Norberg on Klein on Friedman

Here’s my colleague Johan Norberg setting the record straight on Milton Friedman’s view on the role of crisis in social change.

I always thought Friedman’s view was plainly true. In a complex system with countervailing interest groups, the status quo is generally a kind of relatively stable equilibrium. So more than super-marginal policy change is exceedingly difficult. However, every now and then, some kind of salient failure or breakdown in the system breaks the stalemate and people around look for new answers. The coalition that wins is going to be one that has some well-thought-out answers prepared and ready for the airwaves. That’s why it’s important to do serious work on possible policy reforms that aren’t politically feasible in the current climate. A brief “policy window” just might open up, and if you’re ready with a good idea, you might be the first one to jump through.

Note that this is a completely ideologically neutral idea. Those who have tried to use the collapse of Enron, say, or the subprime mortgage fiasco, to implement big new regulatory changes are playing precisely this game. And global warming is surely the biggest crisis play in recent memory. It won’t work, and I think the failure of social security reform shows why. You need actual felt need, not the over-hyped prospect of future pain, which, given the myopia of democracy, might as well be after the heat death of the sun.

Johan’s excellent, comprehensive rebuttal to Klein is here.