Wednesday, November 22, 2006

Remembering Milton Friedman

Gary Becker, former student:

Although his ideas live on stronger than ever, it is hard to believe that he is not here. I can no longer seek his opinions on my papers, but I will continue to ask myself about any ideas I have: would my teacher and dear friend Milton Friedman believe they are any good?

and in the blog replies

I hope you consider it a compliment that sitting in your class and attempting to answer your questions had the same effect on me -- in terms of convincing me I had to (re)learn economics from the ground up -- that sitting in Prof. Friedman's class had on you. I suppose it didn't hurt that at times in class I would imagine that a few years (decades) before, you'd been in the same room taking the same class from him.

Now, I am teaching economics to senior military officers, diplomats, and others at the Industrial College of the Armed Forces. They all favor the all-volunteer military, and to a great extent they understand the benefits of free markets. All we have to do is explain the virtues of free trade. And they know the contributions of you and Milton Friedman and Friedrich Hayek.

From Richard Posner, on the seminal nature of ideas:

I did, however, read a few of Friedman's essays. Two in particular struck me around the time I came to Chicago. One was his essay on the methodology of positive economics, in which he argued that the way to test a theory was not by assessing the realism of its assumptions, but by assessing the accuracy of its predictions. ...

The other essay of Friedman's that struck me was an essay on taxation in which he argued, contrary to the conventional view at the time (though I gather the argument was not original with him), that there was no theoretical reason for supposing income taxes superior in point of efficient resource allocation to excise taxes.

Lawrence H. Summers, NYT Op-Ed:

I grew up in a family of progressive economists, and Milton Friedman was a devil figure. But over time, as I studied economics myself and as the world evolved, I came to have grudging respect and then great admiration for him and for his ideas. No contemporary economist anywhere on the political spectrum combined Mr. Friedman’s commitment to clarity of thought and argument, to scientifically examining evidence and to identifying policies that will make societies function better.

Longtime observer, Samuel Brittain (The Financial Times):
What I did not discover until many years later was that Friedman had been spitefully frozen out of much of the intellectual life of the Cambridge Economics Faculty. For instance, there was an absurdly-named “secret seminar” that discussed capital theory, where Friedman could have helped very much by cutting through some of the mathematical problems and bringing out the essentials, but from which he was excluded.

What dismayed him most were the illiberal attitudes of some in the faculty who were theoretically on his side. An example was the late Professor Sir Denis Robertson, who always maintained reservations about Keynes and who advocated zero inflation decades before that became fashionable. But he shocked Friedman by defending vigorously the right of County Agricultural Committees to dispossess farmers they deemed inefficient. The Chicago professor's admiration for the founding fathers of British economics became tinged with perplexity at what so many contemporary English people were inclined to assert.

San Francisco Values, from The Rose and Milton Friedman Foundation:

In accordance with his wishes, Dr. Friedman’s body will be cremated and the ashes scattered over San Francisco bay.

William F. Buckley Jr. in a smarmy, startlingly self-referential piece:

...such sentiments that struck me so hard on learning of the death of this Nobel Prize winner, the dominant economic and libertarian voice of the 20th century, my sometime skiing buddy.

Cal Thomas, hopeless Conservative:

In the last 10 years of his 94-year life, Friedman and his wife Rose dedicated themselves to school choice. They viewed school choice as a companion to economic freedom. Through the Milton and Rose D. Friedman Foundation, they enthusiastically promoted school choice as a means of liberating the poor from failing government schools. ...

If school choice becomes the norm in America, it will be Milton Friedman's real legacy, and every poor child who is liberated from a failed government school will owe him a lasting debt of gratitude.

Deroy Murdock, Hoover colleague:
Friedman long offered an elegantly simple alternative:

"I've always been in favor of replacing the Fed with a computer." A laptop could calculate the monetary base and expand it annually & through war, peace, feast and famine & by, perhaps, a predictable 2 percent.

While it may be tough to criticize the Fed's recent performance & excluding its 17 interest-rate hikes since 2004 that prompted today's housing slump & "people tend to forget that the long history of the Fed is not one of success, but of failure," Friedman said. Of course, a laptop might ignore things like the late-1990s' bust or Asian financial crisis. Friedman approved. "You sacrifice this kind of appropriate fine-tuning for what fine-tuning generally is, which is a mistake."

Social Welfare done right: Robert H. Frank, Professor, Co-author of widely used Principles of Economics with Ben S. Bernanke, Fed Reserve Chairman:
Market forces can accomplish wonderful things, he realized, but they cannot ensure a distribution of income that enables all citizens to meet basic economic needs. His proposal, which he called the negative income tax, was to replace the multiplicity of existing welfare programs with a single cash transfer — say, $6,000 — to every citizen.

Young, English and on the receiving end:
The child of a military family I was actually not in the country during the 'three day week' of 73/74 but I remembered listening in horror to my sisters' (rather gleeful I thought) stories of their having to cook by candle light as the electricity supplies were limited. Then in 1976 the UK government essentially went bankrupt, having to go cap in hand to the IMF for a loan. That was, to all intents and purposes, the end of the post-war settlement. Iain Murray (who is of an age with me) in his piece at NRO covers a lot of the same ground but there's one detail that's worth pointing to. So forceful was Milton Friedman's critique of the previous manner of doing things that it was the Labour Chancellor of the Exchequer, Dennis Healey, who first introduced monetarism into the UK, not as is often thought, Margaret Thatcher's Conservative government of three years later. That his arguments were of sufficient force to persuade someone who disagreed with him about almost everything else is a testament to their value.

In his own words, WSJ op-ed collection:
On Health Care

The best way to restore freedom of choice to both patient and physician and to control costs would be to eliminate the tax exemption of employer-provided medical care. However, that is clearly not feasible politically. The best alternative available is to extend the tax exemption to all expenditures on medical care, whether made by the patient directly or by employers, to establish a level playing field, in terms of the currently popular cliche.

Many individuals would then find it attractive to negotiate with their employer for a higher cash wage in place of employer-financed medical care. With part or all of the higher cash wage, they could purchase an insurance policy with a very high deductible, i.e., a policy for medical catastrophes, which would be decidedly cheaper than the low-deductible policy their employer had been providing to them, and deposit all or part of the difference in a special "medical savings account" that could be drawn on only for medical purposes. Any amounts unused in a particular year could be allowed to accumulate without being subject to tax, or could be withdrawn with a tax penalty or for special purposes, as with current Individual Retirement Accounts--in effect, a medical IRA. Many employers would find it attractive to offer such an arrangement to their employees as an option.

Also, his widely viewed "Free to Choose", available for "free" (of course, there is no such thing as a free ...).

At The Idea Channel, Free to Choose

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