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Milton Friedman
Chicago School of Economics
MiltonFriedman.jpg
Birth July 31, 1912(1912-07-31)
Brooklyn, New York
Death November 16, 2006 (aged 94)
San Francisco, California
Nationality United States
Institution Hoover Institution (1977–2006)
University of Chicago (1946–77)
Columbia University (1937–41, 1943–45, 1964–65)
NBER (1937–40)
Field Economics
Alma mater Columbia University (Ph.D.), 1946, University of Chicago (M.A.), 1933
Rutgers University (B.A.), (1932)
Influences Frank Knight, Jacob Viner, Arthur Burns, Friedrich Hayek, Homer Jones, Ludwig von Mises, Henry Simons, George Stigler
Opposed John Maynard Keynes, Murray Rothbard
Influenced David D. Friedman, Anna J. Schwartz, Ben Bernanke, Gary Becker, Thomas Sowell, Harry Markowitz, Chicago Boys
Contributions Price theory, Monetarism, applied macroeconomics, floating exchange rates, volunteer military, Permanent income hypothesis, Friedman test
Awards John Bates Clark Medal (1951)
Nobel Memorial Prize in Economics (1976)
Presidential Medal of Freedom 1988
National Medal of Science 1988
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Milton Friedman (July 31, 1912  – November 16, 2006) was an American economist, statistician, and a recipient of the Nobel Memorial Prize in Economics. He is best known among scholars for his theoretical and empirical research, especially consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.[1] He was an economic advisor to U.S. President Ronald Reagan. Over time, many governments practiced his restatement of a political philosophy that extolled the virtues of a free market economic system with little intervention by government. As a professor of the Chicago School of Economics, based at the University of Chicago, he had great influence in determining the research agenda of the entire profession. Friedman's many monographs, books, scholarly articles, papers, magazine columns, television programs, videos and lectures cover a broad range of topics of microeconomics, macroeconomics, economic history, and public policy issues. The Economist magazine praised him as "the most influential economist of the second half of the 20th century…possibly of all of it".[2]

Originally a Keynesian supporter of the New Deal and advocate of government intervention in the economy, during the 1950s his reinterpretation of the Keynesian consumption function challenged the basic Keynesian model. At the University of Chicago, Friedman became the main advocate for opposing Keynesianism.[3] During the 1960s he promoted an alternative macroeconomic policy known as "monetarism". He theorized there existed a "natural rate of unemployment" and he argued the central government could not micromanage the economy because people would realize what the government was doing and change their behavior to neutralize such policies. He rejected the Phillips Curve and predicted that Keynesian policies then existing would cause "stagflation" (high inflation and minimal growth).[4] Friedman's claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of Keynes, who argued that monetary policy is ineffective during depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to decrease mass unemployment. Though opposed to the existence of the Federal Reserve, Friedman argued that, given that it does exist, a steady expansion of the money supply was the only wise policy, and he warned against efforts by a treasury or central bank to do otherwise.[5]

Influenced by his close friend George Stigler, Friedman opposed government regulation of many types. He once stated that his role in eliminating U.S. conscription was his proudest accomplishment, and his support for school choice led him to found The Friedman Foundation for Educational Choice. Friedman's political philosophy, which he considered classically liberal and libertarian, emphasized the advantages of free market economics and the disadvantages of government intervention and regulation, strongly influencing the opinions of American conservatives and libertarians. In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military, freely floating exchange rates, abolition of licensing of doctors, a negative income tax, and education vouchers.[6] His books and essays were well read and were even circulated illegally in Communist countries.[7][8]

Friedman's methodological innovations held wide acceptance among economists, but some considered his policy prescriptions controversial. Most economists during the 1960s rejected them, but since then they have had an increasing international influence (especially in the USA and Britain). Some of his laissez-faire ideas concerning monetary policy, taxation, privatization and deregulation were used by governments,[9] especially during the 1980s. His monetary theory has had a large influence on economists such as Ben Bernanke and the Federal Reserve's response to the financial crisis of 2007-2010.[10][11]

Early life

Friedman was born on July 31, 1912 in Brooklyn, New York, to recent Jewish immigrants, Jenő Friedman and Sára Landau from Beregszász in Hungary (now Berehove, part of Ukraine) both of whom worked as dry goods merchants. Shortly after Milton's birth, the family relocated to Rahway, New Jersey. A talented student, Friedman graduated from Rahway High School during 1928, soon before his 16th birthday.[12]

Friedman graduated from Rutgers University in New Jersey, where he specialized in mathematics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression. Friedman did graduate work at the University of Chicago, earning an M.A. in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During 1933–34 he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for 1934–35, spending the year working as a research assistant for Henry Schultz, who was then working on his very quantitative and empirical Theory and Measurement of Demand. During this year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis.

Public service

Friedman was initially unable to find academic employment, so during 1935, he followed his friend W. Allen Wallis to Washington, where Roosevelt's New Deal was "a lifesaver" for many young economists.[13] At this stage, Friedman said that he and his wife "regarded the job-creation programs such as the WPA, CCC, and PWA appropriate responses to the critical situation", but not "the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration".[14] Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was "the wrong cure for the wrong disease", arguing that the money supply should simply have been expanded, instead of contracted.[15] In the publication Monetary History of the United States by Friedman and Anna Schwartz, they argue that the Great Depression was caused by monetary contraction, which was the consequence of poor policymaking by the Federal reserve and the continuous crises of the banking system.[16]

During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.

