RIP Milton Friedman
It seems as though it must have been an awfully good life: a long one filled with accomplishments, a happy marriage, and countless friends. Milton Friedman, who died today, was the economist nearly everyone’s heard of, the architect of libertarian economic theories followed by Reagan and Thatcher, predictor of the inflationary problems of the 70s (“stagflation”), and hero of former Communist nations struggling to become capitalist.
Friedman believed that government should interfere as little as possible in the economy except for taking a hand in controlling the supply of money. His ideas were revolutionary at the time, since Keynes held sway, but they harked back to earlier thinkers such as Adam Smith.
I’m interested, as usual, in what factors about Friedman’s life may have formed him. The shaping of a human being is always, at heart, a mystery, but here are a few clues:
Mr. Friedman’s father died in his son’s senior year at Rahway High School. Young Milton later waited on tables and clerked in stores to supplement a scholarship he had earned at Rutgers University. He entered Rutgers in 1929, the year the stock market crashed and the Depression began.
Mr. Friedman attributed his success to “accidents”: the immigration of his teenage parents from Czechoslovakia, enabling him to be an American and not the citizen of a Soviet-bloc state; the skill of a high-school geometry teacher who showed him a connection between Keats’s “Ode to a Grecian Urn” and the Pythagorean theorem, allowing him to see the beauty in the mathematical truth that the square of the sides of a right triangle equals the square of the hypotenuse; the receipt of a scholarship that enabled him to attend Rutgers and there have Arthur F. Burns and Homer Jones as teachers…
In his first economic-theory class at Chicago, he was the beneficiary of another accident ”” the fact that his last name began with an “F.” The class was seated alphabetically, and he was placed next to Rose Director, a master’s-degree candidate from Portland, Ore. That seating arrangement shaped his whole life, he said. He married Ms. Director six years later. And she, after becoming an important economist in her own right, helped Mr. Friedman form his ideas and maintain his intellectual rigor.
After he became something of a celebrity, Mr. Friedman said, many people became reluctant to challenge him directly. “They can’t come right out and say something stinks,” he said. “Rose can.”
In 1998, he and his wife published a memoir, “Two Lucky People” (University of Chicago Press.
His wife survives him…
Lucky people, indeed–but not blind luck. Friedman was obviously brilliant, but with a creative mind able to synthesize, some experience with the school of hard knocks as well as academia, and a heart that recognized a good potential spouse when he saw one plus the good sense to stick with her for what must have been something like seventy years.
Friedman had the ability to earn the grudging respect even of his opponents, and sometimes even their reluctant acquiescence in the end. That’s the mark of a formidable thinker, one whose theories had predictive value. It’s also the mark of an honest and open-minded opponent:
Mr. Samuelson…of M.I.T., [who often disagreed with Friedman], who was not above wisecracking himself, had a standard line in his economics classes that always brought down the house: “Just because Milton Friedman says it doesn’t mean that it’s necessarily untrue.”
But Professor Samuelson said he never joked in class unless he was serious ”” that his friend and intellectual opponent was, in fact, often right when at first he sounded wrong.
Mr. Friedman’s opposition to rent control after World War II, for example, incurred the wrath of many colleagues. They took it as an unpatriotic criticism of economic policies that had been successful in helping the nation mobilize for war. Later, Mr. Sameulson said, “probably 98 percent of them would agree that he was right.”
Friedman’s major achievement, the one for which he received the Nobel prize, was linking rising unemployment to rising inflation. He also suggested a remedy, one that’s generally been followed: to have the Federal Reserve keep the money supply growing steadily.
Here are some visuals for the imagination (I’ve seen Galbraith in person, by the way, and though far be it from me to doubt the veracity of the Times, he appeared even taller than this, if possible):
In forums [Friedman] would spar over the role of government with his more liberal adversaries, including John Kenneth Galbraith, who was also a longtime friend (and who died in May 2006). The two would often share a stage, presenting a study in contrasts as much visual as intellectual: Mr. Friedman stood 5 feet 3; Mr. Galbraith, 6 feet 8.
But–in a metaphor that’s almost inescapable–Friedman was a giant of a man.
[NOTE: Liberals and leftists have criticized Friedman for giving economic advice to the government of Pinochet in Chile. I wouldn’t doubt it if some commenters here feel like doing the same (criticizing him, that is, not giving advice to Pinochet). Friedman’s pragmatic answer was this:
…if he could help reestablish a free market in Chile, political freedom would eventually triumph there as well.
