catallaxy files

catallaxy in technical exile

Dr Milton Friedman (1912-2006)

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Andrew Norton has written his personal tribute to the late Milton Friedman here. This is a short one from me.

The first Friedman work I ever read was Capitalism and Freedom. Unlike Andrew I think I was probably already out of high school when I first began seriously reading Friedman’s works. Hayek and Friedman were the two libertarian thinkers who made the greatest early impressions on me. Though in Hayek’s case it actually took a second go later for me to be impressed. By contrast, Capitalism and Freedom was persuasive and engaging on my first serious read. Friedman really had the gift of selling his ideas and writing complex arguments in a manner that was clear and simple but without being dumbed down.

Many of the ideas in that book are still discussed by libertarians to this day and many have found their way into the public policy debate- education vouchers, using a negative income tax in place of a minimum wage to address poverty, reassessing the costs and benefits of occupational licensure, and the links between economic and ‘non economic’ freedoms. Friedman will be remembered as a ‘policy entrepreneur’ as much as for his theoretical achievements.

Aside from this already impressive list there was of course also his role with William Meckling in ending the draft:

One of Meckling’s favorite stories, which his widow, Becky, recalled in a recent interview, was of an exchange between Mr. Friedman and General William Westmoreland, then commander of all U.S. troops in Vietnam. In his testimony before the commission, Mr. Westmoreland said he did not want to command an army of mercenaries. Mr. Friedman interrupted, “General, would you rather command an army of slaves?” Mr. Westmoreland replied, “I don’t like to hear our patriotic draftees referred to as slaves.” Mr. Friedman then retorted, “I don’t like to hear our patriotic volunteers referred to as mercenaries. If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.”

There was also his brave public stance in favour of the legalisation of drugs as early as 1972. Friedman also regarded education as such an important issue that in 1996 he and wife Rose founded the Milton and Rose Friedman Foundation to redouble efforts in establishing school choice and a voucher system.

Last but not least there is his theoretical and academic work. His work on monetary theory and policy will always be heavily contested but fundamentally he was right. As Tyler Cowen argues, Friedman was less of a monetary dogmatist than usually depicted and was continually adapting his fundamentally correct strategy of wanting to substitute rules for discretion in monetary policy:

    The early Milton favored one hundred percent reserve banking, in part as a reaction against the bank failures and excesses of the Great Depression.
    The mid-period Milton favored a fixed rate of monetary growth. The Milton Friedman of 1969 considered the idea of deflation — an “optimum quantity of money” — although it is not clear he ever endorsed that proposal. The Milton Friedman of 1986 Friedman and Schwartz toyed with ideas of free banking. The very late period Milton Friedman was moving toward the notion of an inflation rule, as monetary targeting had not worked.

There is also his magisterial Monetary history of the US with Anna Schwartz which established that Friedman was not just a formalist but also formed his views on careful analysis of history and empirical data (as if that was not obvious enough from his role as ‘policy entrepreneur’).

Finally, any discussion of Friedman’s academic work cannot leave out his permanent income hypothesis which I remember first coming across in university education and which I was struck by the logic and elegance of. Nor can it omit his famous essay on The methodology of positive economics which, regardless of whether it was right or wrong in its conclusions, sparked off an important and lively debate in economics.

Update: You can leave your condolences to the Friedman family at David Friedman’s blog here.

John Humphreys has his own Milton Friedman story here:

My honours thesis was inspired by Friedman’s writings on the negative income tax — an idea that I continue to champion. In the course of my research I contacted lots of economists and thinkers with ideas on the NIT and most didn’t respond. Friedman did. I got a large manila folder with a collection of his writings on the issue and a short written note. All for some 20-year-old stranger from the other side of the world. Top guy. RIP.

Written by Admin

November 17, 2006 at 7:48 am

Posted in Uncategorized

9 Responses

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  1. The copies of Capitalism and Freedom and Free to Choose I ordered on Yobbo and Jason’s recommendation arrived while I was away on circuit. I took both out of the Amazon box yesterday.

    Unlike Jason, I discovered Hayek first – mainly through Professor Suri Ratnapala. That said, I always loved Friedman’s beautifully written introduction to my fiftieth anniversary edition of Road to Serfdom.

    I’m really only discovering Friedman fully now – better late than never, I guess. I think I know what I’ll spend some of my weekend doing…


    November 17, 2006 at 9:12 am

  2. I first discovered him at high school when my Economics teacher pointed me in his direction. At uni, when my Economics 100 lecturer started rubbishing him – and it was outright abuse – I suddenly realised that the lecturer, the Dean of the School, was simply wrong. It was one of those moments.
    Like SL, I think the appropriate response to his death is to (re-)open those books of his and read them again, although the Youtube stuff is a good worksafe substitute.
    We may never see his like again – but I genuinely hope we will.

    Andrew Reynolds

    November 17, 2006 at 10:48 am

  3. Friedman side by side with Stigler.

    Jason Soon

    November 17, 2006 at 10:50 am

  4. A great man who like Solow and Samuelson achieved greatness when his great theory was essentially shown to be wrong.

    I remember him being interviewed on the ABC in 1975 I think with a very young Barry Hughes being the only one who had a clue when questioning him.

    Bring Back CL's Blog

    November 17, 2006 at 11:05 am

  5. Get over to the Australian’s blog on Friedman’s legacy and add some positive comments to balance all the negative that is the only thing there at present.


    November 17, 2006 at 12:30 pm

  6. It seems to have gotten a bit better now. Some of the leftie luvvies do like to blame old Milt for everything, though – the black plague’ll be next.


    November 17, 2006 at 1:15 pm

  7. But watch them go into deep mourning when that old creep Castro dies.


    November 17, 2006 at 2:05 pm

  8. The Cato Institute Google Ad at the top of the page has some good stuff on it, too.

    And don’t get me started on Castro, CL.


    November 17, 2006 at 2:09 pm

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