Skip to comments.Milton Friedman, free market economist, dies at age 94
Posted on 11/16/2006 10:55:13 AM PST by calcowgirl
SAN FRANCISCO - Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three U.S. presidents, died Thursday at age 94.
Friedman died in San Francisco, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis. He did not know the cause of death.
"Milton's passion for freedom and liberty has influenced more lives than he ever could possibly know," said Gordon St. Angelo, the foundation's president and CEO, said in a statement. "His writings and ideas have transformed the minds of U.S. presidents, world leaders, entrepreneurs and freshmen economic majors alike."
In more than a dozen books and a column in Newsweek magazine, Friedman championed individual freedom in economics and politics.
His theory of monetarism, adopted in part by the Nixon, Ford and Reagan administrations, opposed the traditional Keynesian economics that had dominated U.S. policy since the New Deal. He was a member of Reagan's Economic Policy Advisory Board.
His work in consumption analysis, monetary history and stabilization policy earned him the Nobel in economics in 1976.
"He has used a brilliant mind to advance a moral vision - the vision of a society where men and women are free, free to choose, but where government is not as free to override their decisions," President Bush said in 2002. "That vision has changed America, and it is changing the world."
Friedman favored a policy of steady, moderate growth in the money supply, opposed wage and price controls and criticized the Federal Reserve when it tried to fine-tune the economy.
A believer in the principles of 18th century economist Adam Smith, he consistently argued that individual freedom should rule economic policy. Outspoken and controversial, Friedman saw his theories attacked by many traditional economists such as Harvard's John Kenneth Galbraith.
In an essay titled "Is Capitalism Humane?" he said that "a set of social institutions that stresses individual responsibility, that treats the individual ... as responsible for and to himself, will lead to a higher and more desirable moral climate."
Friedman acknowledged that "pure capitalism" did not exist, but said that nations that cherished freedom must strive to keep the economy as close to the ideal as possible.
He said government should allow the free market to operate to solve inflation and other economic problems. But he also urged adoption of a "negative income tax" in which people who earn less than a certain amount would get money from the government.
He lived to see free market reforms spread in the former communist world and Latin America, but played down his own influence.
"I hope what I wrote contributed to that, but it was not the moving force," Friedman told The New York Sun in March 2006. "People like myself, what we did was keep these ideas open until the time came when they could be accepted."
Outspoken and controversial, Friedman saw his theories attacked by many traditional economists such as Harvard's John Kenneth Galbraith.
Born in New York City on July 31, 1912, Friedman began developing his economic theories during the Great Depression when President Franklin D. Roosevelt's based his New Deal on the ideas of Britain's John Maynard Keynes, the most influential economist of the time.
Keynes argued that the government should intervene in economic affairs to avoid depressions by increasing spending and controlling interest rates.
Friedman graduated from Rutgers University in 1932 and earned his master's degree the following year at the University of Chicago.
After working for the National Resources Commission in Washington from 1935 to 1937, Friedman was a member of the staff of the National Bureau of Economics Research in New York from 1937 to 1945 and received his doctorate from Columbia University in 1946.
After World War II, he taught at the University of Minnesota, then returned to the University of Chicago. He became a senior fellow at the Hoover Institution at Stanford University in 1977.
Friedman married Rose Director in 1938. They had two children, Janet and David, and she was co-author of some of his books.
Among his most famous books were: "Price Theory," 1962 (with Rose Friedman); "Capitalism and Freedom," 1962 (with Anna J. Schwartz); "An Economist's Protest," 1972; "There Is No Such Thing As a Free Lunch," 1975; "Price Theory," 1976; and "Free to Choose," 1979, co-authored with his wife. "Free to Choose" also was a series on the Public Broadcasting Service.
Friedman wrote columns for Newsweek from 1966 to 1983 and was one of the few economists to bridge the gap between academia and the public. He involved himself in political campaigns, supporting Barry Goldwater in 1964 and Richard Nixon in 1968. He served on Nixon's commission for an All-Volunteer Army in 1969 and 1970.
In an interview with Playboy magazine in 1973, later republished in a collection of his essays titled "Bright Promises, Dismal Performance," Friedman said he was encouraged by an apparent trend away from government control.