For a fuller explanation by Friedman, see this as well.]
“…if he could help reestablish a free market in Chile, political freedom would eventually triumph there as well.”
bit of an underachiever in the freedom department was old pinochet. Friedman never understood that “free” markets take place in the context of some very unpleasant power politics.
No, Conned. He understood. Read what Neo recommended. But he also understood that economical freedom eventually results in political freedom. As we all know now, exactly this occured in Chile.
By the way, brutality of Pinochet regime is grossly exaggerated. Number of victims is simply incomparable with numbers of victims of any communist regime, and Alliende was a communist de facto, more than that, he was paid agent of KGB. Most of the Pinochet victims were bandits or rabid revolutionaries a la Che Guevara, so to kill them was a noble deed anyway. It saved, may by, hundred thousand innocent lives.
Conned,
Spend five minutes reading “Economic Freedom, Human Freedom, Political Freedom”
The essence of human freedom as of a free private market, is freedom of people to make their own decisions so long as they do not prevent anybody else from doing the same thing. That makes clear, l think, why free private markets are so closely related to human freedom. It is the only mechanism that permits a complex interrelated society to be organized from the bottom up rather than the top down. However, it also makes clear why free societies are so rare. Free societies restrain power. They make it very hard for bad people to do harm, but they also make it very hard for good people to do good. Implicitly or explicitly, most opponents of freedom believe that they know what is good for other people better than other people know for themselves, and they want the power to make people do what is really good for them.
Chile, to this day, continues to outperform the economies of all the countries in South America.
The Democrats don’t follow Friedman’s advice, so why would they care about Pinochet? And the Republicans got far more to worry about now, than some dead guy they complained about.
Economic Freedom is the bedrock of Hamiltonianism. Some of what drives Google at the Executive level, and a lot of what drives economists and businesses.
Nothing says “conservatives care about freedom” like being an apologist for a murderous dictator! Thanks for the laugh, guys.
Good post Book.
and Ymarsakar … as an aside — On the surface Google appears to be an example of free enterprise gone wild but if we look at their donations, political statements, leanings etc, we see they wish to be the elite commissars in a pseudo egalitarian society — better described as Socialism. Google? At the top they are clever liberal leftists.
Milton Friedman — I started reading his works in the early 60’s when he was a stalwart in FEE (Foundation for Economic Education) of which I was a member. And in turn Friedman, through FEE, put me on the right track with Frederick Bastiat’s “The Law” a brilliant “must-read” for all Americans, especially Conservatives.
Friedman will be sorely missed — and such a tragedy — he departs just a few days after our dear country was inundated by lefties. America will be “steered” by those who so hated his proven-to-be brilliant economic philosophy.
ExP(Jack)
I did my economics degree a long time ago, and I’ve yet to meet a practicing (real) economist who’d even pay lip service to Friedman as anything but a charlatan. Trickle down (or supply side) economics is a mirage.
Come to think of it, I’ve never met a Chicago graduate who knew much about economics.
Addressing only money supply is a 1% solution.
and Ymarsakar … as an aside — On the surface Google appears to be an example of free enterprise gone wild but if we look at their donations, political statements, leanings etc, we see they wish to be the elite commissars in a pseudo egalitarian society — better described as Socialism. Google? At the top they are clever liberal leftists.
I won’t say I agree or disagree. I will just say that I’ve seen their Vice President being grilled by a Congressional tribunal. Aside from that, I really don’t have enough information to make a judgement. However, I do use ask.com more, and google less.
Nothing says “conservatives care about freedom” like being an apologist for a murderous dictator! Thanks for the laugh, guys.
Laugh all you want, conservatives have the guns and the killers to use them. You just have the psychos, the nut jobs, the disillusioned, and the idiots. Bet on them all you like. I’ll bet with the Marine Corps.
justaguy: I did my economics degree a long time ago, and I’ve yet to meet a practicing (real) economist who’d even pay lip service to Friedman as anything but a charlatan.
Hmmm, I thought Alan Greenspan was once a practicing economist. No? Or how about Ben Bernanke?
Oh! I get it. ;-D You’ve never met any practicing economists! Ha-ha-ha!
I have met one practicing economist who is devoted Friedman disciple – especially after visiting Chile for direct purpose to study its economical miracle. He has some weight in Russian goverment circles; and he was an author of voucher privatization performed by Gaydar government. And he is also my schoolmate and friend. Really, most my knowlege in economics comes from him. Economics is a hard science, and no charlatan can recieve Nobel prize in it.
