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Milton Friedman, American Hero

by Christopher Chantrill
November 20, 2006 at 7:12 am

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IN THE 1960S and 1970s the United States conducted a spirited argument about the bridge to the economic future. Should Americans continue to implement the New Deal with its cocktail of economic planning and elite political control, or should it return to the pre-Depression policy where the the political and the economic forces competed in rough equality?

Three Americans symbolized this contest, with John Kenneth Galbraith arguing for planning and control and Paul Samuelson for a steady-as-she-goes Keynesianism. The greatest and the most conservative of the three, Milton Friedman, died November 16, aged 94.

It is a tribute to his courage and indomitable will that Friedman persevered and won his personal battle of ideas. For in his heyday—as in ours—a conservative polemicist labored under the disadvantage that he was perceived and reported as a little too extreme, a little too dogmatic, and a little too uncultured to be trusted in polite society.

This was perfectly communicated by the producers of his 1980 PBS TV series Free to Choose. The show was aired to provide equal time for Friedman against John Kenneth Galbraith and his BBC series Age of Uncertainty. Against the urbane Galbraith Friedman came across as decidedly prickly.

If Friedman had been a liberal we could have celebrated his abrasiveness as a natural response to the experience of his working-class Jewish origins and the anti-Semitism he encountered as a Jew pushing into the Jewish-quota academy of the 1930s. But such allowances are not made for conservatives. Friedman had to make his way by being right.

It was not until after World War II (in which he famously helped to implement income tax withholding) that he got his academic career on track and built a reputation at the University of Chicago by developing a modern formulation of the quantity theory of money, “monetarism,” against the fashionable Keynesianism preferred at the Massachusetts Institute of Technology. In his Monetary History of the United States, written with Anna Schwartz, he proposed that the Great Depression was caused by the deflationary monetary policy of the Federal Reserve Board between 1929 and 1933.

In his Capitalism and Freedom in 1962 he championed school vouchers and a negative income tax. Today the negative income tax lives as the Democrats’ favorite social program: the Earned Income Tax Credit.

But Friedman’s modest proposal for school vouchers, the idea that government money for education should go to the parents not the school, has provoked such opposition from the education producer interest, the Democrats’ public schoolteacher paymasters, that nothing less than total implosion of the government school monopoly may permit the solution of the central injustice of government education, the utter failure of schools for poor children in inner cities. Nevertheless, Friedman and his wife founded in 1996 the Milton and Rose D. Friedman Foundation to work for school reform.

In comparing Friedman against his rival economist intellectuals John Kenneth Galbraith and Paul Samuelson one is struck by the poverty of the opposition. Extravagantly lionized in his prime, Galbraith seems today more an entertainer on the liberal improv circuit than a thinker, a man who served up crowd-pleasing one-liners to a generation of liberal readers while successfully representing himself as an iconoclast that challenged “conventional wisdom.” Galbreaith’s theory of “countervailing power” between Big Business and Big Labor in American Capitalism in 1952 proved to be empty rubbish. In fact the reign of Big Business and Big Labor in the early post World War II era, condoned by Big Government, amounted to a conspiracy to loot America’s great manufacturing corporations. His Affluent Society advanced the preposterous notion that a government already grown to imperial grandeur in the 1950s suffered from underfunding in a nation of “private affluence” and “public squalor.”

Friedman’s other rival Paul Samuelson was one of the leading developers of mathematical economics in the 1940s, and built a lifelong franchise with his Economics, an introductory college economic text that owed its success through its many editions to a keen sensitivity to the ever changing liberal zeitgeist.

It was not Friedman’s way to pander or to placate liberal opinion. Instead his tireless advocacy plowed a political space in which the economic reforms of the 1980s could take root. To test that notion we can ask the question: Could President Reagan have won the battle to transform the US economy without Friedman’s polemics? The answer is clear. The triumph of Reaganism is unthinkable without Friedman’s contribution.

There is one black mark against Milton Friedman. In the 1970s he gave some lectures on monetary economic policy in Chile. Then he actually met with dictator August Pinochet. For this he was excoriated in the usual places. But the result of his speeches in Chile was that the Pinochet regime implemented a series of landmark economic policies including school vouchers, free trade, and social security privatization that has made Chile the envy of Latin America (See the way that lefties dispute this). Curiously, Friedman’s speeches on economics in socialist countries like China did not provoke similar outrage.

America has need of men like Milton Friedman. Let us pray that in the challenges of the twenty-first century we shall not lack for successors.

Christopher Chantrill blogs at americanmanifestobook.blogspot.com.

Buy his Road to the Middle Class.

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Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate. 
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.”  —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

presented by Christopher Chantrill

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