Milton Friedman

[[File:Milton_Friedman_1976.jpg|thumb|165px|right|Milton Friedman in 1976.]]
{{cquote|In that paper I was at the point where I would say money is important but the quantity of money should vary countercyclically [...]  I came to the conclusion that this policy rule was more complicated than necessary and that you really didn’t need to worry too much about what was happening on the fiscal end, that you should concentrate on just keeping the money supply rising at a constant rate|||Friedman explaining his academic work which his followers know nothing about.<ref>https://hope.econ.duke.edu/sites/hope.econ.duke.edu/files/How%20Friedman%20and%20Schwartz%20Became%20Monetarists1.pdf</ref><ref>https://www.cambridge.org/core/journals/macroeconomic-dynamics/article/abs/an-interview-with-milton-friedman/4F9B7590919E146F06B80BFAD022080B</ref>}}
{{cquote|A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.|||Milton Friedman.<ref>https://www.chapman.edu/about/our-home/busts-collection/friedman.aspx</ref>}}
{{Economics}}
'''Milton Friedman''' (1912—2006) was an [[United States|American]] economist and statistician who won the 1976 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his work on consumption analysis and to monetary theory and history.<ref>"[http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1976/friedman-facts.html Milton Friedman - Facts]". Nobelprize.org. Nobel Media AB 2014. Web. 6 Aug 2018.</ref><ref>https://www.theguardian.com/business/2002/sep/22/theobserver.observerbusiness15</ref><ref>https://yasha.substack.com/p/its-all-a-big-lie-there-is-no-nobel-d55</ref><ref>https://www.minneapolisfed.org/article/1999/the-beauty-pageant-of-economics</ref>  He held a right-[[libertarian]] point of view that was in favor of a strong private sector without [[government]] intervention &mdash; the [[free market]] cures all ills (or at least cures them better than the [[government]]). Generally ranked as one of the most important economists of the 20th century,<ref>https://econjwatch.org/articles/economics-professors-favorite-economic-thinkers-journals-and-blogs-along-with-party-and-policy-views</ref> Friedman's economic ideas were also partially implemented in the [[United States]] by [[Ronald Reagan]], in the [[United Kingdom]] by [[Margaret Thatcher]], and in [[Chile]] by [[Augusto Pinochet]] during the 1970s and 1980s.

Despite taking a [[progressive]] position at the time in various social debates, including [[LGBT]] issues,{{cn}} Friedman spent most of his political time (for example on his [[PBS]] show ''Free to Choose'' and in lectures, as well as in Washington, D.C) arguing against most of the [[welfare state]], and against public housing, the [[minimum wage]], [[public education]], [[rent control]], progressive [[taxation]] and [[trade unions]], while advocating for [[free trade]], [[deregulation]], [[privatization]] and [[school vouchers]].

==Contributions==
Friedman's contribution to economics is often buried and forgotten by friends and foes alike due to his extreme libertarian [[philosophy]]. His book ''A Monetary History of the United States'' (written with Anna Schwartz) is still considered an (if not ''the'') authoritative work on the history of the [[Federal Reserve]].<ref>[http://eh.net/node/2744 ''A Monetary History of the United States''], reviewed by Hugh Rockoff, Encyclopedia of Economic History.</ref>{{Dead link}} His [[negative income tax]] proposal, i.e. a minimum income for all those who didn't qualify for the lowest tax bracket, is similar to what other economists that worked on the {{wpl|Beveridge report}} suggested.<ref>{{wpa|Negative income tax}}</ref>

In the 1970s, when stagflation hit, Friedman made mathematically rigorous revisions to [[John Maynard Keynes|Keynesian]] models, specifically the [[Phillips curve]] (i.e. how inflation and unemployment could be balanced) by adding adaptive expectations. These were later accepted by New Keynesians, who borrowed from Keynes to modernise Neoclassical economics, even if they were mostly superceded by the rational expectations theory.<ref name=adaptive>{{wpa|Adaptive expectations}}</ref> His {{wpl|permanent income hypothesis}}, that predicts that consumers will spend based on long-term income patterns, implying that people would continue to spend at the same rates despite a temporary change in their income, also forced Keynesian economists to re-think their theories. Finally, Friedman's famous essay ''The Methodology of Positive Economics'' provided one of the most influential insights of all time in social sciences: assumptions don't need be "realistic" in order to bee  scientific [[hypotheses]]; they just need to make correct predictions.<ref>{{wpa|Essays in Positive Economics}}</ref> These ideas are still rejected [[Austrian school|Austrians]] and [[Post-Keynesian economics|Post-Keynesian economists]] who continued to reject Neoclassical concepts. Contrary to the popular belief, one his most famous ideas, [[monetarism]], the defense of a steady, small expansion of the [[money supply]], didn't age well nonetheless, and money targeting was mostly abandoned by central banks around the world, with the interest rate becoming the most used tool to control [[inflation]] since the 1990s.<ref>{{wpa|Monetarism}}</ref>

