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Milton Friedman dies at 94

Nobel Prize-winning economist Milton Friedman

SANDY HAUSMAN: When he walked across the University of Chicago campus, where he spent his most productive academic years, Milton Friedman hardly turned heads. He was a short man, about five feet tall, balding and bespectacled. But when he spoke, the world listened, drawn to his energy, intellect and bold ideas.

Before Friedman, many experts believed government policies and programs were key to creating strong economies. Friedman argued free markets were more effective and efficient in almost every way.

When Friedman turned 90, the university held a conference to honor him. People lined up to be photographed with the Nobel prize winner whose ideas are now considered mainstream, but in the '50s, many considered Friedman a heretic, and fellow Nobel Laureate Jim Heckman says he was shunned by leading economists.

JIM HECKMAN: They wouldn't have him to a workshop. They wouldn't listen to his ideas. Whole generations of students grew up thinking this guy was a raving lunatic if they listened only to their teachers. Of course, students are smarter than their teachers. They can read.

And they did read Friedman's seminal work, Capitalism and Freedom. So did Republican presidential candidate Barry Goldwater, Presidents Richard Nixon and Ronald Reagan. All were impressed and called on Friedman for economic advice.

While Friedman will go down in history for his economic theory, his proudest moment came when President Richard Nixon took his advice and abolished the draft.

FRIEDMAN: It was such a major contribution to promoting freedom, and it has also done so much to limit the costs of war.

Why? Because, Friedman argued, those who join an all-volunteer army are willing to stay longer and train harder. Their morale tends to be better, and their fatalities fewer.

Friedman also called for fundamental changes in the way America educates children, saying public schools should be scrapped in favor of vouchers. Harvard University economist Caroline Hoxbe explains:

CAROLINE HOXBE: The idea is that parents should be allowed to choose schools for their children, and that if they are allowed to choose schools for their children, they will prevent unsuccessful schools from being in business and will move their children to more successful schools and in the long run we'll end up with an education industry that is more productive and more like other industries in the United States where successful firms grow and unsuccessful firms do not.

In a half dozen books and a television program called Free to Choose, Friedman also argued for privatizing social security and putting a stop to housing subsidies. University of Chicago Professor Jim Heckman:

HECKMAN: He would look at studies and say, 'Look, you have rent control for 20 years in this city. You have a large amount of abandonment. Landlords aren't making money. If they don't make money, they're not going to stay in business. Poor people aren't going to have homes.'

In fact, Friedman support for free markets was fueled by a sense that they helped the poor a€" at home and around the world. That's why he got angry when students argued against globalization:

FRIEDMAN: They're limiting the opportunity of people all over the world to make fruitful exchanges one with the other, and the people who are most hurt by such restrictions are not the people in the high income countries. The United States has a high income in large part because it's such a large free-trade area.

Adored by political conservatives, celebrated in academic circles, you might have expected Friedman to relax in retirement. Instead, in his '90s, he took on one more controversial fight, this time delighting social liberals with a call to end the war on drugs.

Friedman felt U.S. drug laws were immoral. He blamed them for putting thousands of minority people behind bars in this country and costing thousands of lives in the Third World:

FRIEDMAN: We have a law against using drugs. If we could enforce that, there'd be no drug cartel. There'd be no revolution in Colombia. There'd be thousands of people who would live instead of die.

When he began his career, Friedman said America was confronted by "galloping socialism"— excessive government involvement in many aspects of our lives. At 90, he said the private sector was doing more for Americans but still he complained of crawling socialism. If he lived to be 100, a colleague said, government would be even smaller — but never as small as Milton would like.

In Chicago, I'm Sandy Hausman for Marketplace.

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