During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service.[17][18] Friedman spent 1941–43 working on wartime tax policy for the Federal Government, as an advisor to senior officials of the United States Department of the Treasury. As a Treasury spokesman during 1942 he advocated a Keynesian policy of taxation, and during this time he helped to invent the payroll withholding tax system, although he later regretted it.[19]

In his autobiography, he comments on "how thoroughly Keynesian I was then".[20] As Friedman grew older he reversed himself; during 2006 he observed, "You know, it's a mystery as to why people think Roosevelt's policies pulled us out of the Depression. The problem was that you had unemployed machines and unemployed people. How do you get them together by forming industrial cartels and keeping prices and wages up?"[21]

Academic career

Early years

During 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of the war years working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments. Then during 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a Ph.D. during 1946. Friedman spent the 1945–46 academic year teaching at the University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his son, David D. Friedman was born.

University of Chicago

During 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he helped build an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago School of Economics.

At that time, Arthur Burns, who was then the head of the National Bureau of Economic Research, asked Friedman to rejoin the Bureau's staff. He accepted the invitation, and assumed responsibility for the Bureau's inquiry into the role of money in the business cycle. As a result, he initiated the "Workshop in Money and Banking" (the "Chicago Workshop"), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.

Friedman spent the 1954–55 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn) and an anti-Keynesian minority (headed by Dennis Robertson). Friedman speculates that he was invited to the fellowship because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people.[22]

Friedman was an economic adviser to Republican presidential candidate Barry Goldwater during 1964, who lost to Lyndon Johnson.

Nobel memorial prize and retirement

During 1976, Friedman won the Nobel Memorial Prize in Economics "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy".[1] During 1977, at age 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco. From 1977 on, he was affiliated with the Hoover Institution at Stanford University. During the same year, Friedman was approached by the Free To Choose Network and asked to create a television program presenting his economic and social philosophy. The Friedmans worked on this project for the next three years, and during 1980, the ten-part series, entitled Free to Choose, was broadcasted by the Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman), also entitled Free To Choose, was the bestselling nonfiction book of 1980 and has since been translated into 14 foreign languages.

Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign, and then served on the President's Economic Policy Advisory Board for the rest of the Reagan Administration. During 1988, he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom. Milton Friedman is known now as one of the most influential economists of the 20th century.[23][24] Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments.

Scholarly contributions

Economics

Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further but Friedman's contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of the United States (1963), which was an examination of the role of the money supply and economic activity in U.S. history. A striking conclusion of their research was one regarding the role of money supply fluctuations as contributing to economic fluctuations. Several regression studies with David Meiselman during the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing but largely untested view on their relative importance. Friedman's empirical research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level.

Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that the phenomenon of inflation is to be regulated by controlling the amount of money put into the national economy by the Federal Reserve Bank. He famously quipped that deflation can be fought by "dropping money out of a helicopter". Friedman's arguments were designed to counter popular claims that inflation at the time was the result of increases in the oil price, or increases in wages: as he wrote,

Inflation is always and everywhere a monetary phenomenon.
—Milton Friedman, A Monetary History of the United States 1867-1960 (1963)

Friedman rejected the use of fiscal policy as a tool of demand management; and he held that the government's role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression, which he termed the Great Contraction, arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve.

The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 ... Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.
—Milton Friedman, Two Lucky People, 233

Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates. Friedman's macroeconomic theories were soon displaced. His close friend George Stigler explained, "As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations, a newer approach developed by Robert Lucas, also at the University of Chicago."[25]

Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.[26] This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to increase later to balance public finances. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps, with the insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labour market.

Friedman's essay "The Methodology of Positive Economics" (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School of Economics. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction.

Statistics

Although known less popularly for statistics, Friedman was also known as a brilliant statistician. One of his most famous contributions to statistics is sequential sampling. "Friedman did statistical work at the Division of War Research at Columbia. He and his colleagues came up with a sampling technique, known as sequential sampling, which became, in the words of The New Palgrave Dictionary of Economics, 'the standard analysis of quality control inspection.' The dictionary adds: 'Like many of Friedman’s contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that however is a measure of his genius.'"[27].

Other work

Friedman was an important member of the team during World War II that developed a new proximity fuse for anti-aircraft projectiles, which prevented shells from exploding unless they were near the object they are meant to destroy.[27]

Public policy positions

Friedman was in favor of abolishing the Federal Reserve System and replacing it with a mechanical system that would keep the quantity of money increasing at a steady rate, issued directly by the government and reducing fractional reserve banking powers for the banks. He also supported libertarian policies such as legalization of drugs[28] and prostitution.

Milton Friedman was a major proponent of a volunteer military, stating that the draft was "inconsistent with a free society".[29] In Capitalism and Freedom, he argued that conscription is inequitable and arbitrary, preventing young men to shape their lives as they see fit.[30] During the Nixon administration he headed the committee to research a conversion to paid/volunteer armed force. He would later state that his role in eliminating the conscription in the United States was his proudest accomplishment.[5] Friedman did, however, believe a nation could compel military training as a reserve in case of war time.[30]

He served as a member of President Reagan's Economic Policy Advisory Board during 1981. During 1988, he received the Presidential Medal of Freedom and the National Medal of Science. He said that he was a libertarian philosophically, but a member of the U.S. Republican Party for the sake of "expediency" ("I am a libertarian with a small 'l' and a Republican with a capital 'R.' And I am a Republican with a capital 'R' on grounds of expediency, not on principle.") But, he said, "I think the term classical liberal is also equally applicable. I don't really care very much what I'm called. I'm much more interested in having people thinking about the ideas, rather than the person."[31]

Friedman was supportive of the state provision of some public goods that private businesses are not considered as being able to provide. However, he argued that many of the services performed by government could be performed better by the private sector. Above all, if some public goods are provided by the state, he believed that they should not be a legal monopoly where private competition is prohibited. For, example, in response to the United States Post Office's legal monopoly of mail, he said

There is no way to justify our present public monopoly of the post office. It may be argued that the carrying of mail is a technical monopoly and that a government monopoly is the least of evils. Along these lines, one could perhaps justify a government post office, but not the present law, which makes it illegal for anybody else to carry the mail. If the delivery of mail is a technical monopoly, no one else will be able to succeed in competition with the government. If it is not, there is no reason why the government should be engaged in it. The only way to find out is to leave other people free to enter.
—Milton Friedman, Friedman, Milton & Rose D. Capitalism and Freedom, University of Chicago Press, 1982, 29

Friedman made newspaper headlines by proposing a negative income tax to replace the existing welfare system, and then opposing a bill to implement it because the bill merely proposed to supplement the existing system rather than replace it.

