A Man of Ideas in the Arena; Milton Friedman, 1912-2006
Samuelson, Robert J., Newsweek
Byline: Robert J. Samuelson
The ideas of economists and political philosophers ... are more powerful than is commonly understood ... Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. --English economist JohnMaynard Keynes, 1883-1946
What Keynes said was true of economist Milton Friedman, who died last week at 94, except that Friedman's immense influence emerged well before his death. He belongs on any list of the 100 most important people since World War II. In some ways, the conversion of China to a market economy, the conquest of double-digit inflation in the United States and elsewhere, the decisions of countless governments to sell (a.k.a., "privatize") nationalized industries--these developments and many more could be traced to him. There was no more ardent or articulate advocate of free markets and personal liberty than Friedman, who was also a NEWSWEEK columnist from 1966 to 1984.
It may seem strange to cite these familiar notions to affirm his historical significance, but that's the point. These ideas were wildly out of fashion when Friedman first championed them in the 1950s. Remembering the Great Depression (the 1930s' unemployment: 18 percent), Americans were suspicious of free markets. In 1962, the appearance of his "Capitalism & Freedom," which remains in print with nearly 1 million copies sold, was a seminal event. It began to change the conversation. Its big theme was that economic freedom was not just good economics; it was "a necessary condition for political freedom." Of course, it wasn't enough, Friedman added, citing prewar fascist Germany.
Free markets favored individual choice and creativity. "The great advances of civilization," he wrote, "have never come from centralized government." But Friedman was not indifferent to societies' hopes to improve themselves through government, and his ideas often aimed to reconcile these goals with maximum individual choice. We have adopted--or are still debating--many of his plans: school vouchers (he believed public schools perform poorly because they are monopolies); the negative income tax (Friedman proposed substituting direct payments to the poor for the "rag bag" of existing government services--the idea partially inspired today's "earned income tax credit," providing subsidies for low-income workers); the all-volunteer military, created in 1973; and personal accounts for Social Security.
Friedman, winner of the 1976 Nobel Prize in economics, made three huge scholarly contributions. First, he helped explain the Great Depression. Until the pub-lication in 1963 of "A Monetary History of the United States, 1867-1960," co-written with Anna Schwartz, the Depression was cast as an extreme example of capitalism's instability. …