A personal tribute to Milton Friedman

The Danish free market think tank CEPOS will later in the spring republish the Danish edition of Milton Friedman’s Free to Choose. I am extremely honoured that the good people at CEPOS have asked me to write the preface for “Det Frie Valg” as “Free to Choose” is known in Danish.

I now finalised  writing the preface and it has surely  been a joyand I would like to share it in a slightly revised English version of the Danish preface with my readers here. Those strictly interested in monetary policy should probably stop reading now and for the rest of you please bare with me – I am not completely rational when I speak about my wife, my son and Milton Friedman.

Here goes…

I have no doubt that the Free to Choose changed my life. I read the Danish version of Milton Friedman’s now-classic bestseller first time in the last half of the 1980s when I was 16-17 years old. It was one of the first books about politics and economics that I had ever read and it shaped the views of the world that I maintain to this day.

I am therefore very grateful that not only has CEPOS chosen to reprint the Danish edition of Free to Choose, but has asked me if I would write this preface. It makes me happy. Since I read Free to Choose almost 25 years, I have constantly spoken, read and written about Milton Friedman, and there is no doubt that the Free to Choose was a key reason why I later decided to study economics.

Miton Friedman’s crucial strength is in addition to being one of the twentieth century’s most important economists is his great teaching abilities. Friedman talks about political, social and economics issues in an enormous engaged and engaging way. He sells his message of freedom and free choice forcefully and effectively. It’s incredibly hard not to be convinced of the correctness of his message. That at least was the case or me. I agreed with Friedman in most of what he wrote, and almost 25 years later not much have changed. I still consider Milton Friedman to be the biggest impact on my political and economic thinking.

In my 2001 book about Milton Friedman I called him a pragmatic revolutionary. It is meant as an honorary title and the title was very much inspired by the Free to Choose. Friedman’s message of freedom and especially freedom of choice may seem radical, even revolutionary to a European and especially to a Scandinavian reader. We are not accustomed to any questions about the size and tasks of government. In Denmark, the “Welfare State” is virtually non-negotiable, but if you read Free to Choose you will be left with the feeling and the knowledge that there is something fundamentally wrong with the cradle-to-grave society we have created not only in Denmark, but also in large parts of Europe and indeed in the US.

Friedman is revolutionary because he was questioning the social order, but he’s also pragmatic. His was always eager to engage supporter of big government and supports of the welfare state. He would not compromise his fundamental believes but he would talk to people that had other view than he did. He confronted – in always polite and humorous fashion – but also agreed that their motives may have been sincere. He told to them “If you want the best education for school children, why will you not make the schools compete? Why will you not let parents choose the school. “

Friedman shows in Free to Choose that if we let parents choose the schools for their children, we will get better schools, happier and smarter children. But what makes Friedman’s arguments so strong is that if the Free Choice works for education, why should not it work for hospitals? For nursing homes? And if private schools are free to compete public schools why not private hospitals and private nursing homes. Yes, if the free choice is the right thing when we go shopping in the supermarket and when we send our children to school why should not it be the foundation of our society?

Friedman’s argument for school choice through the use of vouchers is undoubtedly one of the things that made the biggest impression on me because it totally convinced me of the importance of individual sovereignty. The rights of the individual should also be above the “right” of the government. It is the individual’s free choice, which should be at the core of any social order. A society that does not respect the free choice is not only inefficient, but it also becomes totalitarian.

Another thing that made an enormous impression on me in Free to Choose was Milton Friedman’s discussion of monetary policy. One topic that was somewhat foreign to me as a 16 year old, but since then has been the economic policy issue that has intrigued me the most – both intellectually as professionally. Friedman is the founder of the monetarist school, which stresses the importance of monetary policy on development in particular inflation, but also the business cycle and other macroeconomic conditions. I was convinced by reading Free to Choose that I was a monetarist, and to this day I will unhesitatingly tell anyone who will listen that I am monetarist.

The present economic crisis can only be understood if one understands monetary economics and there is no better teacher for monetary theory than Milton Friedman. It was of course especially for his contribution to the monetary policy research that he was awarded the 1976 Nobel Prize in economics. Free to Choose is not monetary textbook but it does offer a good introduction to the topics, which especial today is so important.

And is just yet another confirmation that Free to Choose is exactly as important as when it was first published in 1980.

Free to Choose is not just a book. There was actually produced a television series of the same name – paradoxically by the American public broadcaster PBS (also in 1980). The book is based on the TV series. Although it is a great TV series, it was not TV series but the book that convinced me why the freedom of choice must be the foundation of our society.

I’m not the only one who has been convinced of the Free to Choose. When the book was published in 1980 it was a huge success and the book is probably one of the best-selling books about economics and politics ever and has since been translated into several languages.

