In one of the most shocking and eerie moments in the history of Congress, the ghost of Milton Friedman recently completed an appearance on Capitol Hill before the House Committee of Government Oversight and Reform. Appearing just eight days before Halloween, Friedman’s ghost admitted that markets weren’t perfect and that sometimes people make mistakes.
"But wasn’t your whole life a rosy, the glass is always filled to the brim Pollyanna paean to the power of markets and the evil of regulation?" Chairman Waxman demanded of the ghost.
Not at all, Friedman replied. "That’s a parody of a parody," he said. But Friedman was forced to admit in a tense exchange that recent events had forced him to reconsider some of the views he had held for his 94 years on this earth.
"From my new perspective up above—" Friedman began before being interrupted.
"You’re sure it isn’t down below?" Waxman interjected.
"Whatever," the ghost replied. "From my new perspective, I can see I might have been wrong. Markets aren’t perfect. Government is. We need a stimulus package. And a more aggressive Fed."
Some witnesses to the testimony felt that these remarks about the Fed cast doubt on the integrity of the ghost’s testimony. But Waxman seemed energized by what seemed to be a confession.
"That’s the spirit," Waxman replied. "I’m glad you finally can admit that you were wrong. And while you’re at it, admit that the Great Depression wasn’t caused by a contraction in the monetary supply but by a naive belief in laissez-faire capitalism that prevented Herbert Hoover from doing anything when the economy collapsed."
At this point in the questioning, the phantasm flickered and faded, then disappeared. Some claim the whole episode was merely a pre-Halloween bit of video editing. But others insist it was real. After all, Alan Greenspan had admitted that his whole intellectual life was a lie. How could anyone, even the great Milton Friedman, fail to see the light when it was so obvious to so many?