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US: Nobel prize winner Milton Friedman dies at 94
The Telegraph Group Limited Gulf News
Friday 17 Nov 2006 Professor Milton Friedman, one of the most influential econo mic thinkers of the 20th century, a Nobel Prize winner who popularised the belief that free markets rather than government action were the best tools to improve living standards, died in San Francisco on Thursday. He was 94. He was the leader of the Chicago School of laissez-faire economics and one of the early gurus of Thatcherism. Friedman tirelessly championed the moral virtues of the free market and opposed all forms of state intervention. When he first came to prominence at the University of Chicago in the late 1940s, he was one of a tiny minority who ventured to question the prevailing wisdom of Keynesianism. But by the mid-1970s - as inflation was let rip and state-dominated economies slid into decline - Friedman's ideas were central to the new current of thought being developed on this side of the Atlantic by Keith Joseph and in due course to be given practical expression by Margaret Thatcher. By the beginning of the 1990s, Friedmanite thinking held sway, to varying degrees, in corridors of power throughout eastern Europe and Latin America. If he received, in the later part of his life, less credit than he deserved for economic reform around the world, it was perhaps because there was such a gulf between the logical purity of what he told governments they should or should not do, and how far they were willing to follow his advice in practice. The starting point of Friedman's beliefs was the classical "quantity theory of money", which held sway among US economists before the shift to Keynesianism which inspired Franklin Roosevelt's New Deal in the 1930s. Quantity theory Quantity theory said that the amount of money in circulation was the dominant factor in the shaping of economic events, whereas John Maynard Keynes taught that economies could and should be managed by manipulation of taxes and government spending. Inflation has risen constantly since Keynes formulated his general theory of it. Underpinning Friedman's economic principles was a belief, shared with contemporaries such as Friedrich von Hayek, in the moral values of individual freedom. "The preservation of freedom," Friedman wrote, "requires limiting narrowly the role of government and placing primary reliance on private property, free markets and voluntary arrangements". He believed that tax-funded government spending was appropriate only to the most limited set of "public goods", such as national defence, and spoke wistfully of the pre-1914 era when only three per cent of America's national income was in the hands of the state; on his 80th birthday in 1992, he observed that the proportion had reached 44 per cent, and that America had unwittingly become "half-socialist". He was opposed to welfare in all its manifestations, proposing instead a system of negative income tax (partially adopted by Lyndon Johnson) to provide cash for individuals in poverty while doing away with the expensive and inefficient machinery of direct welfare provision. He also disapprove d of America's public (state) school system, arguing that, as a socialised monopoly, its product was the educational equivalent of East Germany's Trabant car. In California, he campaigned for education vouchers as a first step towards the ideal of a private education industry competing vigorously to offer parents a choice of schools to suit different pupils. As to business, Friedman believed that entrepreneurs would always find ways to circumvent excessive tax and regulation. "An overtaxed economy breathes through the loopholes," he said, "as grass grows through concrete". He had no time for minimum wage laws, rent controls, federal regulatory agencies, securities regulation or licensing boards for occupations and professions. This line of argument led him into one controversy in which he disagreed with Right-wingers less dedicated than himself to the purest logic of laissez-faire: he espoused the legalisation of cannabis and other drugs. Making comparisons with the Prohibition era, he argued that as long as there is demand for drugs, there will be entrepreneurs willing to exploit it and efforts to resist market forces will simply force prices upwards. Optimistic A diminutive figure with a cheerfully combative disposition, Friedman was unshaken by the tides of hostility and criticism which came his way on this and many other issues. He was a relentless debater and a demanding teacher: "Everything you could say, he could say better," one student recalled. In old age, he remained optimistic about "the struggle for economic and political freedom" even though he had lived long enough to see his ideas tried, abandoned, disputed or mangled by economists and politicians in many parts of the world. Profile: Milton Friedman Milton Friedman was born in Brooklyn on July 31, 1912, the son of a merchant and a sempstress who were immigrants from Austria-Hungary. He was educated at Rahway High School, New Jersey, and took a first degree in economics at Rutgers University in 1932. He went on to take an MA at the University of Chicago. In 1976, the year in which he was awarded the Nobel Prize for Economic Science, he had become probably the best-known economist in the world. His ideas had first reached a wider public through his best-seller Capitalism and Freedom (1962), but he was to achieve international celebrity status through Free to Choose (1980), which was written with his wife and turned into a television series. Friedman married, in 1938, his fellow economist Rose Director; they had a son and a daughter. http://www.gulfnews.com/world/U.S.A/10083445.html -- WebBooks Amazing Amazon Store: http://astore.amazon.co.uk/webbooks05
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