DANIEL DORON 58.
(photo credit: Courtesy)
When distinguished economist Alan Meltzer recently attacked the policies of the US Federal Reserve, its chairman, Ben Bernanke, retorted that their mentor, the late Nobel economics laureate Milton Friedman, would have approved.
Friedman died four years ago, but his influence is still strong. When asked in the past whether his innovative ideas would still have an impact in the future, Friedman replied with his customary modesty: “This will be known only 50 years from now.”
Indeed it will take several decades to assess the full impact of this wise man’s ideas.
We already know that Friedman had enormous impact on crucial economic and social developments in the past century. Just think of the great economic leap forward in the past several decades, the huge increase in prosperity propelled by the stability that his anti-inflation cure made possible; of his strong support for floating exchange rates that made possible the enormous expansion of international trade; and of the dramatic effect of even the partial adoption of his freemarket policies on the spread of prosperity to poor and backward economies such as China’s, India’s and even Israel’s.
These alone prove that Friedman’s policies helped better the economic lot of billions of people who suffered poverty and oppression until his pro-market policies helped liberate them, albeit only partially for the time being.
In a world that still suffers from economic illiteracy, especially among the ruling elites, which causes laggard growth and often grave crises, it is certain that one of the Friedmans’ (Milton and his wife Rose, a great economist in her own right and his true partner) greatest contribution was educational.
Deeply committed to democracy, and treating every person with respect (even when they sharply disagreed with their views) Milton and Rose devoted much of their energy to educational endeavors. They never locked themselves in an ivory tower.
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IN HIS many media appearances, in his weekly page in Newsweek magazine,
and in his highly rated television series and bestselling book Free to
Choose (which was coauthored with Rose), Friedman succeeded in
transforming public opinion on a huge scale. His ideas became the basis
of Margaret Thatcher’s reforms that saved Britain from being the dead
man of Europe and helped it become one of the fastest-growing economies
for several decades. His influence made the election of Ronald Reagan
possible,and the policies that initiated several decades of
It was this prosperity that also enabled Reagan to challenge the Soviet
Union with “Star Wars,” exposing the economic bankruptcy of communism
and leading to its collapse. For this alone, Friedman deserves the
gratitude of humanity. His ideas helped save hundreds of millions from
slavery under communism and rid the world of the terrible danger it
No less important than his crucial contribution to the welfare of
humanity, Friedman’s efforts succeeded in making masses of people aware
that every thinking person, every responsible citizen must acquire a
basic knowledge of economics, and that this required study because
economics is often counterintuitive, so simply relying on common sense
and logic may lead to disastrous consequences.
Many of the social and economic troubles we experience are due to the
public’s lack of understanding – especially among opinion molders and
decision makers – of this need for economic literacy. In economics more
than in other disciplines, ignorance can kill.
The terrible economic crises caused recently by governments – crises
that only ignoramuses or propagandists blame on markets – proved again,
if we still needed proof, that only government meddling can threaten to
ruin the economy, such as the meddling by the Federal Reserve when it
flooded the US economy with cheap credit and enabled two giant
semi-governmental entities, Fanny Mae and Freddie Mack, to sell
worthless mortgages worth trillions of dollars.
THE CRISES also teach us three more lessons: that a healthy economy is
essential for social well-being, that economic literacy is a
precondition for the enactment of policies that create sustained growth
and that economic prosperity, and not a counterproductive “peace
process,” can bring true reconciliation between peoples, as it has in
Europe after centuries of bloodshed.
The panic and confusion with which governments reacted to the recent
crises would not have resulted in dangerous policy initiatives if the
public understood better how an economy functions. An enlightened public
could have prevented the steps politicians took out of ignorance and
myopia, steps that could yet lead to such ruinous consequences as
runaway inflation, and which may endanger our well-being and future
A society cannot preserve its stability, strength and capacity to grow
without economic prosperity. Friedman understood this profoundly, and
devised successful solutions to most of the crucial problems that
plagued our economy.
Friedman attained his standing not only because of his excellence as an
economist, but also because of his caring personality, his wisdom,
integrity and the courage to stick to his truth during decades when he
was mocked and defamed (to this day in Israel, when people cannot argue
with his reasoning they try to undermine his reputation).
In the future we will probably continue to learn from this outstanding
man who taught us that knowledge must be applied and bear practical
results if it is to be meaningful.The writer is director of the Israel Center for Social and Economic Progress.
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