"There are faint stirrings and hopeful signs," he said. "Even some of the intellectuals who were most strongly drawn to the New Deal in the '30s are rethinking their positions, dabbling just a little with free-market principles. They're moving slowly and taking each step as though they were exploring a virgin continent. But it's not dangerous. Some of us have lived here quite comfortably all along."
Friedman, whose wit made him a popular guest on radio and television shows, appeared to enjoy sparring with other economists.
In the Playboy interview, he referred to his disagreement with Galbraith, who endorsed wage and price controls. When Nixon went against Friedman's advice and reluctantly imposed the controls in an effort to slow inflation, Friedman said he wrote a note to Galbraith.
"You must be as chagrined as I am to have Nixon for your disciple," Friedman wrote. Galbraith didn't reply, Friedman said.
Nobody could explain things more clearly, logically or forcefully. He came out with his series Free to Choose not long thereafter. We need more like him. Most of all, we need politicians with the guts to follow his advice.
IIRC, Friedman only advocated any kind of NIT as part of a comprehensive reform that would have drastically reduced overall taxes, moved to sales taxes rather than income, etc. If "they" took one PART of his ideas-that-were-meant-to-be-implemented-comprehensively, and ignored the other parts, one cannot blame Friedman.
He wrote a letter to Galbraith asking snarkily how Galbraith felt to have Nixon as one of his followers. Galbraith never replied.
Last week I was disappointed..
..but today..I'm distraught.
I great champion of FREEDOM passed today..and he will be sorely missed.
The other greats have already passed...Goldwater, Reagan.
WFB..may YOU live forever!
MILTON FRIEDMAN: ... Nixon was a very, very smart person. In fact, he had one of the highest IQs of any public official I've met. The problem with Nixon was not intelligence and not prejudices. The problem with him was that he was willing to sacrifice principles too easily for political advantage.
But at any rate, as I was getting up to leave, President Nixon said to me, "Don't blame George for this silly business of wage and price controls," meaning George Shultz. And I believe I said to him, I think I said to him, "Oh, no, Mr. President. I don't blame George; I blame you! " (laughs) And that, I think, was the last thing I said to him.
Now, the interesting point of that story is that the Nixon tapes are now available, and I have been trying to get that part of the Nixon tapes, but I haven't been able to get them yet. I want to make sure I didn't make this up.
If you're interested in a new approach to this problem, I recommend Charles Murray's In Our Hands. He proposes, in the interests of political provocation, eliminating all entitlements and subsidies and replacing them with a $10,000 grant to every citizen every year from age 20 until death. We spend the same money, without creating the same dependency, making people once again (partly) responsible for their choices. He discusses the NIT and its failure a little in the book.
Amen to that.
Regarding Friedman and the NIT, here is an excerpt from the relevant chapter of his book Capitalism and Freedom.
The major disadvantage of the proposed negative income tax is its political implications.
Apparently some state experiments with an NIT showed significant incentive effects - the discouragement of work. I am surprised he didn't mention that as a major disadvantage.
Still, in light of his lifetime of achievements on behalf of freedom, a vanishingly small mistake.
A great American.
He will be missed.
He did not know the cause of death. old age maybe?"In the long run, we are all dead."
Please - that's a quote from John Maynard Keynes. And we are paying respects to the man who spent his professional career debunking Keynesian economics.
BTW, it is not to be assumed to be true. In the long run, at least until Christ returns, each of us will die - but that is not the same as all people being dead.
"In the long run, we are all dead" is an "Eat, drink, and make merry, for tomorrow we die" philosophy. If our ancestors had followed that prescription we would not have had the patrimony that we have inherited - and if we follow that prescription we will be betraying our posterity instead of honoring the preamble of the Constitution which lists among its purposes "to secure the blessings of liberty to ourselves and our posterity."
Alright already, you caught me trying to be a little cute there with the Keynes quote. Of course I admired Friedman, and despised Keynsian economics. Unfortunately "We're all Keynesians Now" is back in fashion with the GOP.
The problem with this approach is that those currently living on the dole would blow their $10000 in one month or less. Then they would come crying for more help and the electorate would grant them their welfare if for nothing else then "for the children".
I saw this in passing the newsstand at the airport and couldn't believe it.
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