A Sad Day

This is very sad news:

Influential Economist Friedman Dies at 94, by Greg Ip, WSJ: Nobel prize winner Milton Friedman, one of the most influential economists of the last century, died today. He was 94.

Mr. Friedman died of heart failure after being taken to hospital near his home in San Francisco, his daughter, Janet Martell, said today. His wife Rose Friedman, who co-authored many of his books, survives him.

Mr. Friedman's death was also announced at a conference of the libertarian Cato Institute in Washington by the institute's vice president of academic affairs, James A. Dorn. The audience of academics and policy makers observed several moments of silence in observance.

Mr. Friedman was awarded the Nobel prize in 1976. He has long championed the cause of political and economic freedom and the links between the two. He has originated, or been associated with, many breakthroughs in economics since the 1950s. He is best known for explaining the role of the money supply in economic and inflation fluctuations. He also, with this year's Nobel prize winner Edmund Phelps, developed the theory in the 1960s that policy makers couldn't achieve a permanent tradeoff between lower unemployment and higher inflation, and that efforts to do so would simply result in the same unemployment rate and higher inflation, a view that holds sway at major central banks today, including the Fed.

Mr. Friedman also exercised extraordinary influence not just through his academic work but through his advice to politicians and his many popular books, such as Capitalism and Freedom in 1962 and Free to Choose, with Rose Friedman, in 1990, which was made into a television series.

Mr. Friedman had enormous impact on economic policy though he never had a formal job in a government administration after World War Two. His opposition helped lead to the end of the draft. He was an adviser to President Ronald Reagan. He has been closely associated with school vouchers and other applications of free market principles to policy issues.

This is my small tribute to Milton Friedman. It is based on an earlier post. This happened many years ago, a few years before I went up for tenure. I had been to a San Francisco Fed conference and, while there, I saw Friedman present his "Plucking model." A few months later, I sent him a paper I had done on the topic. Friedman, with all his fame and all the demands on his time, showed he still had time to help a young assistant professor:

Friedman sent me a long, detailed letter about one of my papers. He liked it and his comments were, of course, insightful and helpful. I'm still surprised that he took the time to write such a long letter, he surely had plenty of other things he could have done with his time. But receiving the letter pretty much out of the blue provided a motivational boost just when I needed it and I'm grateful to him to this day for doing that.

Here's a post explaining his Plucking Model.
Recent interview: The Romance of Economics.
Also, from last month: The End of the Hong Kong Experiment.

Update: The Financial Times looks back (free) at his major accomplishments.

Comments

[pgl]

We will miss Milton Friedman.

[realpc]

Economic conservatism is not entirely evil, wouldn't you agree?

[bailey]

realpc. Sure that's easy, about as easy as it is ludicrous for Bush in 2002 to honor Friedman for his contributions to conservative economics. Watch & be sick to your stomach as Administration charlatans & Red-coated water-carrying Economists feign over MF this weekend. Shame on them, in advance!

[Holly W.]

I'll raise a glass later and toast, "TANSTAAFL!" as Robert Heinlein put it.

[nodakdude]

Rest in peace, Milton. You'll be missed.

[maria]

He was one of the numerous Jewish intellectuals, often exiles from Europe, who found welcome at the University of Chicago and whose genius made it into the great institution that it was. I say "was" since I think it has slipped a bit in recent years.

[fiskhus jim]

The biggest problem I have with "Uncle Milty" is his insistence that crime, deceit and theft are, on balance, good for society because they are efficient economically speaking.

In fact, I think it is possible to lay both the Silverado/S&L scam and the Enron bust-out at his feet. Certainly, they are the logical extreme of putting several of his theories into practice, such as "structured finance".

It is also important to note, as does Barry Schwartz, in his "The Paradox of Choice", that "constantly being asked to make choices, even about the simplest things, forces us to 'invest time, energy, and no small amount of self-doubt, and dread.' There comes a point, he contends, at which choice becomes debilitating rather than liberating. Did I make the right choice? Can I ever make the right choice?" We normally assume in America that more options ("easy fit" or "relaxed fit"?) will make us happier, but Schwartz shows the opposite is true, arguing that having all these choices actually goes so far as to erode our psychological well-being.

Many of Friedman's "suggestions for reform" are GOP platform line-items that serve the hidden agenda of gutting America's national security interests. This is especially true of his "school voucher" program that will deprive America the Nation of millions of intelligent citizens of the Republic who are qualified to vote based on an understanding of national issues that goes beyond the superficial jingoism doled out at Friedman's "voucher schools", which are, in reality, nothing more than the segregation academies of the Massive Resisters.

