You Got to Be Kidding Me!

Remembering Milton Friedman

Posted in Books, Economics, History, Politics by Stacy McMahon on February 22, 2007

Reason has a great piece on the Nobel Prize-winning libertarian economist Milton Friedman, who passed away last November at the ripe old age of 94. I of course knew who Friedman was, but had no idea that, for example, as a member of the Gates Commission he was primarily responsible for ending the military draft and instituting an all-volunteer military.

Vietnam troop commander William Westmoreland gruffly announced during one commission hearing that he was not interested in leading an army of “mercenaries.” Friedman coolly replied, “Would you rather command an army of slaves?”

Classic!

Without getting into the subject of monetary policy, Friedman also had another characteristic that’s sadly (and shockingly) rare in the realm of policy analysis:

Friedman famously believed that the true test of economic theory was not whether it seemed to make sense but whether it led to testable predictions that were borne out by observable evidence. Thus he didn’t depend only on logical argument to make his point. He and his collaborator Anna Schwartz scrupulously accrued data that showed, in as close to controlled experiments as history allows, how monetary changes usually had far greater effect on nominal income, prices, and output than did fiscal changes.

I once read about an engineering chief at a Detroit automaker who hung a sign on his door: “Without data, you’re just another opinion.” The absolute necessity of honest “did it work or not?” assessment of public policies is breathtakingly ignored by both workaday bureaucrats and politicians driven by ideology or poll results, with often-disastrous results for ordinary people. Radical free marketeer Milton Friedman spent much of his career in government, advising the decisionmakers. Because he was able to make his case so well, we live in his world–as Reason puts it–to a greater extent than someone living in the 1960s could have hoped.

Although Friedman frequently was on the “wrong side” of his profession, in the sense that his beliefs went against then-standard opinions, the cogency of his reasoning, his rigorous reliance on empirical evidence, and such real-world phenomena as stagflation ensured that, as the Fortune Encyclopedia of Economics put it, “No other economist since Keynes has reshaped the way we think about and use economics as much as Milton Friedman.”

Friedman believed so strongly in the relation of individual economic choice to basic freedom that he was willing to lend his advice to unfree societies if they would take it. That resulted in the worst and most ridiculous libel against him–the claim that he supported the bloody butcher of Santiago, Augusto Pinochet. That claim probably began life as part of a package of complaints about US involvement in the coup against Chile’s hard-left (but freely elected) president Salvador Allende, but it’s been separated over time and seems to come up a lot when the name of Milton Friedman is mentioned. As ever, reality is less dramatic:

The dictator asked the professor to write him a letter laying out what he thought Chile’s economic policies should be. Friedman did this, calling for quick and severe cuts in government spending and inflation as well as a more open trade policy.

[…]

Defending himself against accusations of complicity with or approval of Pinochet in a 1975 letter to the University of Chicago student newspaper, Friedman noted that when he spoke to communist leaders he “never heard complaints” that he was giving aid and comfort to their governments. “I approve of none of these authoritarian regimes—neither the Communist regimes of Russia and Yugoslavia nor the military juntas of Chile and Brazil,” he wrote. “But I believe I can learn from observing them and that, insofar as my personal analysis of their economic situation enables them to improve their economic performance, that is likely to promote not retard a movement toward greater liberalism and freedom.”

Milton Friedman is dead, long live Milton Friedman!

Update: Ilya Somin teases us with a couple of great quotes from a new biography of Milton Friedman

In 1971, President Richard Nixon imposed wage and price controls on the country, a ruinous policy rightly decried by Friedman and most other economists. Nixon told Friedman not to “blame George [Shultz] for this monstrosity,” even though Friedman’s friend Shultz was the administration official in charge of administering the price controls. Friedman’s response: “I don’t blame George, I blame you” (pg. 186).

Advertisements

2 Responses

Subscribe to comments with RSS.

  1. Stacy said, on February 23, 2007 at 10:07 am

    Just making sure the RSS readers know this post is updated.

  2. Clint said, on February 23, 2007 at 5:27 pm

    I do that too 🙂


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: