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Friday, August 3, 2012

Milton Friedman's Centenary

Thomas Sowell
If Milton Friedman were alive today -- and there was never a time when he was more needed -- he would be one hundred years old. He was born on July 31, 1912. But Professor Friedman's death at age 94 deprived the nation of one of those rare thinkers who had both genius and common sense.

Most people would not be able to understand the complex economic analysis that won him a Nobel Prize, but people with no knowledge of economics had no trouble understanding his popular books like "Free to Choose" or the TV series of the same name.

In being able to express himself at both the highest level of his profession and also at a level that the average person could readily understand, Milton Friedman was like the economist whose theories and persona were most different from his own -- John Maynard Keynes.

Like many, if not most, people who became prominent as opponents of the left, Professor Friedman began on the left. Decades later, looking back at a statement of his own from his early years, he said: "The most striking feature of this statement is how thoroughly Keynesian it is."

No one converted Milton Friedman, either in economics or in his views on social policy. His own research, analysis and experience converted him.

As a professor, he did not attempt to convert students to his political views. I made no secret of the fact that I was a Marxist when I was a student in Professor Friedman's course, but he made no effort to change my views. He once said that anybody who was easily converted was not worth converting.

I was still a Marxist after taking Professor Friedman's class. Working as an economist in the government converted me.

What Milton Friedman is best known for as an economist was his opposition to Keynesian economics, which had largely swept the economics profession on both sides of the Atlantic, with the notable exception of the University of Chicago, where Friedman was both trained as a student and later taught.

In the heyday of Keynesian economics, many economists believed that inflationary government policies could reduce unemployment, and early empirical data seemed to support that view. The inference was that the government could make careful trade-offs between inflation and unemployment, and thus "fine tune" the economy.

Milton Friedman challenged this view with both facts and analysis. He showed that the relationship between inflation and unemployment held only in the short run, when the inflation was unexpected. But, after everyone got used to inflation, unemployment could be just as high with high inflation as it had been with low inflation.

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