Is the University of Chicago responsible for America’s growing economic inequality and its recent recession?
That’s the argument of Kenneth M. Davidson, a senior fellow at the American Antitrust Institute, and the author of the new book Reality Ignored: How Milton Friedman and Chicago Economics Undermined American Institutions and Endangered the Global Economy.
Friedman taught at U of C from 1946 to 1977, winning the Nobel Prize in Economics the year before he retired. His advocacy of laissez-faire economics influenced conservative politicians from Barry Goldwater to Ronald Reagan.
Friedman’s contention that less government and lower taxes are the keys to economic growth formed the basis of supply-side economics.
Here's Davidson's take on Friedman:
Since Friedman published Capitalism & Freedom in 1962, Chicago School Economics has created one side of America's political debate. Davidson discusses how these views have framed policies for conservative politicians from the time of Barry Goldwater and Ronald Reagan to the modern tea party. He demonstrates how these policies have damaged American society by redefining the roles of federal, state and local governments. Davidson also argues that Chicago theories have persuaded American businesses to focus on short-term profits rather than innovation and efficiency which would help create jobs and lead to a more vigorous economic future.
The Chicago School was a group of like-minded economists, founded Friedman. It also included Friedrich Hayek, one of the fathers of neo-conservatism, whose adherents agitated for invading Iraq in 2003.
It's one of the mysteries of Chicago that such a Democratic city could incubate a school so influential in the conservative movement. U of C economists had only to travel a few miles, to ghettoes of Englewood or the shuttered steel mills of South Chicago, to see the consequences of Reaganomics.
But Hyde Parkers have rarely been interested in anything happening outside Hyde Park, and U of C scholars have always found theory more interesting than experience.