During 2005, Friedman and more than 500 other economists advocated discussions regarding the economic benefits of the legalization of marijuana.[32]

Michael Walker of the Fraser Institute and Friedman hosted a series of conferences from 1986 to 1994. The goal was to create a clear definition of economic freedom and a method for measuring it. Eventually this resulted in the first report on worldwide economic freedom, Economic Freedom in the World. This annual report has since provided data for numerous peer-reviewed studies and has influenced policy in several nations.

Along with sixteen other distinguished economists he opposed the Copyright Term Extension Act and filed an amicus brief in Eldred v. Ashcroft.[33] He supported the inclusion of the word "no-brainer" in the brief.[34]

Friedman argued for stronger basic legal (constitutional) protection of economic rights and freedoms in order to further promote industrial-commercial growth and prosperity and buttress democracy and freedom and the rule of law generally in society.[35]

Honors, recognition, and influence

Friedman allowed the Cato Institute to use his name for its biannual Milton Friedman Prize for Advancing Liberty beginning in 2001. A Friedman Prize was given to the late British economist Peter Bauer during 2002, Peruvian economist Hernando de Soto during 2004, Mart Laar, former Estonian Prime Minister during 2006 and a young Venezuelan student Yon Goicoechea during 2008. His wife Rose, sister of Aaron Director, with whom he initiated the Friedman Foundation for Educational Choice, served on the international selection committee.

Hong Kong

Friedman once said "if you want to see capitalism in action, go to Hong Kong".[36] He wrote during 1990 that the Hong Kong economy was perhaps the best example of a free market economy.[37]

One month before his death, he wrote the article "Hong Kong Wrong - What would Cowperthwaite say?" in the Wall Street Journal, criticizing Donald Tsang, Chief Executive of Hong Kong, for abandoning "positive noninterventionism".[38] Tsang later said he was merely changing the slogan to "big market, small government", where small government is defined as less than 20% of GDP. In a debate between Tsang and Alan Leong, rivals for the job of Chief Executive, Leong introduced the topic and jokingly accused Tsang of angering Friedman to death.

Chile

During 1975, two years after the military coup that ended the government of Salvador Allende, the economy of Chile experienced a crisis. Friedman accepted the invitation of a private foundation to visit Chile and lecture on principles of economic freedom. He spent five days in Chile. Friedman encapsulated his philosophy in a lecture at Universidad Católica de Chile, saying: "free markets would undermine political centralization and political control."[39]

Friedman also met with the military dictator, President Augusto Pinochet during his visit. He did not serve officially as an advisor to the Chilean government, but did write a letter providing Pinochet with a "shock" program to end hyperinflation and promote a market economy[40]. His letter suggested that a brief period of cutting government spending would reduce its fiscal deficit and thus reduce the rate of increase of the quantity of money in the country that was driving inflation. Friedman felt that there might be a brief period ("measured in months") of higher unemployment, followed by recovery once inflation was tamed. His letter also suggested that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes to do so. Later, Friedman said he believed that market reforms would undermine Pinochet.[41] Chilean graduates of the Chicago School of Economics and its new local chapters had been appointed to important positions in the new government soon after the coup, which allowed them to advise Pinochet on economic policies in accord with the School's economic doctrine.

According to his critics, Friedman did not criticize Pinochet's dictatorship at the time, nor the assassinations, illegal imprisonments, torture, or other atrocities that were well-known by then.[42] Later, in Free to Choose, he said the following: "Chile is not a politically free system and I do not condone the political system ... the conditions of the people in the past few years has been getting better and not worse. They would be still better to get rid of the junta and to be able to have a free democratic system."[43]

See more under Criticism.

Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet's rule and to the eventual transition to a democratic government during 1990. That idea is included in from Capitalism and Freedom, in which he declared that economic freedom is not only desirable in itself but is also a necessary condition for political freedom. He stressed that the lectures he gave in Chile were the same lectures he later gave in China and other socialist states.[44] During the 2000 PBS documentary The Commanding Heights, Friedman continued to argue that criticism over his role in Chile missed his main contention that freer markets resulted in freer people, and that Chile's unfree economy had caused the military government. Friedman suggested that the economic liberalization he advocated caused the end of military rule and a free Chile.[45]

Iceland

Friedman visited Iceland during the autumn of 1984, met with important Icelanders and gave a lecture at the University of Iceland on the Tyranny of the Status Quo. He participated in a lively television debate on August 31, 1984 with major socialist intellectuals, including Ólafur Ragnar Grímsson, who later became the president of Iceland.[46] When they complained that a fee was charged for attending his lecture at the University and that hitherto, lectures by visiting scholars had been free-of-charge, Friedman replied that previous lectures had not been free-of-charge in a meaningful sense: Lectures always have related costs. What mattered was whether attendees or non-attendees covered those costs. Friedman thought that it was fairer that only those who attended paid. In this discussion Friedman also stated that he did not receive any money for delivering that lecture.