Finally I would like once again to thank CEPOS for getting this very important book republished in Danish on occasion that Milton Friedman in 2012 would have turned 100 years and I hope the book will make as big an impression on today’s readers as it did on me almost 25 years ago.

I would be happy to hear what my readers have to say about how Milton Friedman impacted their thinking and their choices in life. Furthermore, have a look at Pete Boettke’s excellent comment on Free to Choose here.

Finally I would like note that The Free to Choose Network is honouring Milton Friedman’s Century all through 2012. I plan on doing the same thing.

Update:

Friedman in Free to Choose on the Fed:

“In one respect the System has remained completely consistent throughout. It blames all problems on external influences beyond its control and takes credit for any and all favorable occurrences. It thereby continues to promote the myth that the private economy is unstable, while its behavior continues to document the reality that government is today the major source of economic instability.”  

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20 Comments

  1. I’ve never read Free to Choose. I did read Capitalism and Freedom when I first started getting into economics, but I wasn’t particularly impressed–it was an awkward book. Friedman was really before my time; I didn’t start thinking and reading about economics until about five years ago.

    That said, it’s hard to get away from the vicarious influence of Friedman. Thomas Sowell’s Basic Economics was the book that first got me excited about economics, and the legacy of Friedman is all over it.

    I do love watching Friedman debate. My wife bought me the original season of Free to Choose on DVD last Christmas. Good fun and timeless.

    Anyway, nice introduction.

    Reply
  2. Lee,

    Thanks for the feedback. Thomas Sowell is very much Friedman. I must admit that I also like Free to Choose a lot better than Capitalism and Freedom. Pete Boettke by the way has a good discussion about exactly that-

    The Free to Choose TV series was produced Bob Chitester. He today runs The Free to Choose Network: http://marketmonetarist.com/2012/01/25/dinner-with-bob-chitester/

    Reply
  3. Benjamin Cole

     /  February 28, 2012

    I loved Free to Choose as well.

    I regret that people now choose to forget that Friedman favored taxes on pollution, a progressive consumption tax to finance military outlays, and the elimination of the home mortgage interest tax deduction. He thought the gold standard was nuts. Farm subsidies? Ethanol subsidies and mandates?

    The right-wing today in the USA embraces only a filtered version of MF, no the whole man. The left-wing is out to lunch anyway.

    Reply
    • Thomas Hannaford

       /  February 29, 2012

      Benjamin,

      I’m a noob to the MM movement (although I initially got excited about economics from reading about Friedman and the Chicago school), but I can tell you there is a lot of hope on the horizon for the political realization of the same policy prescriptions you just described. I remember working on Capitol Hill in high school in 2004-2006, and people would have laughed you off the Hill for mentioning such blasphemous things as removing Ethanol Subsidies and the MITD. While not as popular as it should be right now, at the least these things have worked their way into legitimate conversation on the Hill, and I believe within the next few years you will see more and more congressional members (especially some of the younger Republican members who could just as easily be registered independents, along with the economic conservative Democrats who are being ostracized by their party) introducing proposals such as progressive consumption taxation (I dislike the Fair Tax, but I do hold out hope that it can start a conversation on the issue…all we need is a starting point) and potential flat carbon taxes (none of this Cap and Trade nonsense, but an actual no BS Carbon consumption tax, or at least a tax on carbon production over a certain level).

      Things may look a little grim right now, but have faith sir…Friedman’s policy prescriptions and ideas are gaining traction in full force once again, not just in the “Oh, we like this idea but not this one” fashion that has been embraced in recent times.

      Reply
  4. BC,

    I think the big difference between the message in Free to Choose and today’s right-wing in the US is a question about optimism. Friedman actually had solutions to the problems of the day. It seems like the right in the US mostly are concerned with hatred and fear. Thats too bad because the left certainly has nothing to offer other than big government.

    Reply
  5. Jakob T

     /  February 29, 2012

    I too loved Free to Choose and I say that as someone who does not identify as libertarian. I don’t share Friedman’s (and your’s and the “good folks at CEPOS”) view that there is something fundamentally wrong about a welfare society. But Free to Choose is certainly a wonderful defense of free markets and the libertarian argument. Perhaps because Friedman seemed genuinely interested in engaging with his ideological opponents instead of just making cheap shots at them. And he had a way with words and was humorous and a great debater. It seems the “big ones” always are. Whatever one may think of Keynes’ ideas about macroeconomics he too is simply fun to read! (Not talking about the General Theory which I haven’t read).

    But after i read Free to Choose i remember still having this nagging feeling that there was something weird about this idea that personal freedom in the US was somehow under attack. After all the previous 30 years had seen unprecedented economic growth along with very significant improvements of the fundamental democratic rights of many US citizens. I guess this is why I am not really a libertarian :-)

    Anyway it seems there is now one more book on my to-buy list for when I graduate and find a job. Good on CEPOS for letting you write the preface – can I get it signed? :-)

    Reply
  6. Milton Friedman is all the proof any honest intellectual needs to admit that Scott Sumner would be more effective in effecting long term change by delivering red meat to conservatives than by trying to woo liberals.

