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The Illusion of a "Neat-and-Tidy" World It's Not the Spending, Stupid

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Milton Friedman, American Hero

by Christopher Chantrill
November 19, 2006 at 11:12 pm


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 www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

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presented by Christopher Chantrill

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