Milton Friedman, 94: Free market champion

For his maxims, so revered in conservative salons in London, Washington and elsewhere, are contradicted by the facts on the ground, and his life story is at odds with some of his most fundamental beliefs. This leading exponent of the private sector's superior acumen over government did not ever toil in the private sector, but for taxpayer-financed government agencies and universities.

The Toronto Star
November 17, 2006

Milton Friedman, 94: Free market champion
Conservative economist founded 'Chicago School'. Dies just six months after the passing of liberal nemesis John Kenneth Galbraith.
David Olive

Milton Friedman, guiding spirit of economic conservatives worldwide in the post-World War II era, died yesterday of heart failure at a hospital near his San Francisco home. He was 94.

A relentless champion of unfettered free markets and minimalist government, Friedman died just six months after the death of his chief intellectual antagonist, the Canadian-born U.S. economist John Kenneth Galbraith, an unapologetic liberal to the end who promoted an activist role for government in assisting the disadvantaged.

Friedman and his wife, Rose, a noted economist in her own right, have for more than a quarter century been chief mascots of the modern conservative movement that has dominated public policy making in the West since the 1980s.

The Vancouver-based Fraser Institute, an influential libertarian think tank, was perhaps unrivalled in the zeal with which it adopted the Friedmans as ideological patrons almost since the institute's inception in 1974.

Friedman was an adviser to U.S. president Ronald Reagan and British prime minister Margaret Thatcher.

He took criticism from human-rights advocates for counselling Chilean dictator Augusto Pinochet, and from anti-communists on the right for his lectures on free-market principles to government officials and students in the Soviet Union, China and Vietnam. Recalling the protestors who accosted him in Santiago, Friedman said he was resigned to being followed about the globe by demonstrators who made "a concerted effort to tar and feather me."

In contrast to Galbraith, whose undiluted liberalism has been out of style since the early 1980s, Friedman went out on a high, his dismissal of government as an effective agent of social progress having ruled as the dominant economic theology for the past quarter-century.

That makes the Friedman legacy something of an oddity. For his maxims, so revered in conservative salons in London, Washington and elsewhere, are contradicted by the facts on the ground, and his life story is at odds with some of his most fundamental beliefs.

This leading exponent of the private sector's superior acumen over government did not ever toil in the private sector, but for taxpayer-financed government agencies and universities. Criticizing the Depression-era New Deal would consume much of Friedman's thinking and lectures in the 1960s.

But unable to find work during the Depression, he regarded the job he secured with one of Franklin Roosevelt's New Deal agencies "a lifesaver."

Later, on encountering anti-Semitism during a brief teaching stint at the University of Wisconsin, Friedman returned to government work in the federal Treasury department, where, of all things, he played the lead role in devising the current withholding system of collecting income-tax revenue. Friedman railed against corporate philanthropy, insisting that the exclusive role of business is to generate wealth, not engage in social engineering.

Yet Friedman's own academic home of longest duration, the University of Chicago, was willed into existence by Standard Oil monopolist John D. Rockefeller.

Friedman's influence derived from his prophetic 1960s warning that runaway government spending and spiralling wage costs would someday culminate in a toxic co-existence of moribund economic growth, double-digit inflation and soaring unemployment — a phenomenon dubbed "stagflation" by fellow economist Paul Samuelson, a centrist, when it manifested itself in the 1970s.

Friedman's was hardly the only voice raising the alarm, only the most persistent and well-credentialed. During his long tenure as an economics professor at the University of Chicago, Friedman's tutelage of like-minded young economists, some half-dozen of whom went on to become Nobel laureates, earned Friedman the distinction of having appeared to create a movement, namely the "Chicago School," for which there is no liberal counterpart. Friedman himself won Nobel honours in 1976.

Friedman earned a reputation as a contrarian for rebelling against government pump-priming in tough economic times, which was advocated by John Maynard Keynes, the greatest economist of the 20th century.

But the stagflation that earned Friedman celebrity status, a PBS television series and a Newsweek column, was not caused by those practices.

The economic malaise of the 1970s was caused by reckless U.S. spending on Vietnam, two oil shocks in the space of a decade (a barrel of oil cost less than $2 U.S. before the first shock in 1973), and a managerial class in both the public and private sectors content to pass wage increases on to customers rather than stand up to union leaders.

All of that was abhorrent to Keynes, who preached fiscal responsibility and balanced budgets in good times in order to bulk up government treasuries for the inevitable bad times.

The influence of Friedman and his acolytes is exaggerated, although this is rarely acknowledged by either adherents or opponents of "Friedmanism."

It's seldom remarked upon, for instance, that both Reagan and Thatcher used traditional Keynsian methods of increased government spending, along with tax cuts about which Keynes would have been less enthusiastic, to spur the economic boom of the 1980s. Current U.S. President George W. Bush followed an identical strategy in response to the U.S. recession of 2001-02.

The era of big government continues apace, with the massive Medicare and other entitlement programs of Lester Pearson and Lyndon Johnson still in place, embellished recently by the creation of the U.S. homeland security department — the biggest expansion in the U.S. bureaucracy since the creation of the Pentagon shortly after World War II.

Corporate philanthropy is arcing toward a new zenith, surpassing the largesse of the Rockefeller clan and Andrew Carnegie.

"These days, billionaires try to outdo each other not just in how much they give away, but in how effective they can be in tackling problems," writes Slate editor Jacob Weisberg, whose online magazine now sponsors an annual conclave of the world's big business donors. Attending this year's donorfest were Bill Gates, whose foundation has $30 billion (U.S.) to dispense, and, of perhaps more interest, Google Inc. co-founder Larry Page.

As an ideology, Friedmanism is widely subscribed to; in practice, it is stillborn. Viable leadership today comes with promises of frugality and doing more with less.

But then, inevitably, come the hiring and acquisition binges, the corporate-welfare handouts and renewed farm subsidies, the extravagant public expenditure.

Galbraith sought attention while Friedman affected to shun it. "I'm much more interested in having people thinking about the ideas, rather than the person," Friedman insisted. He might have meant it, too.

But his legacy would not be well served by a careful examination of either the efficacy of the ideas he fought for, or a true measure of how widely they have been genuinely implemented.

Brought to you by

Risks: Professor John Kenneth Galbraith, Economics, United States, Chile, Canada, 20061117 Milton Friedman

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License