One of the greatest men of the twentieth century has left us. We know he was great because he left the world a much better place than he found it.
Milton Friedman: Death of the Master
by Bruce Bartlett
"And now this great master has left us. No one who has been close to him both professionally and scientifically would be able to describe the feeling that lies heavy on all of us. No words can express what he has been to us, and few of us if any will have yet resigned ourselves to the realization that from now on there is to be an impenetrable wall separating us from him, from his advice, his encouragement, his critical guidance -- and that the road ahead will have to be traveled without him."
So wrote economist Joseph Schumpeter upon the death of his teacher, Eugen von Bohm-Bawerk in 1914. The words apply equally well to another great master who has left us, Milton Friedman. Unquestionably the most important and influential economist of the second half of the 20th Century, Friedman's work will live on for as long as the field of economics continues to be studied.
Friedman was born on July 31, 1912, in Brooklyn, N. Y. His path toward economics began at Rutgers University, from which he graduated in 1932. There, he came under the influence of Arthur Burns, an important economist who became chairman of the Federal Reserve Board under Richard Nixon. Friedman later called Burns the "guiding influence of my subsequent career."
Friedman started his graduate work at the University of Chicago, completing it at Columbia University. During World War II, he worked on tax policy at the U.S. Treasury Department in Washington. Following the war, Friedman joined the economics department at the University of Chicago, where he became the dominant expositor of what came to be called the Chicago School of Economics.
The 1950s were the high point of Friedman's scientific work in economics. His main accomplishment during this period was to resurrect the role of monetary policy in the economy. At that time, economists generally followed the theories of British economist John Maynard Keynes, who believed that fiscal policy (taxing and spending) was government's most powerful tool for influencing growth, inflation and business cycles. In the Keynesian model, the Federal Reserve's monetary policy (credit and interest rates) was essentially passive, with little direct economic impact.
Eventually, Friedman was successful in convincing most economists that Keynes was wrong. The Friedman view became known as monetarism and was instrumental in overturning the Keynesian orthodoxy in the 1970s.
But Friedman's other scientific work also contributed to this development. This would include the "permanent income hypothesis," which says that temporary changes in incomes do not affect consumer spending, only permanent changes do. Friedman also was instrumental in debunking the idea that higher inflation would lower unemployment, as the Keynesians believed. Any such effect was temporary at best, Friedman argued. In the long run, inflation raises unemployment, he said, a view proven correct in the 1970s.
In the 1960s, Friedman became more active in politics and public policy. He was an adviser to Republican presidential candidates Barry Goldwater in 1964 and Nixon in 1968. In 1966, Friedman began a regular column for Newsweek that became must reading for free-market economists until he gave it up in the early 1980s.
Friedman's most influential publication was the slender volume, "Capitalism and Freedom," based on lectures given in 1956 but not published until 1962. In that book, he put forward one of the most powerful cases for the free market ever written. Its greatest virtues were the clarity and vigor of Friedman's exposition. It had enormous impact in making free-market economics respectable once again, after being falsely blamed for the Great Depression. In his "Monetary History of the United States," Friedman put principal blame for that disaster on the Federal Reserve, which allowed the money stock to shrink by one third, bringing on a massive deflation.
In 1976, Friedman was awarded the Nobel Prize in economics. The Royal Swedish Academy of Sciences cited his achievements in the fields of consumption analysis, monetary history and theory, and stabilization policy.
The following year, Friedman retired from active teaching and took up residence at Stanford's Hoover Institution. Although retired, he continued working until the very end. In 1980, Friedman probably achieved his greatest renown with the best-selling book and PBS television series, "Free To Choose," written with his wife, which explained to average people why free markets work best.
A key reason for Friedman's enormous output and influence is that he was blessed with such a gifted partner in his wife Rose. A distinguished economist in her own right, she contributed heavily to her husband's thinking, most evident in their co-written memoir, "Two Lucky People," published in 1998.
We mourn the death of Milton Friedman, who died in San Francisco on November 16 at age 94. But we also celebrate his life and accomplishments, which will continue to provide guidance and inspiration.
The master may be gone, but his work lives on.
Mr. Bartlett is a nationally syndicated columnist and author of "Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy."
OpinionJournal Editorial: The Man Who Made Free Markets Popular Again
Capitalism and Friedman
There are some public figures whose obituaries can be written years in advance. Milton Friedman was not one of them.
Arguably the greatest economist of the 20th century, he won his Nobel Prize 30 years ago. His classic “Capitalism and Freedom” was published 44 years ago. He died yesterday at the age of 94, but as the op-ed running nearby attests, he was active in writing about, thinking about and explaining how economics affects our world until the end.
In today’s feature, he updates and re-examines conclusions he reached about the Great Depression in “A Monetary History of the United States, 1867-1960,” a book published with Anna Schwartz 43 years ago. His thesis was that the Great Depression was not, as was once commonly presumed, a “market failure,” but a failure of government policy. Contraction of the money supply in the wake of the stock-market crash of 1929 was what turned a financial event into an economic catastrophe.