According to [[Paul Krugman]], Friedman's academic work tended to be far more nuanced than his policy prescriptions.<ref>[http://www.nybooks.com/articles/archives/2007/feb/15/who-was-milton-friedman/ Who Was Milton Friedman?]</ref>

==Change of views==
From the 1930s to the 1950s, Friedman was more moderate, supporting, for instance, higher taxation,<ref>{{wpa|Milton Friedman}}</ref> but still being a founding member of the {{wpl|Mont Pelerin Society}}, in 1947. However, in the 1960s, he started to disagree more and more with the {{wpl|Post-war consensus}}, and came to believe that there was in fact a "''{{wpl|natural rate of unemployment}}''" that the central government had no control over. He believed that the Keynesian system would lead to the [[Inflation|stagflation]], something that indeed happened in the 1970s. The basis behind this idea was adaptive expectations.<ref name=adaptive/> As the government pushed unemployment, through old Keynesian stimulus, below the natural rate, inflation went up. However, since unemployment reverted back to normal over the long run due to the neutrality of demand side stimulus, inflation remained high due to the population expecting inflation to be high.

Friedman’s view, while important, is also only part of the story. As MIT economist Olivier Blanchard wrote in his textbook, the natural rate of unemployment also depends on policy and institutions, mentioning, for instance, how higher unemployment benefits can result in a higher "natural" unemployment rate.<ref>{{Cite book |last=Blanchard |first=Olivier |title=Macroeconomics |date=2017 |publisher=Pearson |isbn=978-1-292-16050-4 |edition=7th |location=Boston Columbus Indianapolis New York San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo}}</ref>{{rp|167}} Friedman’s views were also partially contested by Princeton economist Alan S. Blinder. While Blinder acknowledged that the Federal Reserve made some major blunders due to [[Richard Nixon]]’s pressure<ref name=Blinder>{{Cite book |last=Blinder |first=Alan S. |title=A monetary and fiscal history of the United States, 1961-2021 |date=2022 |publisher=Princeton University Press |isbn=978-0-691-23838-8 |location=Princeton Oxford}}</ref>{{rp|85}} the sharp increase in the relative price of oil as an aggregate supply shock was the main cause stagflation.<ref name=Blinder/>{{rp|92-3}} Blinder did admit that, according to the most accepted literature of the time, stagflation “wasn’t supposed to happen”.<ref name=Blinder/>{{rp|79}}  In the end, however, according to the Fed economist Michael Bryan, that since inflation was already accelearating before the oil shock, there is little debate that errors in the macroeconomic policy were the main cause of the stagflation in the 1970s, and Friedman's alert was of the limitations of the Phillips Curve, that moved just as Friedman predicted, proved to be correct.<ref>{{Cite web |last=Bryan |first=Michael |title=The Great Inflation |url=https://www.federalreservehistory.org/essays/great-inflation |access-date=2025-08-30 |website=www.federalreservehistory.org |language=en}}</ref>

This period also marks Friedman's appoximation with the [[Republican Party]]. In 1964, he became an economic advisor and speech writer for [[Barry Goldwater]]'s presidential campaign.<ref name=reason>{{Cite web |last=Doherty |first=Brian |date=1995-06-01 |title=Best of Both Worlds: An Interview with Milton Friedman |url=https://reason.com/1995/06/01/best-of-both-worlds/ |access-date=2025-01-13 |website=Reason.com |language=en-US}}</ref> Friedman also remained very active in the academia during that time. In 1962, two years before Goldwater's campaign, he published his widely popular book ''Capitalism and Freedom'' and in the following year, he published what is possible his most important work, the gargantuan ''A Monetary History of the United States''.

