On Thursday, November 16, 2006 Nobel Prize winning economist Milton Friedman succumbed to heart complications in San Francisco. He was 94 years old. As a practicing economist I can think of no other individual who has influenced my thinking or shaped the emphasis of my teaching more than Milton Friedman. As Milton has gotten on in years I have occasionally pondered how tragic it will be for the world when he leaves us. Unfortunately all men must eventually pass from this earth.
When Friedman was a young scholar economic theory was dominated by the influence of John Maynard Keynes, who advocated government spending as a way out of the great depression. Keynesian theory argued that free-market capitalism could not ensure full employment and the federal government should instead “fine tune” the economy by manipulating government spending (fiscal policy). The Keynesians, as they were known, dominated economic thinking from 1935 through the 1970’s. When I was a young graduate student in the mid 1970’s all of my professors were Keynesians. I was fed a steady diet from the Keynesian buffet table stocked by economists who believed that big government was the answer to most of the world’s problems. Like most graduate students, I generally accepted the intellectual food that I was fed.
Meanwhile, Friedman was quietly working on his “quantity theory of money” in which he described how the Federal Reserve System (part of Big Government) had actually caused the great depression by choking off the money supply between 1929 and 1932. According to Friedman, the depression was caused not by a failure of capitalism, but by the failure of government (the Fed). Friedman later won a Nobel Prize for his research on the effect of the money supply on the economy.
While he was no doubt one of the most brilliant economists of the 20th century, Friedman achieved the distinction of being perhaps the most communicative and popularly known economist of all time. His book, Free to Choose (1980), which he co-authored with his wife Rose, is still available in bookstores. A popular 10-part series with the same name was later aired on PBS in January of 1980. In that series, Friedman advocated laissez faire economic policies that are just now being appreciated by policy makers, including voucher systems for education and decriminalization of drugs.
I never met Milton Friedman. He came to my university to deliver a lecture in 1974, a year prior to my arrival. However, his intellectual influence on me and on the broader society has been enormous. Freedman was a likeable and humble man. He reminded us that interventionist government policies carry with them a huge cost in economic efficiency and personal freedoms. To honor him is to constantly reinforce the lessons he taught us. Failure to do so will seriously jeopardize our future as a prosperous and free people.
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