Contrary to David Ignatius's Aug. 26 column, "Bush: Raising Keynes," it was Richard Nixon, not Milton Friedman, who made famous the phrase, "We are all Keynesians now." Nixon may have been despised by the left, and defended by the right, because of the enemies he made. It was certainly not because he was anyone's idea of a conservative. In fact, by imposing wage and price controls and creating such regulatory monsters as the EPA, Nixon carved a niche for himself as one of the country's most liberal domestic policy presidents.

Far from being a Keynesian, Friedman is a classically conservative monetarist. If any one past statement encapsulates his philosophy, it is this famous Friedmanism: "Markets are smart, government is dumb." It's a premise that should properly inform all good economic thinking, but one, unfortunately, that our current Federal Reserve chairman has evidently forgotten, to the detriment of us all.

-- Mike Reeder


David Ignatius's Aug. 26 column begins: " 'We are all Keynesians now,' the conservative economist Milton Friedman once famously remarked."

Those readers who were shocked to read such a statement attributed to the leading free market economist can take comfort from the fact that the statement was a famous 1966 misquotation of Friedman by a Time magazine reporter. Milton Friedman actually said, "We are all Keynesians now; no one is any longer a Keynesian." He later explained, "In regrettable journalist fashion, Time quoted the first half of what I still believe to be the truth, omitting the second half."

The point of Friedman's statement was that while Keynes's terminology and many of the analytical details of Keynes's "General Theory" were in common usage by almost all economists, Friedman believed that "no one accepts the basic substantive conclusions of the book." Or, as Friedman was quoted in a 1983 UPI account, "We are all Keynesians now in terminology and words, but no one is any longer a Keynesian in substance." That's hardly a ringing endorsement of Keynesian thought and it hardly makes Friedman a Keynesian.

-- Ken Boehm