Recently Sen. Rand Paul, potential presidential candidate and self-proclaimed expert on monetary issues, sat down for an interview with Bloomberg Businessweek. It didn't go too well. For example, Paul talked about America running “a trillion-dollar deficit every year”; actually, the deficit is projected to be only $642 billion in 2013, and it's falling fast.
But the most interesting moment may have been when Paul was asked whom he would choose, ideally, to head the Federal Reserve and he suggested Milton Friedman — “he's not an Austrian, but he would be better than what we have.” The interviewer then gently informed him that Friedman — who would have been 101 years old if he were still alive — is, in fact, dead. OK, said Paul, “Let's just go with dead, because then you probably really wouldn't have much of a functioning Federal Reserve.”
Which suggests an interesting question: What ever happened to Friedman's role as a free-market icon? The answer to that question says a lot about what has happened to modern conservatism.
For Friedman, who used to be the ultimate avatar of conservative economics, has essentially disappeared from right-wing discourse. Oh, he gets name-checked now and then — but only for his political polemics, never for his monetary theories. Instead, Rand Paul turns to the “Austrian” view of thinkers like Friedrich Hayek — a view Friedman once described as an “atrophied and rigid caricature” — while Paul Ryan, the GOP's de facto intellectual leader, gets his monetary economics from Ayn Rand, or more precisely from fictional characters in “Atlas Shrugged.”
How did that happen? Friedman, it turns out, was too nuanced and realist a figure for the modern right, which doesn't do nuance and rejects reality, which has a well-known liberal bias.
One way to think about Friedman is that he was the man who tried to save free-market ideology from itself, by offering an answer to the obvious question: “If free markets are so great, how come we have depressions?”