Influential Economist Friedman Has Died in California, at Age 94
By GREG IP
November 16, 2006 7:18 p.m.
Nobel Prize winner Milton Friedman, one of the most influential economists of the last century and a free-market champion, died today. He was 94.
Mr. Friedman died of heart failure at his home in San Francisco, his daughter, Janet Martel, said.
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 a moment of silence in observance.
Mr. Friedman was awarded the Nobel Prize in 1976. He long championed the cause of political and economic freedom and the links between the two. He originated, or was 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 developed, with this year's Nobel Prize winner in economics, Edmund Phelps, 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 also 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 1980, which was both a television series and a book.
Mr. Friedman had enormous impact on economic policy though he never had a formal job in a government administration after World War II. His opposition helped lead to the end of the draft. He was an adviser to President Ronald Reagan. He was also closely associated with school vouchers and other applications of free market principles to policy issues.
In commentaries in The Wall Street Journal, Mr. Friedman praised the policies of President Reagan and former Federal Reserve chief Alan Greenspan. Earlier this year, Mr. Friedman wrote that Mr. Greenspan's "performance has indeed been remarkable. There is no other period of comparable length in which the Federal Reserve System has performed so well. It is more than a difference of degree; it approaches a difference of kind."
Mr. Friedman is survived by his wife Rose, his son David and daughter Janet, four grandchildren and three great grandchildren. The Milton and Rose Friedman Foundation said in a statement that, in accordance with his wishes, Mr. Friedman's body will be cremated and the ashes scattered over San Francisco Bay and no service will be held at this time. The family has asked that in lieu of flowers or gifts, contributions be made in his honor to the Milton and Rose D. Friedman Foundation.
Born in New York City
Born in New York City on July 31, 1912, Mr. Friedman began developing his economic theories during the Great Depression when President Franklin D. Roosevelt based his New Deal on the ideas of Britain's John Maynard Keynes, the most influential economist of the time.
Mr. Keynes argued that the government should intervene in economic affairs to avoid depressions by increasing spending and controlling interest rates. (When asked in 2004 by The Wall Street Journal to name the most important economist of the 20th century besides himself, Mr. Friedman named Mr. Keynes)
Mr. Friedman graduated from Rutgers University in 1932 and earned his master's degree the following year at the University of Chicago. After working for the National Resources Commission in Washington from 1935 to 1937, Mr. Friedman was a member of the staff of the National Bureau of Economics Research in New York from 1937 to 1945 and received his doctorate from Columbia University in 1946. After World War II, he taught at the University of Minnesota, then returned to the University of Chicago. He became a senior fellow at the Hoover Institution at Stanford University in 1977.
"Most Americans have no idea what the science of economics is about. Milton Friedman made economic thought more accessible to more people, and he did it in a simple, straight-forward way that avoided politics and cut to the heart of free market capitalism."
Mr. Friedman married Rose Director in 1938. They had two children, Janet and David, and Rose was co-author of some of his books.
Among his most famous books were: "Price Theory," 1962 (with Rose Friedman); "Capitalism and Freedom," 1962; "An Economist's Protest," 1972; "There Is No Such Thing As a Free Lunch," 1975; and "Free to Choose," 1979, co-authored with his wife. "Free to Choose" also was a series on the Public Broadcasting Service.
The producer of that series, Bob Chitester, told the University of Chicago that Mr. Friedman's "insatiable curiosity" made him a different kind of thinker. "He set forth ideas without regard to their popularity or acceptability. He has been equally tough on himself and others in his search for tools of analysis that consistently and accurately predict outcomes in both micro and macro economics. And he has never compromised the resulting analysis to please those in power. Such courage is essential to the survival of a free society," Mr. Chitester said.
Mr. Chitester's new biography of Mr. Friedman, titled "The Power of Choice," will air on PBS in late January.
Mr. Friedman wrote columns for Newsweek from 1966 to 1983 and was one of the few economists to bridge the gap between academia and the public. He involved himself in political campaigns, supporting Barry Goldwater in 1964 and Richard Nixon in 1968. He served on President Nixon's commission for an all-volunteer Army in 1969 and 1970.
In an interview with Playboy magazine in 1973, later republished in a collection of his essays titled "Bright Promises, Dismal Performance," Mr. Friedman said he was encouraged by an apparent trend away from government control.