This insight flowed from Professor Friedman’s conviction that “money matters.” As the Royal Academy of Sweden noted in announcing his 1976 Nobel, Friedman’s was a lonely voice in arguing for the importance of the money supply in economics when he began writing about it in the 1950s.
By the late 1970s, stagflation—the combination of high inflation and high unemployment—had made it obvious that the then-dominant Keynesian model had some large holes. These included the effect of the money supply on inflation and the fact that inflation and employment did not move in lockstep as some of Keynes’s disciples asserted. It was a seminal insight, creating what became known at the University of Chicago and elsewhere as the “monetarist school” and laying the intellectual basis for central bankers to break the great inflation of the 1970s.
In awarding its Nobel in 1976, the Royal Swedish Academy of Sciences cited his “achievements in the fields of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.” The citation covers a huge swath of economic thinking, and suggests both the range and the consistency of Professor Friedman’s thought. In layman’s terms, the Swedish Academy credited him with nothing less than shredding the Keynesian consensus.
First, he had shown that men are no fools. People spend money in accordance with their income expectations over the long-term, not in response to one-time “stimuli” from the government. This is known as the “permanent income” hypothesis, and it called into question Keynesian notions of how short-term stimulus affects the economy. In addition to his monetary insights, Mr. Friedman questioned the degree to which fiscal policy could be used to “fine-tune” the economy by adjusting spending, tax or monetary policy. Today we take for granted that all of these operate with a lag, but it was Milton Friedman who first highlighted the problem.
For all of his academic accomplishments, Professor Friedman’s role as a popularizer of free-market principles was arguably more important. He wrote a column in Newsweek for 18 years starting in 1966, preaching the importance of economic freedom to a generation that had never heard such things in school. His 1980 book, “Free to Choose,” was a best seller, and the videos that accompanied it were smuggled behind the Iron Curtain like seeds of revolution.
He was among the first to point to Hong Kong as a model of free-market success, a lesson that even today is remaking Communist China. And he first suggested educational vouchers to rescue failing public schools as long ago as 1955; in recent years, he established a foundation to support this idea that continues to advance despite ferocious opposition from unions and other entrenched interests.
This newspaper had the privilege of publishing Milton Friedman’s articles on numerous occasions over the years. We’ve also disagreed with him from time to time, notably on exchange rates and drug legalization. These disputes always gave us cause to reflect, and 20 years ago amid one debate on the benefits of fixed exchange rates we noted that “being spanked by Milton Friedman is one of life’s most humiliating experiences.”
In truth, Professor Friedman always argued with civility and a bracing wit. One of his best barbs on the size of government: “Given our monstrous, overgrown government structure, any three letters chosen at random would probably designate an agency or part of a department that could be profitably abolished.” And he popularized “There is no such thing as a free lunch.”
In “Two Lucky People,” written with his wife, Rose Friedman, who survives him as a distinguished economist in her own right, Mr. Friedman well described the role of a public intellectual: “We do not influence the course of events by persuading people that we are right when we make what they regard as radical proposals. Rather, we exert influence by keeping options available when something has to be done at a time of crisis.”
On the death of Ronald Reagan, whom he advised, Mr. Friedman wrote on these pages that “few people in human history have contributed more to the achievement of human freedom.” The same can and long will be said of Milton Friedman.
Amen to that.
Human Events Online: Conservatives React to Milton Friedman's Death
by Robert B. Bluey
America today lost a brilliant person whose free-market ideas changed the world. Milton Friedman died at the age of 94. May he rest in peace.
Friedman was a friend of HUMAN EVENTS, contributing as a judge for our annual Top 10 Most Harmful Government Programs special report.
The following are some reactions to his passing.
Rep. Jeb Hensarling (R.-Tex.):
Milton Friedman was one of the most influential minds of this generation when it came to economic and social policy. No book has impacted my life quite like "Capitalism and Freedom," which every conservative should take the time to read. Milton Friedman influenced some of the most influential leaders around the globe, helping to advance the march of freedom in the process. I offer my prayers and condolences to his family.
Rep. Jeff Flake (R.-Ariz.):
It’s a rare economist who can translate numbers and statistics into concepts and ideas that change the way people live. Milton Friedman was such an economist. His influence on those of us who believe in the power of free markets cannot be measured.
Rep. Tom Feeney (R.-Fla.):
I am deeply saddened for the loss of a true American patriot, economic genius, and a thoughtful man. Although he is no longer with us, Milton Friedman's ideas of individual freedom will remain alive through those of us he influenced.
Milton Friedman's classic book, "Free to Choose," described the essence of liberty in a free society where individuals make the most important choices, rather than a despotic, bureaucratic, or tyrannical government. In economics, Professor Friedman was the leading monetarist from the last century and did more
to debunk the myths of Keynesian economics that had been doctrinaire in American universities for about 50 years.
Today's economic professors and students have been universally enlightened by the economic truths Friedman successfully advanced against popular myths in
academia. Perhaps most importantly, Milton Friedman established that economic liberty is the essential base upon which all freedoms depend in civil society.
It is nice to know there are at three congressmen who get it.
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