Estonia

Although Friedman never visited Estonia, his book Free to Choose exercised a great influence on that nation's then 32-year-old prime minister, Mart Laar, who has claimed that it was the only book on economics he had read before taking office. Laar's reforms are often credited with responsibility for transforming Estonia from an impoverished Soviet Republic to the "Baltic Tiger". A prime element of Laar's program was introduction of the flat tax. Laar won the 2006 Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.[47]

United Kingdom

Milton Friedman influenced the thinking of Alan Walters and Patrick Minford, two of Margaret Thatcher's main macroeconomic advisers. See the book Margaret Thatcher's Revolution: How it Happened and What it Meant, edited by Subroto Roy & John Clarke, Continuum 2005

Criticism

Austrian school criticisms

During 1971, libertarian economist Murray Rothbard wrote a lengthy article for The Individualist which criticized several of Friedman's viewpoints as totalitarian and statist. In particular, Rothbard criticized Friedman's viewpoint that the micro- and macro-spheres are entirely separate, with the government needing to take an active role in the macro-sphere, as false and dangerous, the view that it is beneficial for the government to control currency to maintain constant price levels as bogus and harmful, and the viewpoint that nonpaying beneficiaries of positive externalities created by various services should be taxed to pay producers of that service as an absurd position that opens the door for the most ridiculous forms of totalitarianism. More generally, he criticizes Friedman's efforts to make the government more efficient as detrimental to individual liberty, and concludes that "And so, as we examine Milton Friedman’s credentials to be the leader of free-market economics, we arrive at the chilling conclusion that it is difficult to consider him a free-market economist at all."[48] It should be noted, however, that Friedman's position on governmental control of money changed since 1971 when this criticism was made.[49] In a 1995 interview in Reason magazine he said the "difference between me and people like Murray Rothbard is that, though I want to know what my ideal is, I think I also have to be willing to discuss changes that are less than ideal so long as they point me in that direction". He said he actually would "like to abolish the Fed", and points out that when he has written about the Fed it is simply his recommendations of how it should be run given that it exists.[5]

Keynesian criticisms

After Friedman's death, Keynesian Nobel laureate Paul Krugman, while regarding Friedman as a "great economist and a great man," criticized him during 2007 by writing that "he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose."[50] However, Keynesian economists William Baumol and Alan Blinder repudiated this view, writing that "Friedman is surely no anarchist ... He recognizes that any society needs laws, and that legislation and enforcement of the law are proper roles for government in a free society."[51] Friedman himself acknowledged cases where, for instance, government regulation or a public monopoly may be preferred to private monopoly,[52] and noted numerous areas where he believed government intervention is necessary:[53]

A government which maintained law and order, defined property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented private charity and the private family in protecting the irresponsible ... would clearly have important functions to perform. The consistent [classical] liberal is not an anarchist.

During the Financial crisis of 2007–2010, several Keynesian economists such as James Galbraith and Joseph Stiglitz blamed the free market philosophy of Friedman and the Chicago school for the economic turmoil.[54] In response to these criticisms, University of Chicago Magazine noted that Chicago's Rajan, Thaler, and Vishney warned the US government that regulations are needed and, “The Chicago School never said we wanted blind deregulation ... We should really ask who were the people in 2000 who decided markets don’t need regulating. Those were not Chicago economists. Some of them were Clinton officials Jamie Gorelick#Federal National Mortgage Association (Fannie Mae)[1], and some of them are now advising Obama [2][3][4],” and noted other examples to claim that that their Nobel-winning economists are often mischaracterized regarding their views on deregulation.[55]

Anti-capitalist criticisms

In her book The Shock Doctrine: The Rise of Disaster Capitalism, the anti-capitalist[56] writer Naomi Klein accused Friedman of complicity in military coups in countries such as Chile and Indonesia, as well as the invasion of Iraq, which she claims "shocked" their populations into accepting neoliberal reforms for the benefit of foreign multinational companies.[57] Chilean economist Orlando Letelier similarly asserted that repression was necessary to implement Chicago School policies in Chile.[58] The libertarian author Johan Norberg published a critical response to Klein's assertions, in which he argued that she "confuses libertarianism with the quite different concepts of corporatism and neoconservatism" and "she subjects Milton Friedman to one of the most malevolent distortions of a thinker's ideas in recent history". Norberg also claimed that Friedman had opposed the Iraq War from the beginning.[59]

During Friedman's last email interview (2006), he said that the greatest threat to the world's economy is "Islamofascism, with terrorism as its weapon".[60] During an in-person interview with Friedman and his wife that same month, he said that he opposed the US invasion of Iraq: "What's really killed the Republican Party isn't spending, it's Iraq. As it happens, I was opposed to going into Iraq from the beginning. I think it was a mistake, for the simple reason that I do not believe the United States of America ought to be involved in aggression."His wife disagreed that it was aggression. However, after a short argument with his wife, he added "But, having said that, once we went in to Iraq, it seems to me very important that we make a success of it."[61]

However the idea that Friedman opposed the war from the beginning has been questioned by Klein in her response to Norberg who cited an interview with a German Magazine in April 2003 where, in response to the question concerning the authority of the UN given that many member states are not democracies, "Does this political disagreement threaten a trade war between Europe and America?", Friedman replied “the end justifies the means. As soon as we’re rid of Saddam, the political differences will also disappear.”[62]

Friedman also said in response to a question of whether he was concerned about the danger of a concentration of power as a result of the Iraq war by giving an alternative account of President Bush's motivation: "A clear no. US President Bush only wanted war because anything else would have threatened the freedom and the prosperity of the USA. Counter-question: Do you recommend that Gerhard Schröder ask the whole world for advice before he engages in foreign policy?".[63]

Personal life

According to a 2007 article in Commentary magazine, his "parents were moderately observant [Jews], but Friedman, after an intense burst of childhood piety, rejected religion altogether."[64]

It is believed by experts in the field that Friedman was tone deaf.[65][66]

Friedman wrote extensively of his life and experiences, especially in his memoirs with his wife Rose, titled Two Lucky People during 1998. He died of heart failure at the age of 94 years in San Francisco on November 16, 2006.[67][68] He was survived by his wife, (who died on August 18, 2009) and their two children, Janet and David, who is a philosopher and anarcho-capitalist economist. David's son, Patri Friedman, is also an economist and the executive director of the Seasteading Institute.[69]

