Economics

Iceland Yesterday, Iceland Today, Iceland Forever…Ruined by Milton Friedman

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Among the growing attempts to smear Milton Friedman as the "proud father of global misery," Iris Erlingsdottir over at the Huffington Post has accused Friedman of a) having once spoken in Iceland, over 24 years ago and b) telling me and Reason magazine in 1995 that Iceland was his vision of anarcho-libertarian paradise. Thus, its recent economic collapse has Nobel fingerprints all over it.

Jeff Miller at "The Trunk" blog called her to task effectively on this. I guess one shouldn't necessarily expect Erlingsdottir to be hep enough to somewhat obscure libertarian intellectual talking points to know, but she should have checked before using it as the basis of a smear, since even in her own storytelling terms it makes no sense whatever for Friedman to have said this in 1995. But she fails to realize that when Friedman said this to me:

I would like to be a zero-government libertarian [but] I don't think it's a feasible social structure. I look over history, and outside of perhaps Iceland, where else can you find any historical examples of that kind of a system developing?

…he was referring, as per some of the work of his anarchist son David, to Iceland in the 10th through 13th century. See both David Friedman's and Roderick Long's discussion of olde-timey Iceland's medieval bonafides.

Modern Iceland certainly has lots of crappy decisions by genuine market actors partly to blame for their problems. But it's hard to say a country with over 50 percent M3 inflation leading up to the crackup, and over 20 percent annual such growth pretty solidly for at least the past five years, is some sort of Friedmanite monetary growth rate paradise.

Michael Lewis in Vanity Fair engages in some good old-fashioned Iceland-bashing in his explanation of the crisis. He more or less argues that once you get to know these strange, superstitious, inbred, reckless, pushy, aggressive, sexually screwy freakazoids, you'd understand one should never let them get anywhere near international financial matters. Best Lewis line on Icelanders? "They have a feral streak in them, like a horse that's just pretending to be broken." Not to get all Icelandic Anti-Defamation League on Lewis here, but really? You have to read the whole thing to get the full sense of exactly how much he thinks it was the people, not the system, to blame.

Lewis does, though, tip his hat to the value of free-market mechanisms, crediting Iceland's use of a version of privatized fishing quotas as helping them get rich in the past couple of decades. Ronald Bailey wrote of the benefits of such privatized fishing quotas for Reason Online back in 2005.

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  1. Maybe anarchism and libertarianism, in their raw form, just don’t work?

  2. What about anything makes you say that?

  3. What’s the capital of Iceland?

  4. About $20!

  5. strange, superstitious, inbred, reckless, pushy, aggressive, sexually screwy freakazoids,

    The only person I know from Iceland is Bjork, so, I’m withholding judgement.

  6. Paul,

    Ditto, so Im assuming you should never let an icelander sing near you.

  7. The money quote:

    until unbiased regulators are given real power over financial institutions

    As if an “unbiased regulator” is any less fictional a creature than a perfectly rational investor.

  8. About $20!

    LOL

    A friend of mine was in the Navy and was an MP at the Reykjav?k base before it closed. I said “hey, I’ll come visit you. Iceland’s cool, right?” He said “don’t come here.” He had plenty of stories about the natives and their weirdness.

  9. “Lewis does, though, tip his hat to the value of free-market mechanisms, crediting Iceland’s use of a version of privatized fishing quotas as helping them get rich in the past couple of decades.”

    They aren’t so rich now, are they? I think capitalism has one great advantage over all other economic systems–it’s the only one that works. But let’s face it: the times today aren’t pretty, and it was the masters of finance who did this to us.

  10. But Episiarch, we are hot. And we are easy!

  11. Iris Erlingsdottir over at the Huffington Post

    I loved her in The Player. Say what you will about Altman, he made a few entertaining movies. Didn’t he move to France?

  12. The missus turned to me and said, “Why don’t we go down this street? It looks like a shortcut.”

    But I knew better. That street was a straight through dead end, populated only by rats, hoodlums, and Icelanders.

