u Notes from the Underground: A (belated) tribute to Milton Friedman

A (belated) tribute to Milton Friedman

Thursday, December 14, 2006

As those of you who live on this planet know, Nobel winning economist Milton Friedman passed away around a month back. Falstaff put it best when he wrote:

Friedman managed the incredible balancing trick that every academic / social scientist secretly dreams of - a formidable contribution to theory matched with an important influence over real world policy. The point about Friedman wasn't whether he was right or wrong, it was that he mattered, in a way that few of us ever will.
I don't know enough economics to appreciate his theoretical contributions. But his writings about public policy have influenced me a great deal, and his mixture of moral and utilitarian arguments for the free market I thought was optimal. His espousal of the free market made him a hate figure for some on the Left, but these people use an additional accusation to smear Milton Friedman: that he "supported" the Fascistic Pinochet's regime in Chile. This is what Friedman himself said to such accusations:

Trebach: This question says you supported Pinochet or advised Pinochet.

Friedman: I never advised Pinochet. I never supported Pinochet.

Trebach: We'll throw that one away.

Friedman: But hold on. No, I don't want to evade the question.

Trebachi: All right.

Friedman: Chile was a case in which a military regime, headed by Pinochet, was willing to switch the organization of the economy from a top-down to a bottom-up mode. In that process, a group of people who had been trained at the University of Chicago in the Department of Economics, who came to be called the Chicago Boys, played a major role in designing and implementing the economic reforrns. The real miracle in Chile was not that those economic reforms worked so well, because that's what Adam Smith said they would do. Chile is by all odds the best economic success story in Latin America today.

The real miracle is that a military junta was willing to let them do it. As I said to begin with, the principle of the military is from the top down. The principle of a market is from the bottom up. It's a real miracle that a mititary group was willing to let a bottom-up approach take over. I did make a trip to Chile and I gave talks in Chile. In fact, I did meet with Mr. Pinochet, but I never was an adviser to him, and I never got a penny from the Chdean government. But I will say that that process led to a situation in which you were able to get an election which ended the military junta. You now have a democratic government in Chile. There is as yet no similar example from the world of entirely socialist states.

So, I was not an adviser to Pinochet. I was not an adviser to the Chilean government, but I am more thanwifling to share in the credit for the extraordinary job that our students did down there. (link)

Here is the tribute to him from the Catallarachs, here is a selection of Friedman's writings and quotes from the Wall Street Journal.

My favourite quote from Milton Friedman:
Indeed, a major source of objection to a free economy is precisely that it [..] gives people what they want instead of what a particular group thinks they ought to want.
His book Capitalism and Freedom is not a light read, but it's a libertarian classic, and it's probably the fastest way you can acquaint yourself with the main arguments of libertarianism (it's pretty slim - less than 200 pages). The first two chapters are something everyone who has an opinion on the role of government must read. And in the chapter Occupational Licensure, he gives a great argument as to how regulation almost always benefits the incumbent and the powerful against the interests of the customer.


At 11:30 PM, January 16, 2007, Anonymous Rajat said...

Sorry, off-topic, but don't you think it has been a bit too long since you posted anything (just over a month)? Of course I am taking liberties here, being culpable in the recent past :-).


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