Economist changed the world

Milton Friedman: 1912-2006

November 17, 2006|Jonathan Peterson | Times Staff Writer

MILTON FRIEDMAN, a brilliant champion of free-market economics and individual freedom who almost single-handedly altered the boundaries of public debate on an array of national issues, died Thursday in San Francisco. He was 94.

The cause was heart failure, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis.

Friedman was considered a leading economic thinker of the 20th century. His many prescriptions for policy, notably on managing the nation's money supply and curbing the welfare state, influenced presidents and presidential candidates dating to the 1960s. President Reagan and Margaret Thatcher, the former British prime minister, were among his fans. Friedman's sweeping, pro-capitalist ideas earned him legions of followers both domestically and overseas, while also sparking dissent and controversy.

He was awarded the Nobel Prize in economics in 1976 for a body of "original and weighty work," including his money supply research, which jurors said had influenced fellow scholars as well as the U.S. Federal Reserve and the central banks of other nations.

"He was a great man," said Allan H. Meltzer, an economics scholar at Carnegie Mellon University and the American Enterprise Institute. "It's hard to think of anybody who never held a government position of any importance who influenced our country -- and the whole world -- as much as he did."

The longtime San Francisco resident had been a senior research fellow at Stanford University's Hoover Institution since 1977.

Yet Friedman's influence extended far beyond the ivory tower. He became an economist-celebrity, promoting his passionate beliefs in books, magazines and television appearances. With confidence and a professor's logic, he sought to demolish the conventional belief after World War II that government should play a sweeping role in people's lives.

Taxes should be cut and simplified, he said, and society would benefit when personal choice reigned supreme.

Though some of his teachings about money lost influence over time, he ultimately attained the status of a capitalist icon through the purity and force of his broader world view.

"He had been a fixture in my life both professionally and personally for half a century," former Federal Reserve Chairman Alan Greenspan said in a statement Thursday. "My world will not be the same."

The current Fed chairman, Ben S. Bernanke, said in a statement that "Friedman had no peer" among economic scholars. "Just as important, in his humane and engaging way, Milton conveyed to millions an understanding of the economic benefits of free, competitive markets, as well as the close connection that economic freedoms bear to other types of liberty. He will be sorely missed."

Freedom to choose

In the 1960s, Friedman argued that personal retirement accounts made more sense than a mandatory system of Social Security, helping set the stage for the recent national debate about the issue. Similarly, he contended that parents should be allowed to choose which schools their children attend, laying the foundation for ongoing arguments about school choice.

This latter belief animated Friedman's final years, and promoting choice in schools became the mission of his foundation. "Why do America's universities have a greater reputation around the world than its public schools?" he once asked. "You have choice. That makes all the difference in the world."

His views did not break down into a right-left framework. He emerged as a leading voice in the Vietnam-era movement to end the draft, a position ultimately endorsed by President Nixon.

Friedman offered blunt advice on subjects as personal as laws against prostitution -- he saw them as incursions into individual choice -- and as sweeping as the international system of relatively fixed exchange rates, which he sought to overturn and which indeed collapsed in the early 1970s.

He became the human face of the influential "Chicago school" of economics, emphasizing the role of monetary policy, which affects interest rates, and the benefits of laissez-faire or free-market approaches to the economy.

Political leaders listened, granting almost unparalleled influence to a scholar whose free-market religion once seemed out of step with the times.

At one point, Stanford University tried to lure the influential professor from the University of Chicago to a "free enterprise" chair. But Friedman did not wish to be pigeon-holed, and he turned down the offer. "He felt it would have restricted him or branded him, and he didn't want to be branded," Meltzer said Thursday.

Not all of his ideas found lasting acceptance. The U.S. Federal Reserve, the Bank of England and other central banks eventually abandoned much of his monetary prescription.

After a series of corporate and financial scandals, the Friedman-style mantra for deregulation lost its allure for much of the public. Some of Friedman's social priorities, notably the legalization of drugs, never caught on.

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