|Nov. 16, 2006||
Press Contact: William Harms|
Professor Emeritus Milton Friedman dies at 94
Milton Friedman, retired professor of economics at the University of Chicago and one of the world’s leading proponents of the importance of the free market, died Thursday, Nov. 16, in San Francisco, where he lived with his wife and fellow economist, Rose Friedman.
He was the premier spokesman for the monetarist school of economics and a pioneer in promoting the value of free market economics when the position was not popular.
Friedman, who was the Paul Snowden Russell Distinguished Service Professor Emeritus in Economics, won the Nobel Memorial Prize in Economic Sciences in 1976 for “his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.”
“He was clearly the most important economist of the 20th Century,” said Gary Becker, University Professor in Economics, University of Chicago and 1992 recipient of the Nobel Prize in Economic Sciences. “He had enormous influence in economic science and indirectly on public policy. He clearly had important influence on President Ronald Reagan and other presidents as well as leaders in both parties through his work on the flat tax, school vouchers, flexible exchange rates, stable monetary policy, and the voluntary military. He was on President Nixon's commission to study that issue and was one of the strongest advocates for a voluntary enlistment. He had lots of good ideas and suggested practical ways to implement them.”
“Milton was one of the greatest economists of all times and certainly of the last half century,” said James Heckman, the Henry Schultz Distinguished Service Professor in Economics, University of Chicago and the 2000 recipient of the Nobel Prize in Economic Sciences. “He created and fostered empirical science and made highly original contributions to statistics and to economics and to human knowledge. His death was a huge loss to the world.”
As a leading advocate of monetarism, Friedman contended that changes in the money supply precede, instead of follow, changes in overall economic conditions. He pointed out, for instance, that inflation results from “too much money chasing too few goods.”
He was a leading opponent of John Maynard Keynes (1883-1946), whose interventionist theory contended that the government should be heavily involved in managing national economies. Friedman maintained that the economy functions best when people have opportunities to make free choices unfettered by government regulations.
Friedman and his wife, Rose, were the authors of a number of influential books, including Capitalism and Freedom and Free To Choose, which was published as a companion book to a public television series by the same name. Ronald Reagan, Margaret Thatcher and free-market leaders in Eastern Europe were all devoted followers of the Friedman’s views.
Despite the unusually high public profile their work brought them, the Friedmans remained devoted academics, they said in their memoir Two Lucky People, published in 1998 by the University of Chicago Press. “We reflected again on the wonderful dividend from graduate teaching, of having intellectual children throughout the world…and on the emotional hold which the University of Chicago has had on those who have been there,” they wrote in the book.
Friedman came to the University to study economics after graduating with a B.A. from Rutgers University in 1932. He met Rose Friedman while both were students at Chicago and he received an M.A. in Economics from the University in 1933.
He was a research assistant for the Social Science Research Committee at the University from 1934 to 1935. He joined the faculty of the University of Chicago in 1946 after completing a Ph.D. in Economics at Columbia University and serving as an economist with the U.S. Treasury Department and a number of other agencies.
At Chicago, he and colleagues continued a tradition of taking the study of economics seriously by treating it as a science, and they joined other leading economists to found the Mt. Pelerin Society in Switzerland in 1947. In 1951, Friedman won the John Bates Clark Medal that honors economists under age 40 for outstanding achievement.
His first important work was published in the book Income from Independent Professional Practice, which he coauthored with Simon Kuznets. He contended in the book that state-licensing procedures limit entry into the medical profession and accordingly, doctors can charge higher fees than they could if competition were more open.
Throughout his career, Friedman discredited many of the Keynesian theories that were in vogue at the time Friedman began his work as a professional economist. In 1957, for instance, he published A Theory of the Consumption Function, which contested one of the key Keynesian positions: that people spend less of their income and save more, as their societies become wealthier. Friedman showed that people always want more, no matter how wealthy they become. The book also showed that people’s annual consumption is a function of their expected lifetime earnings, rather than a reflection of current income, which was the Keynesian view.
In his book, Capitalism and Freedom (1962), he made many recommendations that eventually became economic policy. He supported flexible exchange rates, a permanent departure from the gold standard, a volunteer army, a negative income tax, trucking and airline deregulation, competition for the Post Office, and a broader-based income tax.
“Milton Friedman was a very great figure in economic science and in public life,” said Robert Lucas Jr., the John Dewey Distinguished Service Professor in Economics, University of Chicago and 1995 recipient of the Nobel Prize in Economic Sciences. “His research on monetary economics and consumer behavior earned him one of the early Nobel prizes and deeply influenced generations of economists. His tireless defense of classical economic liberalism had an enormous influence of political thinking around the world. It is hard to think of a question of economic policy in the last 50 years on which he did not make a thoughtful and valuable contribution.”
He examined the Great Depression in his 1963 book A Monetary History of the United States, which he co-wrote with Anna Schwartz. Friedman and Schwartz blamed the Depression on the failure of the Federal Reserve Bank to prevent bank panics, as had been its charge when it was created in 1913. The failure of banks during the Depression led to a drop in the money supply.
In 1968, Friedman and economist Edmund Phelps of Columbia University conceived of what was called the “natural rate” of unemployment. Friedman pointed out that if unemployment falls below a “natural rate,” inflation follows. Government policies that promoted full employment during the 1960s and 1970s led to inflation going from 1 percent in 1960 to 13 percent in 1979.
“Milton's impact on economics is broad and deep,” said Philip Reny, Chairman of the Department of Economics, University of Chicago. “His contributions include important work at both the level of the individual as well as at the aggregate level of the economy. Milton's work on the theory of individual decision-making under uncertainty and individual consumption behavior shaped the way economists think about these issues and remains important and insightful to this day. At the level of the economy, Milton's clarity of thought as concerns monetary matters and their effects led to a kind of revolution within the field. His ideas opened the way toward our current understanding of the connection between monetary policy, inflation, and unemployment, and he can be quite accurately credited with the very successful targeted monetary policy implemented by the US Federal Reserve in recent decades.”
Friedman’s work reached people outside academe in ways that few economists ever do. He wrote a column for Newsweek, for instance, from 1966 to 1984. The 10-part series “Free to Choose” was broadcast on PBS in 1980. It attacked welfare dependency and centrally planned economies, and prompted a national debate about economics.
As his fame grew, Friedman was invited to advise governments around the world. His journeys took him to Chile and China, for instance.
More recently, he became a strong advocate of vouchers to encourage school choice.
“Milton was an intellectual entrepreneur, with an insatiable curiosity and a passion for clear thinking,” said Bob Chitester, who produced Friedman's popular PBS television series “Free to Choose,” and whose new biography of Friedman “The Power of Choice,” will air nationally on PBS stations on January 29, 2007.
“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,” Chitester said.
He is survived by his wife and colleague of many years, Rose Director Friedman, a daughter, Janet, and son, David.
Last modified at 03:50 PM CST on Wednesday, April 23, 2008.
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