It's Keynes over Friedman as Democrats successfuly push the largest economic stimulus package in US History against the failure of the "free" market to manage executive pay.
But Friedman wasn't always so Reagon-o-miacal.
Milton Friedman's views changed radically, from New Deal proponent of taxes and government oversight to Reagonomic opponent of taxes and government regulation. His work is predicated on the economically simple notion that inflation is a phenomenon driven by money supply; in other words the more dollars we have, the less we value each individual dollar. This is clearly is one of the fundamental drivers of inflation, but it is far from the sole driver of inflation. Globalization seems to ever minimize the significance money supply plays in infliation as long as the increase in money supply remains steady. But this money supply fundamental seemed to lay the groundwork for Friedman's increasingly emphatic support of market deregulation. Government regulation become something of a scapegoat for inconsistences between Friedman's hypothesis and the phenomenon in practice. The global economy, however, seems far too complex for Friedman's work to shape fiscal policy rather than simply inform fiscal policy. This is a reason why Reagonomics, as shaped by Friedman's work, is doomed to fail in practice.
The truth is that the market is probably a far better manager of the economy than a partisan Government spread thin. If a free market is simply defined as a market in which citizens and companies do what they do best and "trade," however, the idea of a "free market" - a market free of regulation -fails in practice.
This failure has two clear determinites First, the free market does not exist. Period. In the global economy, a free market is borderless. It lacks tarrifs and other protectionist policies that benefits, for example, one country's workforce over another. Second, it relies on the notion of people doing what they do "best." Doing the best hinges on CEO's making business decisions that are in the best interest of the company and all its stakeholders (shareholders, stakeholders, etc.). Equally harmful are the common practices of nepotism, favoritism, indivudal greed, conflicts of interest, etc. I think possibly the stock market itself (or at least the blind focus on shareholder value) and likely derivatives markets hinder company's from achieving "the best."
There is a reason that most economic teachers teach "laissez faire" economics with apples and oranges. It's clear and it works. Unfortunately the global economy is far more than apples and oranges. In the absence of transparency, the execution of a successful deregulated economy requires far more hands than our Government as it stands has to offer.
FREE MARKET (minus) TRANSPARENCY = EXECUTIVE FREE FOR ALL.
