Right then, and right now
Milton Friedman’s ideas continue to shape America and the world.
- Friday, October 26, 2007
Next month will mark one year since the death of Nobel laureate and 20th Century intellectual giant Milton Friedman, who contributed so much to the cause of freedom and whose legacy is sure to grow even more with the passage of time.
The clarity of Friedman’s mind, ideas, and vision are evident in his writings and in the words heard by those fortunate enough to hear him speak in person. He washed away decades of muddled thinking and false theoretical assumptions that had dirtied the windows of economic and intellectual thought. And he reminded us that only by respecting the dignity of the individual and personal choice — through freedom from government coercion — can we enhance the economic well-being of all.
Friedman’s criticisms of Keynesian government interventions in the 1950s and 1960s hit at the heart of the erroneous assumptions that came to fruition during the stagflation of the 1970s. He argued that using inflation as a tool to pursue full employment would eventually lead to higher inflation and higher unemployment.
“You can’t keep fooling the people all the time,” said Friedman. “People will recognize what’s happening, and as they recognize what’s happening you’ll have to have more and more inflation to achieve that objective. And even that won’t work because people will catch on to it. And what happened in the 1970s was about as clear a demonstration of something that had already been predicted in advance as you could have. And that’s what made the stagflation.”
At severe political cost, President Reagan adhered to Friedman’s ideas and supported the Federal Reserve as it contracted the money supply to fight inflation at the cost of a recession in the early 1980s. Friedman’s ideas, and Reagan’s courage to bite the bullet, helped lay the foundation for a decade of monetary stability and the economic success we have seen ever since.
A decade later, young intellectuals and leaders in the former Soviet Republic of Estonia applied Friedman’s ideas as they threw off the shackles of communism. Former Estonian Prime Minister Mart Laar, who had read smuggled Friedman writings during the Soviet occupation, applied his concepts, knowing they would create severe short-term economic hardships — thus paying a heavy political price to reap long-term gains. It worked, and it proved Friedman right once again. Estonia is now one of the leading economic tigers among former communist countries, and is rated by the World Economic Forum as 25th out of 125 countries in global competitiveness.
Laar wrote, “Milton Friedman’s legacy in the modern World is the best proof that ideas really do matter. It is hard or not possible at all to imagine today’s world without Friedman’s ideas. But, I have actually seen this kind of world; I lived in it nearly half of my life. This was in the Soviet Union, built on the ideas of Karl Marx, Lenin and Stalin. There was no place for ideas such as freedom, free choice, human initiative or dignity. This was a world of state control, orders and violence. Human beings did not have any value there.”
Upon accepting the 2006 Milton Friedman Prize, Laar said, “We have really empowered the people in Estonia. We have liberated them to make choices that help move the country forward. Good government policy can give people the opportunity to create something, to be innovative, to look to the future, to dream, and to realize those dreams. I think this is what freedom is about.”
We can best honor Milton Friedman by remembering his words: “The heart of the liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights.”
Joe Enge is education policy analyst at the Nevada Policy Research Institute.