==Influence on libertarianism==
{{cquote|Milton was an ideologue, a [[True Believer]], not given to [[skepticism]] or self-doubt. There are many of those, but he was an ideologue equipped with a very sharp and quick mind. And, what is not the same thing, he was a superb [[debate]]r and a happy warrior: relentless, plausible, tactical, convincing, good with an audience, always smiling.|||Economist Robert Solow<ref>{{Cite web |last=Solow |first=Robert |date=2013-05-21 |title=Why Is There No Milton Friedman Today? · Econ Journal Watch : Milton Friedman, economics, economists |url=https://econjwatch.org/articles/why-is-there-no-milton-friedman-today-RS |access-date=2025-01-13 |website=econjwatch.org |language=en}}</ref>}}

Milton Friedman was a leading light in the "[[Chicago school]]" of economics, which is distinct from the [[Austrian school]] of [[Ludwig von Mises]]. The two competing schools are the source of one of the main splits in the libertarian movement. As a rule, the more radical Austrian schoolers — many of whom are [[anarcho-capitalism|anarcho-capitalists]] in other ways as well (i.e. anti-[[war]], anti-[[police state]]) — view Chicago schoolers as "[[Beltway]] libertarians" and stealth Reaganites whose [[utilitarian]] approach lacks a broader critique of the state beyond merely cutting spending and regulation. Indeed, Austrian "scholar" [[Walter Block]] concluded Milton Friedman to be a socialist.<ref>https://www.researchgate.net/publication/273074293_WAS_MILTON_FRIEDMAN_A_SOCIALIST_YES</ref>{{efn|According to Friedman, In the first meeting of the Mont Pelerin Society, Mises himself called the members "a bunch of socialists" for discussing arguments for a income distribution.<ref>{{Cite web|url=https://www.youtube.com/watch?v=tkQfK8hn0ds&t=3s |title="You're all a bunch of socialists" Mises on Friedman |date=2011-04-17 |last=Guillermo Sanchez |access-date=2025-01-14 |via=YouTube}}</ref>}} Make of that what you will. Friedman rebutted this criticism by claiming that libertarians like [[Murray Rothbard]] and [[Ayn Rand]] were "[[cult]] leaders."<ref name=reason/>

Despite this, or perhaps because of it, Milton Friedman and the Chicago school have been much more influential on real world government policy, having guided the policies of Reagan, Thatcher, Pinochet, and several other countries at various points in time. The fact they could apply some of Friedman's economic ideas while still endorsing a highly socially conservative agenda (and, Pinochet's case, a brutal dictatorship) perhaps indicates the Austrians have a point. The real world influence of Austrian school economics, meanwhile, has been limited to occasional small-time politicians like [[Ron Paul]]. Another main difference is the Chicago school holds to the neoclassical microeconomic model of supply and demand while the Austrian school rejects such [[mathematical]] models in favor of a strictly narrative study of [[Bullshit|human action]] they term "praxeology."

In 1948, still is his more moderate phase, he synthetizes his views on political economy:<ref>{{Cite journal |last=Palley |first=Thomas I. |date=1993 |title=Milton Friedman and the Monetarist Counter-Revolution: A Re-Appraisal |url=https://www.jstor.org/stable/40426309 |journal=Eastern Economic Journal |volume=19 |issue=1 |pages=71–81 |issn=0094-5056}}</ref>
{{quotebox|The basic long-run objectives, shared I am sure by most economists, are political freedom, economic efficiency, and substantial equality of economic power...I believe that all three objectives can best be realized by relying, as far as possible, on a market mechanism within a "competitive order" to organize the utilization of economic resources}}
This views were criticized by other economists such as Joseph Stiglitz. The second one, isn't, according to him, necessarily true, since [[free market#market failures|market failures]] mean that the unfettered markets won't always produce the most efficient outcome. At the same time, unfettered markets can, in his opinion, result in the rich and the elites having a disproportionate voice in shaping both government policies and societal narratives, undermining political freedom and democracy, also resulting in concentration of economic power.<ref>{{Cite web |last=Stiglitz |first=Joseph E. |date=2024-04-22 |title=Freedom for the Wolves |url=https://www.theatlantic.com/ideas/archive/2024/04/neoliberalism-freedom-markets-hayek/678124/ |access-date=2025-01-15 |website=The Atlantic |language=en}}</ref>