    Liberals are not Keynesian. They only want to give free shit to poor people. During good times, no liberal argues we shouldn’t give public employees raises – that’s is Keynesian, if a liberal doesn’t argue it – they are not Keynesian.

    There in three sentences, I liquidate the theoretical underpinning on liberal economic thought.

    Motives matter. And the point of Friedman is that he took away the liberals philosophical claim to wanting to help.

    Sumner doesn’t make liberals feel stupid – and he COULD.

    You are only writing about Friedman today because he did.

    Reply
  7. Jakob,

    I will be happy to sign the book;-)

    And you are completely right about Friedman. He was genuine nice guy and he respected that other people might have other views than he had. Something often missing among other conservative and libertarian intellectuals.

    Reply
  8. Morgan, thanks for dropping by.

    I hate the term “liberal” in the way Americans use it. Friedman considered himself a liberal and he was certainly not a conservative. He would accept being called a libertarian, a liberal or a classical liberal, but never a conservative.

    I think Friedman real success story was that he was able to talk about complicated issues in a way so everybody could understand.

    Reply
    • Thomas Hannaford

       /  February 29, 2012

      Maybe someday people who are labeled as “Conservative” in America will publicly reject that asinine label (not that everyone could do it; there are more than enough statists in both parties) and willingly call themselves “Liberals” in the traditional meaning of the word (Ya know, like we’re all taught in IR 101)!

      Reply
  9. Darko Oračić

     /  February 29, 2012

    Lars, you took a nice quote from Free to Choose. Friedman did not believe that the central bank can add to the stability of the economy, except by following a mechanical rule on money supply. He thought that no central banker or, for that matter, no economist knows enough about the economy to stabilize it by intervention. Moreover, he believed that attempts to stabilize the economy are counterproductive. He was a great intellectual in the sceptical tradition of Hume, Smith and Hayek. As no economist would admit that he does not know enough to rule the economy, no wonder Friedman is either selectively read or completely ignored today.

    Reply
  10. Darko, thanks…I completely agree. That is also why as long as we have central bank we need a rule based monetary policy and preferably we need a market based implementation of the rule via for example NGDP futures.

    Reply
    • Darko Oračić

       /  February 29, 2012

      Lars, I believe that just to legally determine an upper and lower limit of money supply growth would be a great step in the right direction. Maybe the range between the upper and lower limit should be a little bit larger than it was proposed by Friedman, in order to be more acceptable both to economists and to the public. However, I find very unlikely that a more complex rule, among so many offered, will be ever imposed on central banks.

      Reply
      • Darko Oračić

         /  March 1, 2012

        Lars, let me clarify my position further. I think that the rule-based NGDP targeting you propose is systematic monetary interventionism very far from Friedman’s vision of good monetary policy. You believe that money demand/velocity is so unstable, that large interventions in money supply are needed to keep NGDP growth or trend level stable. If that is correct, Friedman’s monetarism is deeply wrong and it belongs to (the dustbin of) history. On the contrary, what we see in reality, especially in Europe, is a strong correlation between money supply growth and lagged real variables growth. Therefore the instability of money supply growth is by far the most important source of economic instability. That, I think, vindicates Friedman’s “old” monetarism.

  11. Benjamin Cole

     /  March 1, 2012

    Thomas H–Glad to hear it, and welcome onboard to Market Monetarism!

    Adam Smith+Market Monetarism=Prosperity

    Reply
  12. Benjamin Cole

     /  March 1, 2012

    Thomas H-

    PS–Newt G’ answer to a q. about farm subsidies was that we would never get rid of them.

    Reply
  13. Darko,

    If velocity indeed is very stable (I tend think it is much more stable than it normally assumed) then there is no difference between NGDP targeting and M-targeting. We (Market Monetarists) of course advocate targeting the level of NGDP rather than the growth of NGDP.

    Friedman acknowledged that velocity is not constant. See here: http://www.msjc.edu/DanPynn/Documents/TheFedsThermostat.pdf

    I used to think money supply targeting was the best think, but I must say that NGDP a lot more qualities.

    Reply
    • Darko Oračić

       /  March 1, 2012

      Lars, what Friedman said in that article, which he wrote at age 91, is that velocity in the US deviated from its previous trend for a period, and then returned to the trend. Leaving that aside, I am not sure that money was correctly measured during that period. In 1997 and 1998, for example, there was a significant drop in M1, for which there is no explanation. Leaving that aside, I believe that velocity is a stable function of long-term interest rates (see, for example, Meltzer’s History, vol. 2, book 2). Nobody claims that velocity is “constant”. Leaving that aside, Europe is much better example of money supply growth being far more unstable than velocity.

      Reply
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