See also

Notes

  1. ^ a b "Milton Friedman on nobelprize.org". Nobel Prize. 1976. http://nobelprize.org/nobel_prizes/economics/laureates/1976/. Retrieved February 20, 2008. 
  2. ^ "Milton Friedman, a giant among economists". The Economist. November 23, 2006. http://www.economist.com/business/displaystory.cfm?story_id=8313925. Retrieved February 20, 2008. 
  3. ^ Milton Friedman—Economist as Public Intellectual
  4. ^ Nobel prize winner Paul Krugman explains, "In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment...dubbed ‘stagflation.” Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995) p 43 online
  5. ^ a b c Doherty, Brian (June 1, 1995), "Best of Both Worlds", Reason Magazine, http://www.reason.com/news/show/29691.html, retrieved October 24, 2009 
  6. ^ Milton Friedman (1912-2006)
  7. ^ "Capitalism and Friedman". The Wall Street Journal. November 17, 2006. http://www.opinionjournal.com/editorial/feature.html?id=110009260. Retrieved August 22, 2008. 
  8. ^ Václav Klaus (January 29, 2007). "Remarks at Milton Friedman Memorial Service". http://www.klaus.cz/klaus2/asp/clanek.asp?id=3DpXss5H9RJv. Retrieved August 22, 2008. 
  9. ^ Sullivan, Patricia (November 16, 2006). "Milton Friedman, tireless promoter of free markets, dies". Washington Post. http://www.dallasnews.com/sharedcontent/dws/bus/stories/111706dnbusfriedman.33895ae.html. Retrieved February 20, 2008. 
  10. ^ Bullock, Penn (September 1, 2009), "Friedman Economics", Reason Magazine, http://reason.com/archives/2009/09/01/friedman-economics, retrieved February 4, 2010 
  11. ^ Bullock, Penn (November 17, 2009), "Bernanke’s Philosopher", Reason Magazine, http://reason.com/archives/2009/11/17/bernankes-philosopher, retrieved February 4, 2010 
  12. ^ Theroux, David J. (November 18, 2006). "Milton Friedman (1912-2006)". The Independent Institute. http://www.independent.org/newsroom/article.asp?id=1853. Retrieved February 22, 2008. 
  13. ^ Feeney, Mark (November 16, 2006). "Nobel laureate economist Milton Friedman dies at 94". The Boston Globe. http://www.boston.com/news/globe/city_region/breaking_news/2006/11/nobel_lauriet_e.html. Retrieved February 20, 2008. 
  14. ^ Friedman 1999, p. 59
  15. ^ "Right from the Start? What Milton Friedman can teach progressives." (PDF). J. Bradford DeLong. http://delong.typepad.com/pdf/20070308_108-115.delong.FINAL.pdf. Retrieved February 20, 2008. 
  16. ^ Bernanke 2004, p. 7
  17. ^ Friedman 1999, p. 42
  18. ^ Friedman 1999, pp. 84–85
  19. ^ Schmidt, Mark (July 29, 2002). "National Taxpayers Union". Nationals Taxpayers Union. http://www.ntu.org/main/press.php?PressID=256&org_name=NTU. Retrieved February 20, 2008. 
  20. ^ Friedman 1999, p. 113
  21. ^ Hawkins, John. "Interview with John Hawkins". Right Wing News. http://www.rightwingnews.com/interviews/friedman.php. Retrieved February 20, 2008. 
  22. ^ CATO, "Letter from Washington," National Review, September 19, 1980, Vol. 32 Issue 19, p 1119
  23. ^ "Milton Friedman: An enduring legacy". The Economist. November 17, 2006. http://www.economist.com/daily/news/displaystory.cfm?story_id=8190872. Retrieved February 20, 2008. 
  24. ^ Sullivan, Patricia (November 17, 2006). "Economist Touted Laissez-Faire Policy". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2006/11/16/AR2006111600592.html. Retrieved February 20, 2008. 
  25. ^ Stigler, George (March 15, 2003). Memoirs of an Unregulated Economist. University Of Chicago Press. pp. 34. 
  26. ^ Charlie Rose Show. December 26, 2005.
  27. ^ a b The Life and Times of Milton Friedman - Remembering the 20th century's most influential libertarian
  28. ^ Milton Friedman. (1991). The War on Drugs. America's Drug Forum. http://yes390.org/friedmanvideos.html. 
  29. ^ Rostker, Bernard (2006). I Want You!: The Evolution of the All-Volunteer Force. Rand Corporation. pp. 4. ISBN 9780833038951. 
  30. ^ a b Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. pp. 36. 
  31. ^ "Friedman and Freedom". Queen's Journal. Archived from the original on August 11, 2006. http://web.archive.org/web/20060811115145/http://queensjournal.ca/article.php?point=vol129/issue37/features/lead1. Retrieved February 20, 2008. , Interview with Peter Jaworski. The Journal, Queen's University, March 15, 2002 – Issue 37, Volume 129
  32. ^ "An open letter". Prohibition Costs. http://www.prohibitioncosts.org/endorsers.html. Retrieved February 20, 2008. 
  33. ^ "In the Supreme Court of the United States". Harvard Law School. http://cyber.law.harvard.edu/openlaw/eldredvashcroft/supct/amici/economists.pdf. Retrieved February 20, 2008. 
