Champion of free markets, Milton Friedman


94-year old free market champion Milton Friedman died yesterday. Many great accountings for his career will be written, I’m sure — here is the New York Times notice.

Milton Friedman in 1964, NY Times photo

Milton Friedman in 1964 – New York Times photo

At the end of the 20th century, it certainly appeared that Friedman was more right than Keynes, and almost diametrically opposed to Marx. There are questions about whether free markets will be able to pull the former Soviet Union out of its economic woes, however, and we have run into a lot of questions about how to establish the free markets that guarantee political freedom in nations in Africa, Asia and South America.

Friedman was the greatest exponent of school vouchers in America, a view that I found had intellectual appeal but which, to me, fails to win any respect in actual practice, especially when the voucher programs hammer away at the foundations of public education (such as the public schools Friedman attended) by systematically choking off funding for public education.

I for one will miss his voice in these debates. It was a well-educated, gentle voice, tempered by reason and a lot of common sense. Free market economists grow almost abundant these days. There will never be another Friedman.

Update: Nice tributes and serious criticism. A friend uses an exercise in class requiring students to write obituaries for famous economists — Friedman’s death offers ample opportunities to collect real obits to use for examples. See some of the comments, such as:

Nothing about Friedman is up yet at The Becker-Posner Blog.  If they do anything at all on Friedman, it will be worth the read.

7 Responses to Champion of free markets, Milton Friedman

  1. bernarda says:

    One might claim “bias” in pro-management news because all the mainstream media is in the hands of megacorporations.

    But workers can apparently sometimes win a few crumbs falling from the coporate ogre’s table.

    http://soapblox.net/texaskos/showDiary.do?diaryId=2084

    “What a difference a day makes! We have reached a tentative agreement for a 3 year contract for janitors.

    Wages: $1.15 increase the first year, $1.00 the second year, and $.50 the third year.”

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  2. edarrell says:

    Actually, that sounds to me as not much about a free market at all. And while one might be tempted to yell “bias,” since it’s a press release from the Service Employees International Union (SEIU), on the face of it they have a good case.

    So, isn’t that a case of the free market Friedman wanted being frustrated?

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  3. bernarda says:

    It helps for friedman’s “free enteprise” to have its enforcers, as in Houston, Texas.

    “In an unprecedented transparent attempt to severely limit the right to peaceful protest and freedom of speech of low-wage Houston janitors and their supporters, a Harris County District Attorney has set an extraordinarily high bond of $888,888 cash for each of the 44 peaceful protestors arrested last night. Houston janitors and their supporters, many of them janitors from other cities, were participating in an act of non-violent civil disobedience, protesting in the intersection of Travis at Capitol when they were arrested in downtown Houston Thursday night. They were challenging Houston’s real estate industry to settle the janitors’ strike and agree on a contract that provides the 5,300 janitors in Houston with higher wages and affordable health insurance.

    The combined $39.1 million bond for the workers and their supporters is far and above the normal amount of bail set for people accused of even violent crimes in Harris County. ”

    http://investors.com/breakingnews.asp?journalid=45953185

    “n every city, the janitors work for many of the same national cleaning firms in buildings owned by the same national commercial landlords. But, while janitors in Chicago, Los Angeles, New York and other cities make more than $10 an hour, have health insurance and full-time work, Houston workers are paid an average of $20 a day, with no health insurance for part-time work.”

    Of course the U.S. muliti-nationals have been using this sort of method and much worse in Latin American banana republics and elsewhere around the world for decades.

    Oh, it is just the free market at work.

    Thanks for the original link to:

    http://brownfemipower.com/

    Like

  4. DavidD says:

    Many things in the 20th century taught the lesson that economies driven by consumer choice had big advantages over those controlled by bureaucrats. That lesson being learned, however, look at how many oversimplify that into saying that the freedom in a market always should be maximized, that private enterprise is better than public enterprise in every case. These are people for whom Milton Friedman is a hero.

    It is not possible to sufficiently control any experiment involving human institutions to make any of the social sciences, even economics, to be as precise as physics. It’s quite uncertain what the ideal economy is, even today. Any reasonable person would say that the best economy has freedom that is balanced by regulation, both regulation that is necessary for the market, such as for transportation and communication, and regulation that improves the market for people as a whole, such as for health and safety or even the benefit of having one school system for everyone.

    There is no equation or analysis to say exactly what the right balance of such things are, yet politically any approach to find a better balance is attacked as government intrusion, as if it has been proven that free markets are best, meaning no regulation at all, whether one sees that regulation as the “nanny state” or “the corporate patriarchy”. I would applaud any economist who could get across to the general population that the lesson of the 20th century or maybe the 21st century is not that freedom is best, but some mixture of freedom and discipline is best. I’m sure that is true for life in general, not just economics.

