Milton Friedman, Democratic Revolutionary
Source: John Petrie’s Milton Friedman Quotation Page

The great Milton Friedman died yesterday in San Francisco. His ideas changed the world the most in our era. When we say ‘free markets,’ we think of him. I can think of no one whose ideas made more revolution and genuinely changed the world more for the better. He was the biggest democratic revolutionary of our age.

Friedman won the Nobel Prize for Economics in 1976. He brought forward free market ideas that were grounded in an Aristotelian understanding of human nature. Among his great ideas are that profit is not evil. People are naturally competitive. Low taxes mean bigger private sectors. Government must be small – and strong. If someone offers you a gift, you take it.

And one of my favorites: Inflation is a monetary and only a monetary) phenomenon. (In plain English: you only get inflation when government jackasses work overtime at the money-printing presses, stamping out too much cash which floods the economic system with toilet paper money). Not one other thing causes inflation – not jobs, not savings, not velocity of money, not business, not labor costs. Just the printing press.

Friedman was the original Chicago Boy, leading the economic revolution at the University of Chicago through the mid-20th century. It took awhile to get his ideas out, but they were very radical indeed. They finally reached the mainstream with the election of the great Ronald Reagan.

A New Yorker, whose was born in Austria, (same place the other great economists come from), Friedman nevertheless infused his ideas with the American experience. I have always seen himn as uniquely American and loved his wonderful biography he wrote with his lovely wife, Rose, called “Two Lucky People.” Friedman also had a few government roles, advising the great Ronald Reagan, whose political rise came from his understanding of Friedman. It was Friedman’s advice that cured our economy from the stagflation nightmare of Jimmy Carter in 1980. He’s the one who told Paul Volcker to go raise interest rates to burn excess money out of the system. It was painful and horrible but that’s what you have to do to get rid of money-printing excesses. And nobody liked money-printing as much as Jimmy Carter’s Fed did. Except maybe the Confederacy.

Friedman also was the little bureaucrat responsible for the decision to take the cash that is taken out of our paychecks each payday for taxes. It was his idea that he cooked up while working for the government in the 1940s, and something he later rued as a tax cutter, but I am not so sure it was a bad thing. One of the great strengths of the government system here in the states is that taxes are collected and not many people cheat. Most places don’t have that – they have vast informal sectors, capital flight, money stuffed under beds or accounts in the Canaries or Caymans or Miami or Luxembourg. It’s the normal state of affairs. Not so in the states and the taxes automatically taken out are one reason why.

That wasn’t all he did on the fiscal front. He understood the power of fiscal action for creating democratic revolution. Sounds farfetched but it is perfectly true. When Augusto Pinochet, a tinpot tyrant of Chile with blood dripping from his hands, asked for some help in creating a social security system where each Chilean would have his own account and a stake in the system, and huge socialistic state-run enterprises would be taken right out of his own state hands and put in the hands of the people instead, Friedman gladly took the opportunity. Unlike Pinochet, Friedman knew that giving people personal cash power was a proven tyrant-slayer. He wasn’t surprised to see Chile blossom into a full-blown democracy shortly after that and Pinochet permanently out of power. That was one real people-power democratic revolution that to this day has staying power.

He also did something else – he popularized economics. It was no longer the dismal science after he got done with it, it was the magic of possibility, the transformation of poverty into wealth and choices. He was really good on TV. When I was young, I was wildly inspired by his TV show, ‘Free To Choose.’ It talked a lot about Hong Kong, where 80-something year-old Friedman was considered a ‘rock star.’ He actually attracted screaming teenagers! He explained to people like me that Asia was an economic miracle. Poor people from the 1960s were suddenly living normally. It came about from wealth creation and wealth creation came about because governments lowered taxes to practically nothing. That was why Hong Kong was such a dynamic, wonderful place. Begging bowls were things of the past, water buffalo were pets in a zoo, and nobody ate cats in the glittering, prosperous free-market Hong Kong of today.

To appreciate Friedman, you have to understand what the world was like before him. It was an economic wasteland. Everyone thought John Maynard Keynes was the ‘It’ Boy and that governments could spend indefinitely, creating one vast entitlement program after another. Jimmy Carter was the ultimate culmination. But he wasn’t the only one. Lyndon Johnson, Richard Nixon and Gerald Ford were also believers in this garbage and they all worked together to set the stage for Jimmy Carter’s economic morass, his most memorable contribution to leaving America a worse place than he found it.

For me, I grew up with the horror of Carterism and remember it well. I had no knowledge of World War II or the Fifties or much of the Sixties. All I knew was that government had no idea what it was doing and my public-school teachers liked to tell us kids there was no solution. It made me a rebel.

As a kid, I used to sneak off to the community college a couple miles away to read a magazine that excited me called National Review. I would go there specifically to read Friedman essays. I loved his take on the free market – smaller government, smaller taxes, no more regulation. The rebel in me became a believer. Once, I even got into a fight with my parents as a kid because I read in a Parade magazine essay that Friedman said kids should always get allowances to teach them to manage money. My parents weren’t keen on that and said he had no idea what he was talking about. (They probably figured I wouldn’t manage it!)

In college, I can’t say I had a big picture on economics as I do now. It was all fragmented. I had one fabulous high-school teacher named Mister Janc who taught us “Rich-Dad” personal finance techniques, a brilliant thing to impart to kids, and much better than economic theory.

Then there was Friedman and his tax-cut small-government ideas.

Then in college, all we got was Keynes. There were those creepy graphs I had trouble understanding as well as the ridiculous idea that governments can spend indefinitely and the more they spend the bigger and better the economy gets. It made no sense at all. How could I reconcile that nuttiness with the wonderfulness of Friedman? Were they the same ideas? I didn’t get it. How could these two insanely different concepts even be called the same ideas? I was horrified and if Keynes was what economics was, then I wanted no part of this field.

Later on, when I became a financial journalist, I learned to reconcile them all. Of course, I learned that Keynes wasn’t all bad, but his understanding was limited by the zeitgeist of his era.

I had the honor of meeting Mr. Friedman two times. In 1998, I called him at his house in San Francisco from Singapore. I needed his help to save Indonesia. He gave help. I asked him if Indonesia could benefit from a currency board. He said unequivocally yes. “But you have to get rid of the central bank,” he added, cautioning that it could not be a phony currency board. I put that quote on the wire and moved world currency markets toward support for Indonesia as word spread that momentum was building in the direction of monetary sanity for the poor battered Indonesians who’d just lost all their savings in a catastrophic IMF-induced currency devaluation. Still, he scared me a little, he had a steel-trap mind and a taste for precision that I have never seen to such an extent as anyone else. Was I just too awed of him? No, there really was something there, he was icily precise in everything he said and thought through.

The second time I met him was 2004 in San Francisco, at a big Cato Institute conference named in Friedman’s honor. What a glorious evening that was! I got to sit next to John Fund at the dinner. I got a long (two-hour) interview with the great Hernando de Soto. I got to sit down after dinner with Thomas Sowell, who was really nice. I met all these totally cool people.

But I also got to go to the front table and meet Mr. Friedman, who greeted me warmly when I recalled our Indonesia conversation. His lovely wife Rose was also there, and they made a sunny couple and looked so happy. Everyone was awed and honored to be in his company one brief evening. He had, after all, really changed the world and we all knew it.

Here’s one heck of a good roundup from Atlas Foundation that’s a must-see here.