BOOK REVIEW
AN ARGUMENT FOR LAISSEZ-FAIRE
FREE TO CHOOSE

Author: By Robert Lenzner Globe Staff

Date: Sunday, March 30, 1980
Page: ?????
Section: BOOKS

Milton Friedman thinks the way to stop inflation is to print less money and spend less of it every year. It is a simple idea - utopian really - that is hard to execute but one whose time has come.

However, that is not the only reason to plow through this personal statement on the US economy by the Nobel prize winner and household name (Galbraith and Samuelson are the other economist household names).

Friedman is the ideological standard bearer for businessmen and conservatives everywhere. He wants to get Uncle Sam out of the economy, return to greater laissez-faire and bring back growth and productivity to the US economy.

He warns that "we have gone very far in the past fifty years in expanding the role of government in the economy. That intervention has been costly in economic terms. The limitations imposed on our economic freedom threaten to bring centuries of economic progress to an end."

This nerve point has almost become a cliche. Deregulation is getting more popular every day. Oilmen who want to replace OPEC crude oil with domestic supplies complain that bureaucratic snafus over licenses cost years and money - and raise prices. Deregulation has become an anti-inflation weapon in official Washington.

Friedman calls on his eminince grise, Adam Smith, to change the rules of the game."Everyman, as long as he doesn't violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men," Smith wrote.

Of course, Smith, like Friedman, sets an ideal goal, impossible to achieve. Here is John De Lorean, former General Motors executive telling it like it is in the real world.

". . . Within our corporate walls, we engaged in business practices which were not only monopolistic, but sometimes were downright violations of our free enterprise system. We stifled competition," De Lorean told J. Patrick Wright, author of "On a Clear Day You Can See General Motors."

Friedman is a utopian about getting rid of regulation in a period of 20 percent inflation,too. The discipline needed to restrain the economy requires more regulation in the banking system, and the extension of credit, not less.

Ironically, Friedman's most brilliant insight into the mishandling of the economy was the disastrous performance of the nation's central bank, the Federal Reserve, prior to the Great Depression.

The Fed, which is supposed "To coin money, regulate the value thereof," according to the Constitution, allowed money to dry up in late 1929, rather than expanding the supply to counteract the contraction of the economy.

Friedman, recognized as an expert on the role of money in the economy, thinks the Fed should have increased the money supply and prevented the disaster of 352 banks closing in 1930 alone.

If you read only the chapter dealing with this, you will be a more enlightened citizen. It is a lesson to ponder as the greatest credit crunch since 1974-75 overtakes the economy.

On many scores Friedman makes hard sense of nonsense notions. By bringing into focus the mistakes made in Great Britain and other economies with socialistic tendencies, the former University of Chicago professor destroys the concept of nationalized industries and central planning as panaceas. They never mean higher growth or productivity.

It is enviable that Friedman has as his co-author his wife, Rose, an economist, who not only loves him but apparently agrees with his point of view and can share the defense from liberal attack.

Friedman is in the vanguard of thinkers who want to take the scalpel to government programs like Social Security which have become as basic a part of American life as football games on Sunday television. His most radical proposal is to pare down Social Security and make every American plan to take care of his own retirement.

The scary thing is that some politicians recognize that Social Security might have to be pared as part of the fight to beat back inflation.

This is a tough read, full of the ideas that make liberals vent their spleen and anti-New Dealers cheer from their executive suites.

LENZNE;03/17,19:14 GALLAG;03/31,13 B08029224