So, as globalization (i.e. transnational corporatism) subsumes democracy, it becomes clear that Friedman was ever more of an apologist for profiteers and criminals than a major economic thinker.

[fiskhus jim]

As a follow-up to my first previous comment:

It may also be possible to pay much of the blame for Iraq at Friedman's feet also:

"There is no doubt that the destruction of Iraq’s governmental infrastructure is the exact outcome the Neocons in the Bush administration sought, because they also sought to privatize as much of the Iraqi infrastructure as possible.

Iraq was to be the petri dish of the Neocon experiment to prove privatized infrastructure was a better alternative to governmental oversight of a nation’s infrastructure. It needs also to be mentioned that the corporate clients of the Bush cabal were to profit handsomely from the privatization of Iraq’s infrastructure.

That the cultural divisions of the Iraqi population were ignored is a testament to the self centered arrogance of the Neocons, they simply couldn’t envision any other outcome to their plans than their chosen outcome.

[evagrius]

I've always thought that "Free to Choose" was a peculiar work. It exemplified the American notion of freedom; the more to choose the freer one is.
But this notion of freedom is actually counter to the great philosophical and theological traditions of the world.
Real freedom means not having to choose since one "knows" automatically what to do.
Don't confuse this with totalitarianism or authoritarianism. In those situations one is told what to do. In the former, there is no compulsion, inner or outer, to direct one's choice.

This may sound like meaningless gibberish, but consider how powerful advertising is ( especially when it links itself to subconscious drives), how powerful "product
placement" is in stores, how powerful self-image is etc;etc;

Our consumer economy depends on people being "free to choose" but not being free. It depends on the necessity
of choice, not on freedom from necessity.

A wonderful paradox.

I don't think Milton Friedman gave that paradox much thought.

[ken melvin]

I think he did a great deal of harm, and that he was one of the sorriest humans I ever heard speak.

[Emmanuel]

Jim--I wouldn't go so far as to characterize Iraq as an experiment in Friedman's philosophy. To begin with, there is no semblance of a functional market system there.

That said, you did bring to mind an interesting link between Milton Friedman and Donald Rumsfeld. Who did Friedman interview in the television series Free to Choose to help explain the virtues of free markets? None other than then-G.D. Searle & Company chairman Donald Rumsfeld.

[Madam Change]

Now maybe he won't do any more damage.

[Greg T]

Fiskhus Jim, you are wrong when you lay the blame for the woes in Iraq on Friedman and privatisation. It is a ridiculous assertion that privatisation has been the cause of troubles in Iraq, the causes of which are numerous, but no clear-thinking person would argue privatisation was on the list at all. BTW, Friedman opposed military action against Iraq.

You also blame corporate crime on Friedman, in your dismal attempt to drag his name through the mud. Well, Friedman never supported corporate crime, he supported free, bilaterally informed transactions, without deception or fraud.

You also quote rubbish like Barry Schwartz, who would prefer to have decisions delegated to some central authority, rather than have to think for oneself. If you can't make decisions for yourself without incurring crippling 'psychological' costs, then I suggest making choices is the least of your worries. Give me the freedom to choose who to vote for, what to eat, wear, where I can travel, etc any day, rather than your oppressive regimes.

You have illustrated a complete ignorance and disrespect for one of the greatest ever thinkers of our time.

[anne]

"It is a ridiculous assertion that privatisation has been the cause of troubles in Iraq, the causes of which are numerous, but no clear-thinking person would argue privatisation was on the list at all."

Juan Cole has written and spoken of just this problem, just the disastrous problem of privatisation in Iraq, several times. Interestingly privatisation stopped where, at the oil ministry. Cole, who has been devastatingly right about Iraq for years, has attributed severe problems beginning with terrible unemployment to privatisation.

[anne]

Juan Cole also pointed out the land reform was essential for Iraqis, but land reform would not be considered. Beyond Cole, several scholars have written on our failure to consider that Iraq was socialist and by drastic forced change from socialism we were doing continual economic harm. We destroyed infrastructure, and made re-building and caring for infrastructure a matter that removed Iraqis wholesale from the process.

[anne]

Darn, I will try to find the references for though I knew the importance and probity of Juan Cole's writings I almost never saved them. Remember, I heard another scholar, Chair of Columbia's Middle East studies department, urge an immediate withdrawal from Iraq in June 2003, and the director of public television news asked him sharply if he meant we should "cut and run" and turned away and ignored him from then on.