==The laissez-faire President==
Friedman sat on [[Ronald Reagan]]'s Economic Policy Advisory Board for the whole of the administration. Reagan even went so far as to give him the Presidential Medal of Freedom, an honor which Reagan himself had bestowed upon him in 1988. Despite resulting in a remarkably economic growth, his presidency was also marked by many economic issues caused [[fiscal responsibility|fiscal irresponsibility]] that had to be solved in by his successors:

#Dramatic increases in defense spending, causing large deficits. Friedman was opposed to this.<ref>[http://www.fdic.gov/bank/historical/s&l/ The S&L Crisis: A Chrono-Bibliography], Federal Deposit Insurance Corporation</ref>
#The Savings and Loan crisis.<ref>[http://www.fdic.gov/bank/historical/s&l/ The S&L Crisis: A Chrono-Bibliography], Federal Deposit Insurance Corporation</ref>
#The stock market crash of 1987.<ref>[http://business.time.com/2012/10/22/25-years-later-in-the-crash-of-1987-the-seeds-of-the-great-recession/ 25 Years Later: In the Crash of 1987, the Seeds of the Great Recession], ''TIME''</ref>
#Raising the national debt from $700 billion to $3 trillion in a matter of only eight years. Friedman was opposed to this in the manner it was implemented, although he once said, "I would rather have a $1 trillion budget that is way out of balance than a $2 trillion budget that is in balance.<ref>"https://www.washingtonpost.com/wp-srv/politics/special/budget/stories/op071597.htm</ref>
#Changing the U.S. from the world's largest creditor to the world's largest debtor].<ref>[http://www.washingtonpost.com/wp-dyn/articles/A26402-2004Jun8.html Reagan Policies Gave Green Light to Red Ink], ''Washington Post''</ref> Friedman is criticized by conservatives for having been a [[globalist]] in this sense.{{cn}}

==Chile and the Chicago Boys==
In 1973, Augusto Pinochet, who was supported/funded by America/[[CIA]], [[coup]]ed the then [[democracy|democratically]] elected Chilean president, the [[Marxist]] physician [[Salvador Allende]], and destroyed decades Chilean democratic tradition.<ref>http://nsarchive.gwu.edu/NSAEBB/NSAEBB8/nsaebb8i.htm</ref> Friedman visited the country in 1975, and shortly after, Chile underwent to a "shock treatment", with many structural market reforms being implemented by the military [[junta]]. For the next years, the "Chicago boys" (Chilean young graduates from the University of Chicago, many of whom were Friedman's students) freed prices and interest rates, lowered import tariffs, privatized hundreds of state-owned enterprises, instituted [[school vouchers]], created individual savings pension accounts, deregulated businesses and banks and furthered markets everywhere. Friedman called the vigorous economic growth that Chile saw during the Pinochet's dictatorship as the "Miracle of Chile".<ref>{{wpa|Miracle of Chile}}</ref> The period still faced at least one major downturn in 1982, when Chile saw a serious crisis. According to Friedman, the crisis happened because Chile wasn't at that moment [[neoliberal]] enough, blaming, for instance, political interventions in the Chilean peso.<ref>{{wpa|Crisis of 1982}}</ref> The post-1982 reforms were much more pragmatic, despite still having a strong neoliberal tilt,<ref name=Chile/>{{rp|162}} and by the dawn of the 21st century, Chile became, by a wide margin, the wealthiest nation in [[Latin America]], also attaining the best social indicator levels in the region for health, education, and life expectancy.<ref name=Chile>{{Cite book |last=Edwards |first=Sebastian |title=The Chile project: the story of the Chicago boys and the downfall of neoliberalism |date=2023 |publisher=Princeton university press |isbn=978-0-691-20862-6 |location=Princeton (N.J.)}}</ref>{{rp|2-3}}