  13. I loved the icelandic people when i was there, i was only there for a few days. it is a bit grey and drab. but the people were wonderfull. i really liked it and wish to return someday.

  14. Didn’t he move to France?

    Yes, he died.

  15. …these strange, superstitious, inbred, reckless, pushy, aggressive, sexually screwy freakazoids…

    As opposed to the superhero variety? 😉

  16. Are you trying to tell me some dipshit on Hufpo misquoted something to support a statement? Tell me it ain’t so.

    Next your going to tell me Santa isn’t real and the Easter Bunny is actually a Jewish conspiracy to raise all non-Jewish peoples cholesterol in an attempt to take over the world.

  17. from WoI’s link:

    “as of today, a ticket to Iceland from SFO is nearly $2,000! That’s like 4,000 Jack in a Box Tacos!”

  18. “I guess one shouldn’t necessarily expect Erlingsdottir to be hep enough…”

    I’ve read in more than one place that Icelanders don’t have last names – “Erlingsdottir” simply means “daughter of Erling.” Calling someone “Ms. Erlingsdottir” is apparently a really good way to identify yourself as someone who doesn’t know the first thing about Iceland… it seems you’re just supposed to use the first name and everyone knows who you’re talking about (it’s a small place, only about 320K people).

    With that said, I admit to not knowing the first thing about Iceland and this is entirely based on a few pieces I’ve read since their economy collapsed.

  19. Actually, it was that Michael Lewis piece you linked to.

    About 1/4 of the way down:

    “But if you wish to reveal how little you know about Iceland, you need merely refer to someone named Siggor Sigfusson as “Mr. Sigfusson,” or Kristin Petursdottir as “Ms. Petursdottir.””

  20. aggressive, sexually screwy freakazoids,

    And what’s wrong with that?

    Oh, and why the hell have I not visited Iceland??

    The Icelanders party like screaming Canadian spring breakers in Cancun every goddamn weekend. Right about the time that people in most U.S. cites are usually being shooed home the Icelanders are just getting warmed up. If you show up at any night club in Reykjavik before 1:00 AM, you better be able to entertain yourself, because you will be sitting there alone with one bartender and a bored bouncer who is likely to curtly ask you, “Why are you here so early?” After 1:00 AM however, watch the hell out! Icelanders pile into the bars and clubs by the bus, taxi, and car-load, already ripped to the tits.

    Alcohol is taxed like Boston tea in most of Scandinavia and in Iceland the drinks get more expensive as the night wears on, hence a couple rounds of drinks after 1:00 AM could almost make your car payment. Accordingly, there are two main approaches to a night on the town in Iceland. Either you buy one ridiculously over-priced drink and slowly milk it for the entire evening or you can employ the more popular practice of getting royally stewed at home, which is only slightly less fantastically expensive, before heading out and staggering around all night on the fumes from that bender. I had learned these drinking tips during my first stay in Iceland, so I came prepared with two bottles of duty-free vodka which I dipped into at about 11:00. A few cocktails later, I sauntered out the front door of my hotel, with yet another drink in my hand and was almost immediately knocked down by two women. After a couple slurred words, they hooked my arms and lead me to the their favorite club. At this point I was mentally reviewing the rumors about the Icelandic women and I was unsure of what to expect, but my curiosity quickly wilted away after we sat down at our table. The blonder of the two immediately grabbed my hand and with a beautiful shit-eating grin on her face placed it firmly in her crotch and then crossed her legs for good measure. The night just got more depraved from there.

  21. “I’ve read in more than one place that Icelanders don’t have last names – “Erlingsdottir” simply means “daughter of Erling.” Calling someone “Ms. Erlingsdottir” is apparently a really good way to identify yourself as someone who doesn’t know the first thing about Iceland… it seems you’re just supposed to use the first name and everyone knows who you’re talking about (it’s a small place, only about 320K people).”

    Russians do the same thing with daughters and sons. The middle name indicates the paternal name and the suffix is relative to the gender of child.