  34. ^ http://lessig.org/blog/2006/11/only_if_the_word_nobrainer_app.html
  35. ^ A New British Bill of Rights: The Case For, ISR Online Guides
  36. ^ Ingdahl, Waldemar (March 22, 2007). "Real Virtuality". The American. http://www.american.com/archive/2007/march-0307/real-virtuality/. Retrieved February 20, 2008. 
  37. ^ Friedman, Milton; Friedman, Rose (1990). Free to Choose: A Personal Statement. Harvest Books. p. 34. ISBN 0156334607. 
  38. ^ Friedman, Milton (October 6, 2006). "Dr. Milton Friedman". Opinion Journal. http://www.opinionjournal.com/editorial/feature.html?id=110009051. Retrieved February 20, 2008. 
  39. ^ "Interview with Jeffery Sachs on the "Miracle of Chile"". PBS. http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ufd_reformliberty_full.html. Retrieved February 20, 2008. 
  40. ^ Letters of correspondence between Friedman and dictator Pinochet
  41. ^ "Commanding Heights: Milton Friedman". PBS. http://www.pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#10. Retrieved December 29, 2008. 
  42. ^ O'Shaughnessy, Hugh (December 11, 2006). "General Augusto Pinochet". The Independent. http://www.independent.co.uk/news/obituaries/general-augusto-pinochet-427998.html. Retrieved February 20, 2008. 
  43. ^ "Free to Choose Vol. 5". Free to Choose. http://www.freetochoose.net/1980_vol5_transcript.html. Retrieved February 20, 2008. 
  44. ^ Friedman 1999, pp. 600-601
  45. ^ "Milton Friedman interview". PBS. http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/int_miltonfriedman.html. Retrieved February 20, 2008. 
  46. ^ Friedman, Milton; Grímsson, Ólafur Ragnar. Milton Friedman on Icelandic State Television in 1984. 
  47. ^ "Mart Laar". Cato Institute. http://www.cato.org/special/friedman/laar/. Retrieved February 20, 2008. 
  48. ^ Murray Rothbard, "Milton Friedman Unraveled". Originally printed 1971 in The Individualist. Reprinted in the Journal of Libertarian Studies, Fall 2002.
  49. ^ Ebeling, Richard. M., "Monetary Central Planning and the State, Part 27: Milton Friedman's Second Thoughts on the Costs of Paper Money"
  50. ^ The New York Review of Books, Who Was Milton Friedman?, February 15, 2007
  51. ^ William Baumol and Alan Blinder, Economics: Principles and Policy, Second Edition, 1982, pp. 807.
  52. ^ Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. pp. 28–29.
  53. ^ Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. pp. 34.
  54. ^ John Lippert, Friedman Would Be Roiled as Chicago Disciples Rue Repudiation, Bloomberg L.P., December 23, 2009, retrieved September 9, 2009.
  55. ^ http://magazine.uchicago.edu/0910/features/chicago_schooled.shtml
  56. ^ The pin-up revolutionary: Naomi Klein, The Independent, November 9, 2000, retrieved July 17, 2009.
  57. ^ Naomi Klein, The Shock Doctrine, Metropolitan Books, New York, NY 2007.
  58. ^ Orlando Letelier, Economic Freedom's Awful Toll, The Nation, August 28, 1976.
  59. ^ Norberg, Johan (October 2008), "Defaming Milton Friedman: Naomi Klein's disastrous yet popular polemic against the great free market economist", Reason Magazine, http://www.reason.com/news/show/128903.html, retrieved October 24, 2009 
  60. ^ Friedman, Milton (January 22, 2007). "Email from a Nobel Laureate". Opinion Journal. http://opinionjournal.com/extra/?id=110009561. Retrieved February 20, 2008. 
  61. ^ Wall Street Journal, The Romance of Economics, TUNKU VARADARAJAN, Saturday, July 22, 2006 http://www.opinionjournal.com/editorial/feature.html?id=110008690
  62. ^ http://www.naomiklein.org/shock-doctrine/resources/milton-friedman-war-iraq
  63. ^ http://www.naomiklein.org/shock-doctrine/resources/milton-friedman-war-iraq
  64. ^ Lanny Ebenstein, Milton Friedman, Commentary, May 2007, p. 286.
  65. ^ What is specific to music processing? Insights from congenital amusia
  66. ^ Stewart, Dr. Lauren; Amusia; Newcastle University; published 2006
  67. ^ Christie, Jim (November 16, 2006). "Free market economist Milton Friedman dead at 94". Reuters. http://www.reuters.com/article/ousiv/idUSWBT00621920061116. Retrieved February 20, 2008. 
  68. ^ Ambrose, Jay (November 22, 2006). "Milton Friedman’s legacy". Examiner.com. http://www.examiner.com/a-413909~Jay_Ambrose__Milton_Friedman_s_legacy.html. Retrieved February 20, 2008. 
  69. ^ Doherty, Brian (July 1, 2009), "20,000 Nations Above the Sea; Is floating the last, best hope for liberty?", Reason Magazine, http://www.reason.com/news/show/133865.html, retrieved October 24, 2009 