Juastaguy, “long time ago” means that this was at time of absolute monopoly of Keynesian paradigm in economics. No wonder, they label as charlatan the chief debunker of this paradigm.
I am not big fan of Pinochet; but it seems there were no non-violent solution to Chile crisis, and military dictatorship was the only alternative to chaos and civil war. I know what civil war means, and almost any dictatorship is far better that it.
Sergey – why would you say “the brutality of the Pinochet regime was grossly exaggerated”? What makes you think that, because I’ve never heard that before.
Fauta – You say Chile is outperforming all other S.American economies at the moment – again where are you getting the info from?
I’m not disagreeing – I just, again have not heard that and am interested…
“It is not known exactly how many people were killed by government and military forces during the 17 years that he was in power, but the Rettig Commission listed 2,095 deaths and 1,102 “disappearances.”, with the vast majority of victims coming from the opposition to Pinochet at the hands of the state security apparatus.”
3000 dead in 17 years in country with population 15 mln does not seem to me very brutal death toll, especially if you see who these victums were:
“Much of the regime’s violence was directed toward those it viewed as socialist or Marxist sympathizers”
(that is, ideologists and practitioners of political violence themselves). Also:
“Isolated attacks by armed groups opposed to the regime allowed the dictatorship to justify what they termed the “cycle” of oppression.”
That is, not so much oppression of peaceful citizens, but mostly war against armed terrorists.
And even qualification of Pinochet seizing power as a coup is problematic:
“With rising domestic strife in Chile, Pinochet was appointed Army Commander in Chief on August 23, 1973 by President Salvador Allende, his masonic brother of the same lodge, just the day after Parliament voted a resolution calling Allende’s removal, by force if necessary.”
It seems, Pinochet’s deed was legitimized by Parlament.
All these facts are from Wiki, and they do not fit well to popular perception.
Paul Krugman once wrote of a statement by Miltron Friedman (and I am quoting from memory) that is was “typical Milton: too simple, but more correct than not”. Which is, when one thinks about it, high praise.
Fauta – You say Chile is outperforming all other S.American economies at the moment – again where are you getting the info from?
She can’t because it isn’t. Real per capita earnings in Chile excluding foreign entities is still below 1973 levels and per capita real net worth is also still below 1973 levels..
Massaging the figures to include untaxed US owned corporate profits is dishonest chicanery practised by dishonest charlatan proponents of neoliberal US corporatism.
Regarding Chile: Please supply the data including and excluding untaxed US owned corporate profits, Also data on per capita earnings excluding foreign entities in either 73 or 2006 real dollars.
Obviously you have it at your fingertips.
Fair enough – though I obviously disagree with your conclusion.
Considering he was an installed dictator who usurped a democratically elected leader I think the general view of Pinochet as a monstrous leader holds appropriately.
You would also consider that most of the country oppossed him and his policies which were a disaster for the country.
Also, you left out the issue of instiutionalized torture and state terrorism which kept people attempting to renistall the democratic process(‘marxists’, apparently), most of the country, in a state of fear and hopelessness.
Figure in that he’s still a hated figure who was pursed – and convicted if I’m not mistaken – internationally for grievous crimes against his own people.
The difference, is some people talk about the “image” they hold and others talk about “what are we going to do about it”.
Here is some interesting data to look at.
http://www.ers.usda.gov/Data/Macroeconomics/Data/HistoricalGDPSharesValues.xls
I’m not sure if this line of thinking has been applied yet to Chile and the “experiment”, but probably the most important measure of success (besides bringing down inflation, which obviously was successful) is Chile’s share of global GDP and whether it increased or decreased. I took this data and looked at Chile’s share of global GDP now and in 1973, and it grew 76% in absolute terms (from .15 in 1973 to .26 currently) while the share of South America as a whole, along with 7 out of the 12 countries in the region actually fell over the same period. Chile experienced the most dramatic growth in its share of world GDP during this period, more than doubling the next closest country (Paraguay with 34% growth). It seems to me that this is a better judge of the success of the economy because it washes out the effects of an obvious regional decline that would effect all countries in the area. Most critics like to cite declines in the Chilean economy using measures such as unemployment or homelessness or a widening gap in the poorest and wealthiest citizens, but it becomes clear that the Chilean economy has performed remarkably better than all other economies in South America. Looks to me like there may have been a miracle in Chile after all.