While Friedman is often regarded as the most influential figure on the Chilean economy during Augusto Pinochet's dictatorship, according to economist Sebastián Edwards this title in fact belongs to a pragmatic and more flexible thinker, Al Harberger.<ref name=Chile/>{{rp|19}} Friedman said that he never supported nor personally advised Pinochet. He once had a roughly 45-minute talk with Pinochet – on his six-day trip to Chile in March 1975 – however he never accepted a penny from the Chilean regime and turned down two honorary degrees from Chilean universities that received government funding, because it could be interpreted as support of the junta. He wrote Pinochet a formal letter afterward, arguing for a plan to end hyperinflation and liberalize the economy, similar to those letters he sent to communist dictators in the [[USSR]], [[China]], and [[Yugoslavia]].<ref>[https://www.youtube.com/watch?v=dzgMNLtLJ2k Milton Friedman on Pinochet and Chile]. Uploaded by LibertyPen on YouTube. Cited on July 13, 2015.</ref><ref>Norberg, Johan. [http://www.libertarianism.org/publications/essays/klein-doctrine-rise-disaster-polemics The Klein Doctrine: The Rise of Disaster Polemics]. Cited on July 13, 2015.</ref><ref>https://www.cato.org/policy-report/septemberoctober-2017/little-known-story-milton-friedman-china</ref>{{better source}} His views on Pinochet can be contrasted with those of [[Friedrich Hayek]], an Austrian school economist and philosopher who made public defenses of the Chilean dictator.<ref>{{Cite journal |title=Hayek, Friedman, and Buchanan: On Public Life, Chile, and the Relationship between Liberty and Democracy |journal=Review of Political Economy |last=Meadowcroft |first=John |last2=Ruger |first2=William |date=2014-07-03 |url=https://www.tandfonline.com/doi/abs/10.1080/09538259.2014.932066 |doi=10.1080/09538259.2014.932066 |issn=0953-8259}}</ref> Friedman still claimed that the free market institutions were ultimately responsible for Chile's return to democracy in 1990 nonetheless:

{{cquote|[[Post hoc ergo propter hoc|The Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society]].<ref>[http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ufd_reformliberty_full.html Up for Debate - Reform Without Liberty: Chile's Ambiguous Legacy], PBS</ref>}}

==Religion==
Coming from a [[Jewish]] family, Friedman called himself an [[agnostic]], though he defined [[atheism]] in the strong sense, so his views were similar to those of weak atheism. He also subscribed to the view of [[morality]] put forth by [[evolutionary psychology]].<ref>https://www.celebatheists.com/wiki/Milton_Friedman</ref>

==Family==
Milton Friedman married [[Ukraine|Ukrainian]] Rose Director Friedman who was also a free-market economist{{efn|Milton and his wife wrote the popular book ''Free to Choose in 1980, that was based on a PBS series}} and the sister of another prominent Chicago school economist, {{wpl|Aaron Director}}. Together, Rose and Milton parented [[David D. Friedman]], who is, believe it or not, ''more'' far-out than his father on economics, being an [[anarcho-capitalist]] and the author of a seminal book in that field entitled ''The Machinery of Freedom''. David Friedman is one of the few anarcho-capitalists to adhere to the Chicago school and a [[utilitarian]] view on [[ethics]] (the majority are Austrian school schoolers, and many adhere to a [[natural law|natural rights]] view.) This is a reason for much back and forth between Friedman's utilitarian versus the natural rights versions of anarcho-capitalism of [[Murray Rothbard]], Morris and Linda Tannehill and others, as well as a source of some interesting, some would say [[Insane|way out there]], ideas on the part of David Friedman, such as polycentric law being enforced by competing private courts. David's son, {{wpl|Patri Friedman}}, is also a prominent anarcho-capitalist activist and a proponent of [[seasteading]].

Friedman also had a daughter named Janet Friedman Martel, who is bridge player from California.<ref>{{wpa|Jan Martel}}</ref>

==See also==
*[[Ben Bernanke]]
*[[Classical liberalism]]
*[[Great Depression]] - Along with Anna Schwartz, Friedman provided one of the most widely accepted explanations to the Great Depression 
*[[Alan Greenspan]]
*[[Monetary policy]]
*[[Thomas Sowell]] - one of his most prominent students
*[[School vouchers]]

==Notes==
{{notelist}}
==External links==
*[http://www.econlib.org/library/Enc/bios/Friedman.html Entry in EconLib]

==References==
{{Reflist|2}}

{{DEFAULTSORT:Friedman, Milton}}
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