References

  • Bernanke, Ben (2004), Essays on the Great Depression, Princeton University Press, ISBN 0691118205 
  • Friedman, Milton (1999), Two Lucky People: Memoirs, University of Chicago Press, ISBN 0226264157 

Further reading

  • Ebenstein, Lanny (January 23, 2007). Milton Friedman: A Biography. Palgrave Macmillan. ISBN 1403976279. 
  • Enlow, Robert (September 25, 2006). Liberty & Learning: Milton Friedman's Voucher Idea at Fifty. Cato Institute. ISBN 1930865864. 
  • Friedman, Milton (November 15, 2002). Capitalism and Freedom. University of Chicago Press. ISBN 0226264211. 
  • Friedman, Milton (November 26, 1990). Free to Choose: A Personal Statement. Harvest Books. ISBN 0156334607. 
  • Friedman, Milton (February 1, 2008). Milton Friedman on Economics: Selected Papers. University of Chicago Press Journals. ISBN 0226263495. 
  • Friedman, Milton (November 1, 1971). Monetary History of the United States, 1867-1960. Princeton University Press. ISBN 0691003548. 

External links


Quotes

Up to date as of January 14, 2010

From Wikiquote

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.

Milton Friedman (31 July 191216 November 2006) was an American economist noted for his support for free markets and a reduction in the size of government. In 1976 he was awarded a Nobel Prize in Economics.

Contents

Sourced

I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind.
Underlying most arguments against the free market is a lack of belief in freedom itself.
  • Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. ... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.
    • The Counter-Revolution in Monetary Theory (1970)
  • On the level of political principle, the imposition of taxes and the expenditure of tax proceeds are governmental functions. We have established elaborate constitutional, parliamentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in accordance with the preferences and desires of the public — after all, "taxation without representation" was one of the battle cries of the American Revolution. We have a system of checks and balances to separate the legislative function of imposing taxes and enacting expenditures from the executive function of collecting taxes and administering expenditure programs and from the judicial function of mediating disputes and interpreting the law.
    Here the businessman — self-selected or appointed directly or indirectly by stockholders — is to be simultaneously legislator, executive and, jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds — all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on.
  • The political principle that underlies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate. There are no values, no "social" responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.
    The political principle that underlies the political mechanism is conformity. The individual must serve a more general social interest — whether that be determined by a church or a dictator or a majority. The individual may have a vote and say in what is to be done, but if he is overruled, he must conform. It is appropriate for some to require others to contribute to a general social purpose whether they wish to or not.
    Unfortunately, unanimity is not always feasible. There are some respects in which conformity appears unavoidable, so I do not see how one can avoid the use of the political mechanism altogether.
    • "The Social Responsibility of Business is to Increase its Profits" in The New York Times Magazine (13 September 1970)
  • So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not.
    • Interview "Milton Friedman Responds" in Chemtech (February 1974) p. 72.
  • I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.
  • An Economist's Protest (1975), p. 6; often quoted as "The government solution to a problem is usually as bad as the problem."
  • I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere.
  • I say thank God for government waste. If government is doing bad things, it's only the waste that prevents the harm from being greater.
    • Interview with Richard Heffner on The Open Mind (7 December 1975)
  • One of the great mistakes is to judge policies and programs by their intentions rather than their results.
    • Interview with Richard Heffner on The Open Mind (7 December 1975)
  • In this day and age, we need to revise the old saying to read, "Hell hath no fury like a bureaucrat scorned."
    • "Bureaucracy Scorned" in Newsweek (29 December 1975), later published in Bright Promises, Dismal Performance : An Economist's Protest (1983)
  • Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant little to the wealthy. The rich in ancient Greece would have benefited hardly at all from modern plumbing — running servants replaced running water. Television and radio — the patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading artists as domestic retainers. Ready-to-wear clothing, supermarkets — all these and many other modern developments would have added little to their life. They would have welcomed the improvements in transportation and in medicine, but for the rest, the great achievements of western capitalism have rebounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.
    • Free to Choose (1980) p.148
  • There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.
    • Free to Choose (1980), segment Who protects the consumer?
  • Governments never learn. Only people learn.
    • Statement made in 1980, as quoted in The Cynic's Lexicon : A Dictionary Of Amoral Advice‎ (1984), by Jonathon Green, p. 77
  • With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves.
    • Lecture "The Suicidal Impulse of the Business Community" (1983); cited in Filters Against Folly (1985) by Garrett Hardin ISBN 067080410X
  • The broader and more influential organisations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend.
    • Lecture "The Suicidal Impulse of the Business Community" (1983); cited in Filters Against Folly (1985) by Garrett Hardin
  • Every friend of freedom... must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence.
    • "An Open Letter to Bill Bennett" in The Wall Street Journal (7 September 1989)
  • Spending by government currently amounts to about 45 percent of national income. By that test, government owns 45 percent of the means of production that produce the national income. The U.S. is now 45 percent socialist.
  • The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe (monetary) contractions of 1920-1, 1929-33, and 1937-8. No other 20 year period in American history contains as many as three such severe contractions.
    This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System... and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities...
    Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank...
    To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers.
  • I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money and equally of no sharp decline in the stock of money that was not accompanied by a severe depression.
  • The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933
    • National Public Radio interview (Jan 1996)
One of the great mistakes is to judge policies and programmes by their intentions rather than their results.
  • The unions might be good for the people who are in the unions but it doesn't do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn't do a thing for them.
    • Interview with Brian Lamb, In Depth Book TV (2000)
  • The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did.
    • Financial Times [UK] (7 June 2003)
  • I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.
  • There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.
    • Fox News interview (May 2004)
  • I am a libertarian with a small "l" and a Republican with a capital "R". And I am a Republican with a capital "R" on grounds of expediency, not on principle.
  • Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money, set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!
  • Thanks to economists, all of us, from the days of Adam Smith and before right down to the present, tariffs are perhaps one tenth of one percent lower than they otherwise would have been. … And because of our efforts, we have earned our salaries ten-thousand fold.
  • If a tax cut increases government revenues, you haven't cut taxes enough.
    • As quoted in "Milton Friedman's Last Lunch" at Forbes.com (11 December 2006)
  • The true test of any scholar's work is not what his contemporaries say, but what happens to his work in the next 25 or 50 years. And the thing that I will really be proud of is if some of the work I have done is still cited in the text books long after I am gone.
    • As quoted in The Power of Choice (January 2007)
  • I’m in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal.
    • As quoted in ‪If Ignorance Is Bliss, Why Aren't There More Happy People? (2009) ‬by John Mitchinson, p. 87

Capitalism and Freedom (1962)