  22. The Catholic church has had to take some saints off its list. Maybe the Libertarian church will have to take a few of its. I’m just sayin’.

  23. After inquiring with a Russian’s spouse the Russian version of what I mentioned is a “patronymic.”

  24. That wacky Friedman; he makes Ghengis Khan look like an introverted boy scout.

  25. About $20!

    That’s what, about 50 eurocents?

  26. Maybe the Libertarian church will have to take a few of its. I’m just sayin’.

    It is patently obvious that you’re “just” saying such cow dung. You don’t need to overdo it.

  27. Let’s not let Friedman off the hook so easily. Every rational person knows that the roots of Iceland’s financial meltdown can be found in the Middle Ages. They were so busy wanking off and writing their damned sagas that they had no time to impose basic regulations on the stock market and prevent the abuses of unrestrained capitalism.

  28. Hazel Meade beat me to it, but I have to reiterate. From the original post:

    It should be obvious now that regulation by disinterested parties is essential to the functioning of the markets.

    This is it folks. This is why markets go all screwy. We need to find us one of these disinterested parties to keep things straight. Someone who doesn’t need money, staffing and good press to get elected or reelected. Someone immune to the pressures of lobbyists because they don’t care if they have a nice house or a big TV, or if their kids get into good private schools, or if they can score a cushy consulting job after they leave office, or if they get smeared and undermined in the press.

    We need someone with no connection to the country and no stake in its success to tell us how to run things. I wonder what Dr. Manhattan is doing?

  29. Anthony Bourdain hated Iceland and Romania. That’s all I need to know about either place.

  30. You mean, there is a difference between monetarism and Keynesianism?

  31. ANTHONY BOURDAIN HATES COUNTRIES THAT PRODUCE SOME OF THE HOTTEST WOMEN IN THE WORLD? STRANGE. THE URKOBOLD ALWAYS ASSUMED THAT MR. BOURDAIN WAS A MAN OF THE HETEROSEXUAL PERSUASION.

  32. At this point I was mentally reviewing the rumors about the Icelandic women and I was unsure of what to expect, but my curiosity quickly wilted away after we sat down at our table. The blonder of the two immediately grabbed my hand and with a beautiful shit-eating grin on her face placed it firmly in her crotch and then crossed her legs for good measure. The night just got more depraved from there.

    Dude, haven’t you seen Hostel? As Magneto quips in X Men 2, don’t ever trust a beautiful woman, especially one who seems interested in you.

  33. over 20 percent annual such growth pretty solidly for at least the past five years

    What does that even mean?

  34. Well, you know – the articles and shows that seek to discredit libertarian ideals (or inadvertently do so by way of referring to them, e.g. fox nuz) get seen and heard by hundreds of millions. Reason magazine and publications like it get, what, a tiny fraction of that? Or is it an itty-bitty fraction? There’s no helping it. I heard some dumbass on Fox referring to Atlas Shrugged, by way of Steven Colbert’s mocking parody, but I get the distinct impression neither Colbert nor the fox guy had actually read it.

  35. THE URKOBOLD ALWAYS ASSUMED THAT MR. BOURDAIN WAS A MAN OF THE HETEROSEXUAL PERSUASION.

    With that earring and the faggy way he twirls his cigs at French restaurants?

  36. Anthony Bourdain hated Iceland and Romania. That’s all I need to know about either place.

    Cool, I just got a scolding email from an anonymous Icelander. Unfortunately, I have no way of knowing if the email is from a her, nor her hotness compared on a global scale.

  37. Liberals are stupid.

    When someone kills one, can we just call it abortion?

  38. I think Lenin left England when Russia was destabilized by WWI and he led a revolution. My one regret is not going to Iceland to help stir up a monetary revolution. They are more likely to trade with commodities, such as gold and silver, now that they experienced severe, sudden paper money devaluation.

