Dhanno-ki-Amma had gifted me a book that I was surprised I had not come across before. The book changed my life in many ways -- it gave me a completely different perspective on what one should believe in.  After I had read Ayn Rand's The Fountainhead for the first time, one could say, that it became one of the many first steps that I took, in the direction of becoming a Libertarian. The second, came much later, when I realized that I didn't really know what type of a Libertarian I really was. As they say, there is a unique type of Libertarianism for every unique Libertarian there is.

One such unique libertarian was Milton Friedman. Today is the day when he would have turned hundred. And what a century it has been.

There is perhaps no one in the field of economics that has influenced modern thought like Friedman did. He was called one of the most influential figures of the modern world in the second half of the last century. He was an adviser to many presidents and prime ministers, most notably -- the two that influenced modern conservatism like none other -- Ronald Reagan and Margaret Thatcher. And other than the rather ignored fact that he won the Nobel memorial prize in economics, which everyone assumes automatically, he came up with the modern theory of monetarism, which in my Desi-speak means the following -- Any government, should stay the hell out of the people's business of doing anything productive, and if it would really like to have a control valve of sorts over the people it governs, it should be in possession of a slightly leaky faucet, to slowly create money. And then, it should stay the hell out. Of the people's business. Of being productive.

When you read about the man, Friedman does not come across as a crazy rifle wielding, government hating, horse riding, cabbage farming, moo-milking crazy nut-job, that most of us Libertarians are made out to be. He seems very practical about philosophies, to the extent that he was willing to "fine tune" his beliefs if the process gave him clarity. Of course, like many other Libertarians out there, he believed in legalizing drugs and sex, minimizing government and the military, and allowing the free market to flourish. But, unlike many others,  he believed that the federal reserve, given that it existed, should play a limited role. And that, earned him many converts, including the people who run the current monetary system.

It is hard to judge a fountainhead. More so, if the impact of his work takes centuries to reveal, while you live your life barely a decade away from his passing. So, things like these, are best left to historians who look back at things without the confusion that too much information tends to create.

Many years ago, I had asked Kailash the milkman, (who appears in one of my short stories, Bagpiper Karma) why he adulterated milk with water. He had been in a good mood that day, and so, he had told me his secret.

Apparently, as the calf gets older, it gets off the udder. And since the milk is mainly for the calf, the cow produces less, while the number of customers the milkman has, stays the same. So, he sends his cows to the field, hoping that at least one, would hit a bulls-eye. And, to keep his customers happy while the next cow comes home, he puts a little bit of water in the milk. But, he always makes sure that he does not add too much water too quickly, since it is easy to get caught that way.

What Kailash did, was not that bad really, since the alternative is complete chaos. In small town India, where milk comes next after water, people like him keep the peace.

Many years later, as I learned the few things that I know about economics, I learned that the central banks around the world do pretty much the same thing that Kailash did. The number of resources in the world, is finite, while the population keeps increasing, and everyone likes to carry around nice looking wallets. As wads of cash have to be produced at short notice, governments print money. And every time the press turns, inflation is created. After all, if there was no money, there would be complete chaos. So, a little dilution, may not be such a bad thing after all. The trick is to do it in small steps. And that is what Friedman had recommended.

Does that mean that I am going to call Milton Friedman the "Kailash" of the world economy? Perhaps not, since it makes my life really difficult if I have to explain free drugs and sex with a bovine analogy. So, I will let the cows explain all that to you. When they come home.


  1. Your posts are always a delight to read, desi babu. Only wish that you would shed the shroud of anonymity.:)


    1. Janani: Do you know, the wisest quotes are attributed to a person called "anonymous"? :-) Please keep visiting, always a pleasure reading your comments!

  2. Never have I read an article or post about an economist with such interest as this one. Only you could make me do that :)

  3. Loved the blog…