"There are faint stirrings and hopeful signs," he said. "Even some of the intellectuals who were most strongly drawn to the New Deal in the '30s are rethinking their positions, dabbling just a little with free-market principles. They're moving slowly and taking each step as though they were exploring a virgin continent. But it's not dangerous. Some of us have lived here quite comfortably all along."
Mr. Friedman, whose wit made him a popular guest on radio and television shows, appeared to enjoy sparring with other economists.
In the Playboy interview, he referred to his disagreement with John Kenneth Galbraith, who endorsed wage and price controls. When Mr. Nixon went against Mr. Friedman's advice and imposed the controls in an effort to slow inflation, Mr. Friedman said he wrote a note to Mr. Galbraith.
"You must be as chagrined as I am to have Nixon for your disciple," Mr. Friedman wrote. Mr. Galbraith didn't reply, Mr. Friedman said.
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Master of Economics
Key events in the life and career of Milton Friedman
MILTON FRIEDMAN was one of the towering figures of economics in the 20th century. A leading advocate of free markets, he championed monetarism, the notion that the inflation can be regulated by the Federal Reserve's control of the money supply. He wrote extensively on the Great Depression and was an advocate of libertarian ideas such as the decriminalization of drugs.
1912 — Born in New York.
1932-1933 — Receives bachelors degree from Rutgers University, masters degree from the University of Chicago.
1937 — Becomes a member of the research staff of the National Bureau of Economic Research, a post he would maintain until 1981.
1945 — With coauthor Simon Kuznets, publishes "Income From Independent Professional Practice," his doctoral thesis.
1946 — Receives doctorate from Columbia University and is hired to teach at the University of Chicago, where he served as a professor of economics until 1976. Friedman would come to be seen as the leader of the Chicago School of monetary economics, which stresses the importance of the money supply as an instrument of policy and a determinant of the business cycle.
1951 — Wins the John Bates Clark Medal, which honors top economists under the age of 40.
1956 — "Studies in the Quantity Theory of Money" is published. In it, Friedman argues that increased monetary growth over the long run raises prices but has no effect on output. In the short term, increased money supply boost hiring and output.
1957 — "A Theory of Consumption Function" is published. Considered a landmark study, it tackles the notion, associated with John Maynard Keynes, that consumers adjust their spending to reflect current income, arguing instead that people's annual consumption is a function of what they expect to earn over the course of their lifetime.
1962 — "Capitalism and Freedom" is published. Friedman's key text on free markets, it argues in favor of floating currency exchange rates, an all-volunteer military, a negative income tax and education vouchers.
1963 — "A Monetary History of the United States, 1867-1960", co-authored with Anna J. Schwartz, is published. In a work that would become hugely influential in the field of monetary economics, Friedman and Schwartz used historical narrative and reams of supporting data to argue that steady control of the money supply is crucial in steering the economy. The book famously critiqued the Federal Reserve's performance during the Great Depression and the central bank launched a lengthy internal review of its policy-making after receiving a prepublication draft of the book. The Fed commissioned Elmus R. Wicker to write a rejoinder in hopes of deflecting some of Friedman's arguments.
1964 — Serves informally as an economic adviser to Republican presidential candidate Barry Goldwater. Later, Friedman served as an economic adviser to Richard Nixon's 1968 presidential campaign, and to Ronald Reagan's 1980 campaign.
1967 — Serves as president of the American Economic Association.
1975 — Friedman makes a controversial trip to Chile, along with several other University of Chicago professors, where he meets with dictator Gen. Augusto Pinochet.
1976 —Is awarded the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in economics for his work in the fields of "consumption analysis, monetary theory and history and for his demonstration of the complexitity of stabilization policy."
1977 — Becomes a senior research fellow at the libertarian Hoover Institution at Stanford University.
1980 — PBS airs the 10-part "Free to Choose," which is made into a bestselling book co-authored with his wife, Rose Friedman. The series and book were a robust defense of the couple's free-market economic beliefs.
1981 — Serves as a member of Reagan's Economic Policy Advisory Board.
1988 — Receives Presidential Medal of Freedom and National Medal of Science.
2002 — President Bush speaks at a ceremony honoring Friedman, celebrating his 90th birthday and recognizing his contributions to the study of economics.
Nov. 16, 2006 — Friedman dies of heart failure at a hospital near his home in San Francisco. He was 94.
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February 02, 2006, 08:29:23 PM