  39. Here’s what I put up on my blog a few days ago:

    Michael Lewis has a good article on what went wrong in Iceland, all of which is worth reading. It’s more anecdotal and anthropological than analytical, but I was especially struck by his explanation, in the sixth of seven pages, of how Iceland privatized its fishing resources back in the 70’s.

    If everyone is free to fish, there’s a tragedy of the commons: More and more people catch more and more fish until the fishery is depleted, or at least the price of fish falls, and you can’t make a good living fishing. There may be actual famine, if the fishery crashes. The economists who analyzed this were not Georgists, so they recommended privatization as a solution: Have the government decide how many fish could be caught sustainably, and give away fishing permits to existing fishermen. If you had historically caught 300,000 pounds of fish per year, you could go on doing so, or you could sell or rent your permit to someone who did the actual fishing, while you lived a more comfortable life ashore, and maybe got a Ph.D., if you were of scholarly bent.

    Iceland has a tradition of reading and learning, so some of the fishermen who became well-off rentiers also studied finance and went into banking, where they made some big messes.

    If only Iceland had taken a Georgist approach of having the government rent out fishing permits to the highest bidders, it could have avoided a tragedy of the commons, obtained revenue for public purposes, and cut other taxes, all without creating a class of parasitical fishing-permit owners. One weird thing is that I met an Icelander back in 1980, and argued economics with him; he was studying economics at Penn State, and he and a couple of other students were arranging to rent the family home for six months or so while we went to France, where my father was to teach at Nice and then Paris for a while.

    He didn’t get Georgism. I wish I could remember his name; it would be interesting if he turned out to be one of the bankers, politicians, and economists who have now flown the Icelandic economy into the side of a mountain.

  40. In fact, Iceland of that period had a *very* interesting structure which included jury of peers and legal representation before national “courts.” There was also a pretty detailed legal spec of what it cost to kill/destroy someone/something. If you killed a man or burned down his farm you could force the family to forgo revenge by paying for the life and property. Ah, good times.

  41. Brian: Dead on with the David Friedman-Iceland connection. I’ve had some fun times with David.

    That street was a straight through dead end, populated only by rats, hoodlums, and Icelanders.

    Was that original, or is it ripped from somewhere? Either way, it’s fucking brilliant.

    I heard some dumbass on Fox referring to Atlas Shrugged, by way of Steven Colbert’s mocking parody, but I get the distinct impression neither Colbert nor the fox guy had actually read it.

    That could be a very dangerous assumption re Colbert — I recall the man riffing some brilliant Shakespeare quotes off the cuff. He’s smart and plainly reads a lot — a pity about his politics.

  42. Our planet was dying! We had no choice but to find a new one!

  43. Nick Rosen,
    I happen agree with the Georgist viewpoint, but I don’t think that not distributing the land rent effectively is the reason for the failure of the Icelandic economy.

  44. “I wonder what Dr. Manhattan is doing?”

    The last I heard, Dr. Manhattan had departed for a less complicated Galaxy.

  45. “Michael Lewis in Vanity Fair” doesnt engage in Iceland bashing in the article quoted. I read the article and the word he seems to use the most is “charming”.

  46. Some might consider “charming” to be a bash.

  47. Icelanders are never identified by their patronymic or matronymic (Erlingsdottir) alone. She should be referred to as Iris, even formally.

  48. I lived in Iceland for a couple years and it was no hotbed of libertarianism. They were typical of Europe.

    Also, no “anarcho-libertarian paradise” would ever name its government the “Althing”.

  49. Greenland is an environmental utopia. Greenland has had an economic melt down. Coincidence?

    I think not!

  50. joshua corning | March 13, 2009, 12:10pm | #
    Greenland is an environmental utopia. Greenland has had an economic melt down. Coincidence?

    I think not!

    Oh crap i meant Iceland

    LOL!!

  51. Greenland, Iceland, same thing. They’re all Vikings.

  52. Hah! joshua corning, I totally fucking got you! HA!

  53. Iceland and Greenland could not be more different. Intelligent discussions are a great idea, but uninformed nonsense and guesses are not.

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