Milton Friedman is dead (17 November 2006)

Economist Milton Friedman, a tireless champion of markets over government intervention, has died. His book Capitalism and Freedom is an accessible and forcefully stated argument for the idea that only markets can guarantee freedom and democracy and, along with Hayek's Road to Serfdom, gives you all the basic philosophical underpinnings of the conservative/libertarian view, which is essentially that the market can arbitrate economic matters better than any council of state experts a society could convene. Yes, there's a lot in there about floating currencies and monetary policy and the evils of board certifications, but possibly Friedman's most influential idea outside of the realm of economists is that political and economic freedom are essentially synonymous -- this view almost seems like common sense in America, where purchasing power is typically seen as a proxy for individual liberty.

Friedman rose to prominence with his prediction of 1970s stagflation and Reagan's subsequent adoption of his rhetoric, but beyond changing the terms of the debate on state interventionism, his practical legacy is still debated. Tyler Cowen has links to articles on Friedman here, but this Guardian piece jumps out with its decidedly unbalanced take: it's called "Milton Friedman: a study in failure" -- the kind of uncompromising gesture Friedman himself might have appreciated (The NYT quotes him defending his own extremism thus, "In every generation, there’s got to be somebody who goes the whole way, and that’s why I believe as I do.”) -- and argues that Friedman's only lasting contribution to policy was the withholding tax: "Rest in peace Milton Friedman, big government's best friend." That's harsh; he hasn't even got a chance to roll over in his grave yet at this jibe.

The NY Times obit provides a more general overview of his life, but also suggests his ideas haven't had the lasting impact on policy that he's sometimes credited with.

"Prof. Robert Solow of M.I.T., a Nobel laureate himself, and other liberal economists continued to raise questions about Mr. Friedman’s theories: Did not President Reagan, and by extension Professor Friedman, they asked, revert to Keynesianism once in power? “The boom that lasted from 1982 to 1990 was engineered by the Reagan administration in a straightforward Keynesian way by rising spending and lowered taxes, a classic case of an expansionary budget deficit,” Mr. Solow said. “In fairness to Milton, however, it should be said that one of the reasons for his wanting a tax reduction was to force the spending cuts that he presumed would follow.”

The WSJ's lengthy front-page story, which not surprisingly has a more positive assessment of his policy contributions, concludes with Friedman's explanation of his devotion to academia (not exactly an open market liberated from professional certification and bureaucracy) , which suggests some of the contradictions that lurk behind his seemingly single-minded stance: "For society to be at once humane and to give opportunity for great human achievements, it is necessary that a small minority of people who do not have materialistic objectives have the greatest degree of freedom." In other words, markets and economic "freedom" (i.e. the guiding rules of scarcity and necessity and ceaseless competition) are good for the little people, the people of bronze. The greatest degree of freedom is reserved for the people of gold who shouldn't have to waste their energy earning a living and stunting what they need to share with the world by routing it through markets.