[anne]

Now, I have been instructed by a student of mine that Milton Friedman was a genuinely kind person, so I am impressed but not surprised that he would be so kind to Mark Thoma. Please then, do not think I have the slightest criticism of Friedman in mind. But, applying a radical capitalist model to Iraq was argued to be a severe error by several scholars and we should not ignore this.

[anne]

http://economistsview.typepad.com/economistsview/2006/10/milton_friedman.html#c25429551

The End of the Hong Kong Experiment

Please read Dave Meleney's fine admiring comment on Milton Friedman that Mark Thoma has linked to above.

[evagrius]

Let's not blame Iraq on Friedman, neither the invasion nor the horrendous economic and social damage wrought thee since.
I've just heard a professor from UC Berkely, ( sorry- didn't catch the name ),interviewed about Friedman. He credited Friedman's ideas as the origin for the EITC.
While I don't think the EITC is really that good of an idea, it's better for low-income people than getting poked in the eye with a sharp stick.
There's a lot to be said for not micro-managing economies but at the same time, letting them act without restraint is equally harmful.
Let's just say that without Friedman as the devil's advocate, there might be the improved debate in economic thought.
The sad part is that it's the intellectual midgets enacting his ideas through bad legislation or non-action that have harmed his reputation.

[calmo]

Thank you for that WSJ link to his wife and fellow economist, Rose (The Romance of Economics).

[lonesome moderate]

The people running the privitizations, and most of the rest of the occupation authorities, were in so far over their heads that you can't really use its failure as proof of much of anything, other than Bush and Rumsfeld's incompetence. Rajiv Chandrasekaran's recent book Imperial Life in the Emerald City offers a good account, for those who enjoy the Theatre of the Absurd.

[GT Capitalist]

"I think he did a great deal of harm, and that he was one of the sorriest humans I ever heard speak." - ken melvin

Only a genuine asshole would write something like this on the death of well known American and economist.

Fools like melvin don't know when to zip it.

[No Name]

You even made the Marketbeat on WSJ.com :cool:

Nice story. If only more people would reach out like that to up and comers. Really helps to know that people actually care. A good role model for us all.

[reason]

My father taught me not to be sentimental. He always said "there is no better way to go than from a heart attack while still in good health". Rather suspiciously, he managed it himself. It is when people die painfully in the middle of life that it is sad. We should celebrate what he acchieved.

[fiskhus jim]

In response to those who believe my criticism of Friedman's theories in action is ignorant and disrespectful, let me add this:

During the PBS series he did in the early 1980s, Friedman was talking about how government has proper no role in regulating the market.

A women in the audience got up and asked whether a recent government ban on a particular type of baby crib (the slats were too wide and allowed babies bodies to slip through, but then caught their heads and essentially hung them) didn't give the lie to his argument.

Nonplussed, Friedman responded, "Not at all; once enough babies have died the company will go bankrupt and the product will be taken off the market."

I find nothing either efficient or "good" in his endorsement of a policy of killing babies to achieve market efficiency.

[evagrius]

fiskhus jimp;

On the baby cribs-Friedman obviously wasn't thinking. He allowed an abstraction to guide his response.
It is very telling however.

[No Name]

fiskhus jim,

the government probably only banned the crib after it was already sold and killed babies. so they died anyway before someone realized it wasnt an effective product.

[calmo]

Ok, fiskhus U B right, Miltie made a mistake here"Not at all; once enough babies have died the company will go bankrupt and the product will be taken off the market." The product would never be taken off the market because any litigation by those careless parents seeking class action payouts would be quashed as "over-reach". Only babies of diligent (ok and suspicious bordering on paranoid) parents would survive and there would be lower health care costs today, if only we listened to Miltie.
We all have bad days.
How would it have gone with Mrs. Friedman interjecting at his arm?"Not at all; once enough babies have died [Oh Milton. Don't be silly! Only the fathead babies will die in those cribs. The pinheads slip right through! It's outrageous discrimination!] the company will go bankrupt [and well they should!] and the product will be taken off the market.[and bloody good riddance!]"
So we fatheads and pinheads have made it this far with Milton Friedman. Truly amazing.

[TCO]

I've read some of his mathematical work (did not understand it). He could bring it though. He was not merely a populizer, but could do the most tricky and interesting statistics, theoretical and applied.

[ninjaplease]

Hopefully the world will correct or disuse all of the bad ideas he presented.

market efficiency, hah. Atleast you can't buy your way past mothernature.