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  5. edarrell says:

    Friedman’s theories lead to difficulties, I think — Greenspan had it right, when he noted that workers displaced by the workings of free markets get new jobs, but the jobs generally go to the next generation of those workers. In other words, displaced workers die off, without getting new jobs. On paper, it looks good for free markets. If one happens to be one of the displaced workers, it’s literally deadly.
    Daniel Yergin’s television piece, Commanding Heights, has a piece on Friedman’s work in Chile. Friedman told Pinochet he had to go to free markets, and Pinochet did. Eventually, Chile came out with a relatively robust economy, and political freedom to boot (one of the key issues of the 20th and 21st centuries, I think, is whether we can have political freedom without economic freedom, or economic freedom without political freedom — this example supports the notion that both are required for each other). As told at the website for the series,
    http://www.pbs.org/wgbh/commandingheights/lo/people/pe_name.html (go to the name “Friedman,” and click on “video,” then pick your format), it rather suggests Friedman as a great protector of political freedom. But of course, Pinochet was a monster.
    I’ve pondered this for a long time. Did Friedman do the right thing? Would it have been better to support a violent overthrow of Pinochet to speed up his demise?
    Even if we make the leap and assume free markets are the way to go in almost all situations, we are still stuck with reality: We can’t go from the U.S.S.R. to a free-market Russia in one leap. What are the best ways to make the transitions, from wartime North Vietnam to a free market Vietnam in the 21st century; from the Soviet Union to 16 free-market nations across Europe and Asia; from the communist, closed Peoples Republic of China to an open-market Asia; from Saddam Hussein’s Iraq to a free market Islamic republic; from a Palestinian people under seige from all sides to a robust free market next to Israel.
    Stephen Levitt had a very nice tribute to Friedman on NPR this morning, in an interview. He said essentially that Friedman’s true genius was in looking at data and seeing things that others had not seen before, and in inventing ways to analyze the data to make decision paths clear. That’s not to say we agree with Friedman on everything, but it is to recognize that much of what he said was right. One needs to make a careful analysis indeed to show where he erred. (Here’s a link — the audio is not up as I write this:
    http://www.npr.org/templates/story/story.php?storyId=6506918.)

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  6. bernarda says:

    Maybe you don’t attribute these results to the implementation of Friedman’s theories, but I do.

    “In the age of globalization and outsourcing, and with a vast underground labor pool from illegal immigration, the average American worker is seeing a different life and a troubling future. Trickle-down economics didn’t happen. Despite the vaunted all-time highs of the stock market, wages and salaries are at all-time lows as a percentage of the national wealth. At the same time, medical costs have risen 73% in the last six years alone. Half of that increase comes from wage-earners’ pockets rather than from insurance, and 47 million Americans have no medical insurance at all.

    Manufacturing jobs are disappearing. Many earned pension programs have collapsed in the wake of corporate “reorganization.” And workers’ ability to negotiate their futures has been eviscerated by the twin threats of modern corporate America: If they complain too loudly, their jobs might either be outsourced overseas or given to illegal immigrants.”

    http://www.opinionjournal.com/editorial/feature.html?id=110009246

    That’s at home. This is abroad. Of course in this case, a large part of the structural problem pre-existed Friedman, but he just helped injustice along.

    “n Venezuela, elections in December will produce another win for Hugo Chávez, a man of black and Indian origin. Much of the virulent dislike shown towards him by the opposition has been clearly motivated by race hatred, and similar hatred was aroused the 1970s towards Salvador Allende in Chile and Juan Perón in Argentina. Allende’s unforgivable crime, in the eyes of the white-settler elite, was to mobilise the rotos, the “broken ones” – the patronising and derisory name given to the vast Chilean underclass. The indigenous origins of the rotos were obvious at Allende’s political demonstrations. Dressed in Indian clothes, their affinity with their indigenous neighbours would have been apparent. The same could be said of the cabezas negras – “black heads” – who came out to support Perón.

    This unexplored parallel has become more apparent as indigenous organisations have come to the fore, arousing the whites’ ancient fears. A settler spokesman, Mario Vargas Llosa, the Peruvian-now-Spanish novelist, has accused the indigenous movements of generating “social and political disorder”, echoing the cry of 19th-century racist intellectuals such as Colonel Domingo Sarmiento of Argentina, who warned of a choice between “civilisation and barbarism”.

    Latin America’s settler elites after independence were obsessed with all things European. They travelled to Europe in search of political models, ignoring their own countries beyond the capital cities, and excluding the majority from their nation-building project. Along with their imported liberal ideology came the racialist ideas common among settlers elsewhere in Europe’s colonial world. This racist outlook led to the downgrading and non-recognition of the black population, and, in many countries, to the physical extermination of indigenous peoples. In their place came millions of fresh settlers from Europe.”

    http://www.guardian.co.uk/print/0,,329627746-103677,00.html

    Of course Friedman didn’t create this situation, but his theories were/are the contemporary excuse used by the settler class to maintain their established privileged position at the expense of the majority at basically subsistance level.

    If Friedman’s ideas aimed to improve the economic condition of people in general, they have failed miserably.

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  7. DavidD says:

    Being a great man doesn’t mean that everything that came out of one’s mouth was great. Even before Ronald Reagan was elected President in 1980, Edwin Meese said that if they had to choose between a defense buildup and a balanced budget, they would choose the former. So the Reagan years set off a renewed era of deficit spending, about which Mr. Friedman frequently said not to worry, because, “We owe it to ourselves”.

    I never once heard a journalist call Mr. Friedman on this, pointing out that the future people who owe the debt are not exactly the same people who own the notes. The disparity is even greater now, with first the Japanese and now the Chinese buying up a lot of our national debt. So what’s the plan: to balance the annual budget, with 14% of the budget to go for interest on the debt forever the way some people are with their credit cards, to pay down the debt the way Ross Perot advocated, as hard as that would be or for some future America to say drop dead to our creditors and curse those who said running up such debt didn’t matter, beginning with Milton Friedman? Maybe they’ll think Milton Friedman was a genius like PT Barnum to make everyone comfortable with borrowing money we never will pay back. What can our sucker creditors do about it?

    Politicians are always slippery about foreseeing where things can go wrong, but I would think a truly great man would have more than just a simple slogan to wave away any danger.

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