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… is especially relevant today because the U.S. dollar has been ‘floating’ now for 53 years – that is, the U.S. dollar’s value isn’t pegged or ‘fixed’ to the values of other currencies, to any precious metal, or to any basket of commodities; specifically, this quotation is from pages 15-16 of Milton Friedman’s 1967 “First Lecture” in a debate that he had with Robert Roosa, the proceedings of which are published under the title The Balance of Payments: Free versus Fixed Exchange Rates:

A system of floating exchange rates completely eliminates the balance-of-payments problem – just as in a free market there cannot be a surplus or a shortage in the sense of eager sellers unable to find buyers or eager buyers unable to find sellers. The price may fluctuate but there cannot be a deficit or a surplus threatening an exchange crisis. Floating exchange rates would put an end to the grave problems requiring repeated meetings of secretaries of the Treasury and governors of central banks to try to draw up sweeping reforms. It would put an end to the occasional crisis producing frantic scurrying of high governmental officials from capital to capital, midnight phone calls among the great central banks lining up emergency loans to support one or another currency.

DBx: I thank Phil Magness for reminding me of this piece by Friedman, which I’d first read as an NYU student in 1981 at the suggestion of Professor Fritz Machlup. Until Phil, at his Facebook page, quoted from this piece, I’d forgotten about it.

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… is from page 97 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

Those who fear that [if term limits for members of Congress were imposed] we would lose the great “expertise” that members of Congress develop after years of dealing with certain issues fail to see that much of that experience is in the arts of packaging, log-rolling, creative accounting and other forms of deception.

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… is from page 146 of Razeen Sally’s excellent 2005 paper “Free Trade: The Next 50 Years,” which is chapter 10 of the 2005 collection, edited by Philip Booth, Towards a Liberal Utopia?:

The historical record shows that countries that are more open to the world economy grow faster than those that remain closed.

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… is from pages 101-102 of Thomas Sowell’s Compassion Versus Guilt, a 1987 collection of some of his popular essays; specifically, it’s from Sowell’s July 22nd, 1985, column titled “Lessons from Coca-Cola”:

The greatness of a competitive economy is that it forces constant revision of our estimates and changes in our behavior when we are mistaken. If we were omniscient, there would be no point in free enterprise or a competitive economy. Appointed officials could issue orders from on high to do the right thing, and that would be the end of it.

DBx: Yes.

Note that proponents of industrial policy implicitly believe that human beings who exercise government power are, if not omniscient, at least in possession of super-human intelligence and foresight.

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