  • To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served.
    • Introduction
  • The free man will ask neither what his country can do for him nor what he can do for his country. He will ask rather "What can I and my compatriots do through government" to help us discharge our individual responsibilities, to achieve our several goals and purposes, and above all, to protect our freedom? And he will accompany this question with another: How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect? Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.
    • Introduction
  • Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.
    • Preface (1982 edition), p. ix
  • Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions. So also did political freedom in the golden age of Greece and in the early days of the Roman era.
    History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 10
  • Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated — a system of checks and balances.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom"
  • The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rule of the game" and as an umpire to interpret and enforce the rules decided on.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 15
  • A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 15
  • With respect to teachers' salaries .... Poor teachers are grossly overpaid and good teachers grossly underpaid. Salary schedules tend to be uniform and determined far more by seniority.
    • Ch. 6 "The Role of Government in Education"

America's Drug Forum interview (1991)

"America's Drug Forum" (1991)
  • The proper role of government is exactly what John Stuart Mill said in the middle of the 19th century in On Liberty. The proper role of government is to prevent other people from harming an individual. Government, he said, never has any right to interfere with an individual for that individual's own good.
    The case for prohibiting drugs is exactly as strong and as weak as the case for prohibiting people from overeating. We all know that overeating causes more deaths than drugs do. If it's in principle OK for the government to say you must not consume drugs because they'll do you harm, why isn't it all right to say you must not eat too much because you'll do harm? Why isn't it all right to say you must not try to go in for skydiving because you're likely to die? Why isn't it all right to say, "Oh, skiing, that's no good, that's a very dangerous sport, you'll hurt yourself"? Where do you draw the line?
  • It does harm a great many other people, but primarily because it's prohibited. There are an enormous number of innocent victims now. You've got the people whose purses are stolen, who are bashed over the head by people trying to get enough money for their next fix. You've got the people killed in the random drug wars. You've got the corruption of the legal establishment. You've got the innocent victims who are taxpayers who have to pay for more and more prisons, and more and more prisoners, and more and more police. You've got the rest of us who don't get decent law enforcement because all the law enforcement officials are busy trying to do the impossible.
    And, last, but not least, you've got the people of Colombia and Peru and so on. What business do we have destroying and leading to the killing of thousands of people in Colombia because we cannot enforce our own laws? If we could enforce our laws against drugs, there would be no market for these drugs.
  • It's a moral problem that the government is making into criminals people, who may be doing something you and I don't approve of, but who are doing something that hurts nobody else. Most of the arrests for drugs are for possession by casual users.
    Now here's somebody who wants to smoke a marijuana cigarette. If he's caught, he goes to jail. Now is that moral? Is that proper? I think it's absolutely disgraceful that our government, supposed to be our government, should be in the position of converting people who are not harming others into criminals, of destroying their lives, putting them in jail. That's the issue to me. The economic issue comes in only for explaining why it has those effects. But the economic reasons are not the reasons.
  • If you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That's literally true.
    • One role of prohibition is in making the drug market more lucrative.

Unsourced

  • Is it really true that political self-interest is somehow nobler than economic self-interest?
  • I am a limited-government libertarian.
  • If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can only gain at the expense of another
  • Inflation is the one form of taxation that can be imposed without legislation.
  • We don't have a desperate need to grow. We have a desperate desire to grow.
  • We have a system that increasingly taxes work and subsidizes non-work.
  • What is not forbidden in Sweden, is obligatory.
  • What would the people who sold us goods do with the money? They'd get dollars. What would they do with the dollars? Eat them?!
    • In response to a suggestion that total free trade would end in cheaper foreign products flooding the market and causing unemployment.
  • If you pay people not to work and tax them when they do, don't be surprised if you get unemployment.
  • Everywhere, and at all times, economic progress has meant far more to the poor than to the rich.
  • Complete free trade is not politically feasible. Why? Because it's only in the general interest and in no one's special interest. The benefits of a tariff are visible. [Union workers] can see they are "protected". The harm which a tariff does is invisible. It's spread widely. There are people that don't have jobs because of tariffs but they don't know it.
  • Corruption is government intrusion into market efficiencies in the form of regulations.
  • The stock market and economy are two different things.
  • If you put the federal government in charge of the Sahara desert in five years there’d be a shortage of sand.
  • There is nothing so permanent as a temporary government program.
  • So long as large sums of money are involved — and they are bound to be if drugs are illegal — it is literally impossible to stop the traffic, or even to make a serious reduction in its scope.
  • There is no logical basis for the prohibition of marijuana. $7.7 billion is a lot of money, but that is one of the lesser evils. Our failure to successfully enforce these laws is responsible for the deaths of thousands of people in Colombia. I haven't even included the harm to young people. It's absolutely disgraceful to think of picking up a 22-year-old for smoking pot. More disgraceful is the denial of marijuana for medical purposes.

Disputed

  • The business of business is business.
    • Widely attributed to Friedman, and sometimes cited as being in his work Capitalism and Freedom (1962) this is also attributed to Alfred P. Sloan, sometimes with citation of a statement of 1964, but sometimes with attestations to his use of it as a motto as early as 1923.

Misattributed

  • There's no such thing as a free lunch.
    • Also often misattributed to Robert A. Heinlein because both helped popularize the expression – Friedman with a book with that title. The phrase actually dates to at least the 1930's.

Quotes about Friedman

  • I don't give a good goddamn what Milton Friedman says. He's not running for re-election!

External links

Wikipedia
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Simple English

Milton Friedman (1912 –2006) was an American economist who believed in monetarism. Monetarism is the theory that how much money the government prints each year has a huge effect on the economy. He supports the government printing the same low rate of money each year rather than a different amount each year.

During the 1970s, Milton Friedman's idea of monetarism gained popularity and he became an economic advisor to President Ronald Reagan.

Friedman believed that the government control over the economy should be limited. He supported cutting taxes, lowering government spending, getting rid of government rules that limited the economy and letting parents choose which school their taxes paid for. His political views were libertarian. He was against forcing people to join the army, and said that getting rid of the United States' policy of doing that was the thing he was most proud of doing.

Throughout several decades, Friedman made many documentaries, books, and interviews to express his views to the public. The main books he wrote were Capitalism and Freedom and Free to Choose.








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