The Trunk

The Huffington Post Defames Milton Friedman

For some reason, the left’s concerted effort to make Milton Friedman into some kind of monster continues.  The latest is the effort to pin Iceland’s collapse on his shoulders. Iris Erlingsdottir attempts to spread this meme in a recent article for the Huffington Post.  Her contention:  that Friedman somehow saw Iceland as his vision for a libertarian utopia:

In autumn 1984, the Icelandic Libertarian Association arranged for American economist Milton Friedman to visit Iceland. During this visit, Friedman gave a lecture at the University of Iceland on the “Tyranny of the Status Quo,” and debated the country’s leading socialist intellectuals—including current president Ólafur Ragnar Grímsson. This visit made a great impact on several young members of the Independence Party, including Davíð Oddsson, Hannes Hólmsteinn Gissurarson, and Geir Haarde.

Not content to sit on the sidelines, these men took action to break the government’s total control over Iceland’s media, fisheries, and banks. Hannes Hólmsteinn operated an illegal radio station, to protest against the government monopoly of broadcasting, and wrote an influential book advocating the privatization of Iceland’s main resource, its fisheries.

Davíð was made head of the Independence Party and became Prime Minister in 1991. He began a radical program of monetary and fiscal stabilization, privatization, and tax rate reduction. Corporate taxes were reduced from 50% to 18%, and the net wealth tax was abolished. The fishing quotas were given free of charge to the owners of fishing vessels. In 2002, Hannes Hólmsteinn published a new book—“How Can Iceland Become the Richest Country in the World?”—in which he set forth a plan for Iceland to become an international financial center. In 2003, the country’s main commercial banks were privatized.

Friedman saw Iceland as his utopia. “I would like to be a zero-government libertarian [but] I don’t think it’s a feasible social structure. I look over history, and outside of perhaps Iceland, where else can you find any historical examples of that kind of a system developing?”

Click on the link referring to “his utopia,” and you’ll see that Erlingsdottir’s contention is completely unsupported.  Here’s the context of Friedman said, from a 1995 interview:

I am a Republican with a capital “R” and a libertarian with a small “l.” I have a party membership as a Republican, not because they have any principles, but because that’s the way I am the most useful and have most influence. My philosophy is clearly libertarian.

There are many varieties of libertarians. There’s a zero-government libertarian, an anarchist. There’s a limited-government libertarianism. They share a lot in terms of their fundamental values. If you trace them to their ultimate roots, they are different. It doesn’t matter in practice, because we both want to work in the same direction.

I would like to be a zero-government libertarian [but] I don’t think it’s a feasible social structure. I look over history, and outside of perhaps Iceland, where else can you find any historical examples of that kind of a system developing?

Note—Friedman is talking about Iceland as a historic example, not a present-day one.  He’s not talking about the government currently in place.  He’s talking, of course, about Iceland’s largely anarchic Free Commonwealth period between 930 and 1262:

Many libertarians are familiar with the system of private law that prevailed in Iceland during the Free Commonwealth period (930-1262). Market mechanisms, rather than a governmental monopoly of power, provided the incentives to cooperate and maintain order.

In outline, the system’s main features were these: Legislative power was vested in the General Assembly (althingi); the legislators were Chieftains (godhar; singular, godhi) representing their Assemblymen (thingmenn; singular, thingmadhr). Every Icelander was attached to a Chieftain, either directly, by being an Assemblyman, or indirectly, by belonging to a household headed by an Assemblyman. A Chieftaincy (godhordh) was private property, which could be bought and sold. Representation was determined by choice rather than by place of residence; an Assemblyman could transfer his allegiance (and attendant fees) at will from one Chieftain to another without moving to a new district. Hence competition among Chieftains served to keep them in line.

The General Assembly passed laws, but had no executive authority; law enforcement was up to the individual, with the help of his friends, family, and Chieftain. Disputes were resolved either through private arbitration or through the court system administered by the General Assembly. Wrongdoers were required to pay financial restitution to their victims; those who refused were denied all legal protection in the future (and thus, e.g., could be killed with impunity). The claim to such compensation was itself a marketable commodity; a person too weak to enforce his claim could sell it to someone more powerful. This served to prevent the powerful from preying on the weak. Foreigners were scandalized by this “land without a king”; but Iceland’s system appears to have kept the peace at least as well as those of its monarchical neighbors.

The success of the Icelandic Free Commonwealth’s quasi-anarchistic legal institutions has been used by David Friedman, Bruce Benson, and others as evidence against the Hobbesian argument that cooperation is impossible in the absence of central authority.

So let’s get this straight:  Friedman attended a debate in Iceland in 1984, and then eleven years later he made a reference to an obscure period in Iceland’s history that concluded approximately 800 years ago.  For this, the collapse of Iceland’s economy is somehow his fault.

Look, people can have an honest debate about whether free market principles or other things led to the collapse of Iceland’s economy.  There’s no need to defame Milton Friedman in the process.  (Why the left would want to defame the guy who ended the military draft and brought about the earned-income tax credit is beyond me.)