by John McClaughry
High on a hill outside the village of Ely stands an unusual octagonal house with a commanding southeast view down the Connecticut River valley. For several years, from the late Sixties to the mid-Seventies, it was the summer home of Milton and Rose Friedman.
Friedman was for thirty years a professor of economics at the influential University of Chicago. As an interviewer for a now-disappeared magazine called Business and Society Review, I interviewed a number of leading economists. That’s how I made the Friedman’s acquaintance at their Ely home, that they sold a few years later when Milton retired and moved to San Francisco.
I well recall several things about that interview – my first for the magazine. The location, on a bright summer day, was stunning. Both Friedmans were about five foot three but, as I said later, “with seven foot intellects”.
Perhaps most memorable was Milton’s lightning-fast responses to questions. They followed the pattern “the correct view (mine) is such and such, and there are four principal reasons for it.” Then he would recite, concisely, the reasons, and stop. My taped Friedman interview needed no editing at all.
Friedman’s most celebrated professional work, A Monetary History of the United States (1971) won for him the Nobel Memorial Prize in Economics in 1976. In that work, Friedman and his coauthor Anna Schwartz showed convincingly that the Great Depression was not, as leading economists believed at the time, due to “insufficient demand” that could be cured by government deficit spending.
As he later wrote, “The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.”
Later, when inflation (the general rise of the price level) became a leading concern, one of Friedman’s mantras was “inflation is always and everywhere a monetary phenomenon.” This is widely understood today, but for many years it was commonly believed that inflation was caused by above-market wages secured by union bargaining or manipulated increases in the price of commodities like minerals and petroleum.
Friedman favored replacing a discretionary monetary authority – the Fed – with a permanent monetary growth rule administered, in principle, by a computer. The more he examined the workings of government, they more he became devoted to economic freedom.
A recurring Friedman observation, based as always on rigorous research, was “The only cases in recorded history in which the masses have escaped grinding poverty is where they have had capitalism and largely free trade.” He despised price controls and correctly identified the minimum-wage law as “one of the most, if not the most anti-black law on the statute books,” because it created a high labor force entry barrier to people with low education and skills – young people and minorities.
One of Friedman’s great successes was laying the groundwork for elimination of the military draft, which he accomplished as chairman of a Nixon task force on military manpower. When General Westmoreland objected on the grounds that a paid soldiery would be “mercenaries”, Friedman retorted “If you insist on calling our volunteer soldiers ‘mercenaries’, I’ll call those who you want drafted into service ‘slaves’”.
In his final decades – he died in 2006 at the age of 94 – Friedman powerfully championed parental choice in education. Let parents have an education voucher, like the GI Bill, to spend at the school that they believe is best suited to meet the needs of their children; then let all sorts of schools compete for empowered consumers. That consumer choice and provider competition model is making great progress in states like Wisconsin, Ohio, Indiana, Louisiana, and Arizona. (In Vermont, it’s a constant battle against bureaucrats and the teachers union just to preserve the tuition town choice system in place since 1859.)
Milton Friedman richly earned the accolade “Champion of Freedom”. Everyone who views individual and economic freedom as the path to liberty and prosperity – as proven in Friedman-influenced countries like Chile, Estonia, and Reagan-era America – owes a debt of gratitude to Milton on the occasion of his centennial.
John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).