The person who really usurped power and suppressed democratical process was Allende. He got only 30% vote, while his opponents votes were divided between 3 major parties. This was not mandat for socialist experiment, but he proceed with radical reforms that destroyed economics and were explicitly anticonstitutional. Parlament voted for his impeachment, there was general strike that completely paralyzed transport and trade. During this impasse army was the only organized force that still can function. So Pinochet resolved the crisis by the only possible way – toppled crazy Soviet puppet and restored order. He could not restore law – nobody could when army is the only functioning government body.
If the Left was as informed and perspicacious as Sergey here, I would be afraid of the Left. But, they aren’t, so.
Unfortunately Sergey isn’t offering informed opinion.
Opinion, to be sure.
Informed, I’d beg to differ…
Sergey isn’t offering informed opinion, he is offering information. Your logic doesn’t parse.
Simply to give some measure for comparison, there were 3000 death cases in Chile during 17 years in a country with population 15 mln due government forces. In Darfur there were 200 000 death cases and 2 mln refuges in a country with population 7.5 mln during 3 years. I do not give any opinion there, I only rise a question: if Pinochet rule was a brutal dictatorship, how would you call Sudan regime? Make for yourself a simple arithmetic and find death toll ratio per capita per year for two cases.
“The United States is the largest international donor in Sudan, consistently providing 80 percent of all humanitarian assistance-and more than $1 billion since 2005.”
So, US actively cooperate with Susanese brutal, murderuos regime and give it huge sums of US taxpayers dollars. And Freidman was blamed for giving Pinochet his economic advice. I see here some hypocrisy. Do you?
See also:
http://www.fas.org/irp/world/para/spla.htm
These sources indicate that Sudan became very important Islam terrorist training ground, only second after Iran.
“Most of the Pinochet victims were bandits or rabid revolutionaries a la Che Guevara, so to kill them was a noble deed anyway”
it really is impressive how some people are willing to stand up for unpleasant dictators –
http://en.wikipedia.org/wiki/Caravan_of_Death –
i am sure you feel this is the behaviour of freedom loving people
it really is impressive how some people are willing to stand up for unpleasant dictators –
We’re just trying to make peace with the Left. Doing what they do. Hanging with the cool crowd, no?
“Nevertheless, Allende’s own refusal to obey and/or enforce more than 7,000 Chilean Supreme Court and other legistlative rulings (as detailed in the Resolution of August 22, 1973) indicate he had already begun ruling in a dictatorial style in defiance of Chile’s democratic government institutions.”
Exactly this endorsed Pinochet to implement the said Resolution. In chaotic situation just before the coup there were no democratic solution; the choice was between two kind of dictatorship: military of Right or Marxist party of Left, sponsored by Castro. Allende’s suicide was made by AK-47 that Castro personally gave to him. Everybody with knowledge of carnage which Marxist parties inflict everywhere when they came to power understand which choice is better.
Looks to me like there may have been a miracle in Chile after all.
Robb | 11.18.06 – 12:09 am | #
This is the usual misinformation of Friedman’s accolytes. Please factor in cumulative current account deficit, trade deficit and outstanding foreign debt and forward liabilities.
Only then will you have a figure worth working with.
Neoliberalism is a mirage that can only be justified with rubbery partial figures. It has never worked, anywhere, to anyone but the very wealthiest’s advantage.
Hmmm, I thought Alan Greenspan was once a practicing economist. No? Or how about Ben Bernanke?
Oh! I get it. ;-D You’ve never met any practicing economists! Ha-ha-ha!
a guy in pajamas | Homepage | 11.17.06 – 12:37 am | #
Greenspan was respected as a central banker with a narrow policy remit.
There is much unease in international economic circles with regard to Bernanke. Printing money to pay foreign debt is a fool’s game. Your children and your grandchildren will pay for this.
The Bretton Woods system was adopted for sound reasoning. It was discarded hastily without good science and disregard for historical precedent. Friedman thought he had the answer to managing the risks.
We will see in the next 5 years whether he was right. I wouldn’t bet the farm on it.
“This is the usual misinformation of Friedman’s accolytes. Please factor in cumulative current account deficit, trade deficit and outstanding foreign debt and forward liabilities.”
The problem is, you keep making authortarian pronouncements but offer nothing to back it up.