Remembering Milton Friedman

A tribute to the Nobel Prize-winning economist whose inner harmony changed the world.

November 29, 2006 22:00
4 minute read.
Remembering Milton Friedman

milton friedman 88. (photo credit: courtesy)

Milton Friedman, who died November 19 at 94, had the rare ability to see the ocean even in a grain of sand. He knew how to parley his all-encompassing vision into many innovative, practical policy initiatives, and how to win the hearts of men and of top leaderships, convincing them to make vast improvements in human life. This son of struggling Jewish immigrants from Hungary did not let ambition, or envy, skew his mind or embitter his heart. A man with a compassionate yet unsentimental temperament and a powerful mind, he was lucky to discover his vocation - economics - early on, recognizing that "becoming an economist seemed more relevant to the burning issues of the day." He was also very fortunate in graduate school to be seated (by alphabetical order) next to Rose Director. Rose, a very gifted economist and the sister of another genius, Aaron Director, font of many innovative economic ideas, became more than Milton's wife and helpmate. She was his partner, co-authoring many of his non-technical works and tempering his sometimes excessively logical mind with her common sense and skepticism. The memoirs they wrote together were entitled Two Lucky People. FRIEDMAN immediately grasped that Adam Smith was right, that it was the invisible hand of competitive markets rather than the heavy and corruptible hands of governments (which Marxist and other planned economies promoted) that lead to prosperity. He had the courage to challenge the dominating ethos of economics in those days, the heritage of another great mind, John Maynard Keynes's, by demonstrating that empowering government to fight recession and unemployment with inflationary anti-cyclical measures (because there supposedly was a trade-off between inflation and unemployment) was both futile and dangerous. Only years later would stagflation and the destructive growth of big government prove Friedman right and win him the Nobel prize. Earlier he had to face ostracism and derision from many, including economists. Friedman not only debunked a theory that caused great damage, he also offered a cure for the terrible scourge of inflation that ruined so many people, economies and nations (bringing, among other evils, Hitler to power). Contending that inflation was a monetary phenomenon of too much money chasing too few goods, he admonished that only governments can cause it by irresponsibly printing money to sustain their profligate habits through deficit spending; and consequently that only governments could stop inflation by stopping the printing presses. He finally made people aware that governments were cheating voters by bribing them through deficit spending while secretly plundering their wealth, imposing the hidden tax of inflation that destroys the value of their earnings and savings. JUST FOR unmasking the nature of inflation and for offering an effective cure Friedman must be considered a great "socially conscious" economist who did more than anybody else to enhance the security and well-being of hundreds of millions of people in many countries. But Friedman did much more. He also helped curb a dangerously expanding government by convincing both the public and the decision makers that big government is bad and corrupt government that destroys competition and growth. He convinced them that it was imperative to cut governments drastically by reducing taxes (and simplifying them through the flat-rate tax) and by extensive deregulation. Friedman's strong support for international as well as internal trade free from government constraints, and his strong support for floating exchange rates, made possible an unprecedented and hugely beneficial expansion of international trade. Contrary to the myth spread by economic ignoramuses, international trade is not "exploitative" and "damaging to the poor." It stimulates global economic growth by increasing efficiency, reducing prices and expanding employment, and it improves the life of the poor in advanced economies as well creating great economic opportunities for citizens of poorer countries. Friedman advocated many other social causes. Fifty years ago he suggested that deteriorating government-controlled education could be improved by introducing choice, competition and greater parental participation through the voucher system (the Friedmans have endowed a foundation for educational choice). He convinced president Reagan to establish an all-volunteer army, and advocated legalizing light drugs. UNLIKE MANY elitists, Friedman, a man with a generous heart, had great trust in human beings and in their capabilities. He passionately believed that freedom was essential for their ability to develop them. "Freedom," he wrote, "is the major objective in relations among individuals…The preservation of freedom requires limiting narrowly the role of government and placing primary reliance on private property, free markets, and voluntary arrangements." In "Tennis with Milton" Ralph Kinney Bennett described a chance game he played with Friedman when they both attended a conference. Bennett was an athletic young man. Friedman was then in his 60s, and not the athletic type. Yet he readily won. Friedman was, Bennett wrote, "completely at peace with his own strengths and weaknesses and he had a seamless confidence born of being so honest about himself… Many times in later years, I thought of the qualities he displayed in that match… the precision of his thinking, the seriousness (not solemnity) with which he regarded those he engaged, and the absolute intellectual honesty with which he defended and advocated the overarching principle of his life - individual liberty." America has lost one of its greatest sons, and Israel (and this writer) a warm and caring friend.

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