Nobel-winning economist Milton Friedman dies at 94

Advocate of free markets influenced policies for several decades

November 17, 2006|By Jonathan Peterson | Jonathan Peterson,LOS ANGELES TIMES

WASHINGTON -- Milton Friedman, a brilliant champion of free-market economics and individual freedom who almost single-handedly altered the boundaries of public debate on an array of national issues, died yesterday in San Francisco. He was 94.

The cause was heart failure, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis.

Mr. Friedman was considered a leading economic thinker of the 20th century. His many prescriptions for policy, notably on managing the nation's money supply and curbing the welfare state, influenced presidents and presidential candidates starting in the 1960s.

Former President Ronald Reagan and former British Prime Minister Margaret Thatcher were among his fans.

Mr. Friedman attracted a legion of followers domestically and overseas. His ideas also sparked dissent and controversy.

He was awarded the Nobel Prize in economics in 1976 for a body of "original and weighty work," including his money supply research, which jurors said had influenced fellow scholars and the U.S. Federal Reserve and the central banks of other nations.

`A great man'

"He was a great man," said Allan H. Meltzer, an economics scholar at Carnegie Mellon University and the American Enterprise Institute. "It's hard to think of anybody who never held a government position of any importance who influenced our country -- and the whole world -- as much as he did."

A longtime San Francisco resident, Mr. Friedman had been a senior research fellow at Stanford University's Hoover Institution since 1977.

Yet Mr. Friedman's influence extended far beyond the ivory tower. He became a celebrity, promoting his passionate beliefs in books, magazines and television appearances. With confidence and a professor's logic, he sought to demolish the conventional wisdom after World War II that government must play a sweeping role in people's lives.

He said taxes should be cut and simplified, and that society benefits when personal choice reigns supreme.

Some of his teachings about money lost influence eventually, but Mr. Friedman became a symbol of capitalism through the consistency and force of his broader world view.

"He had been a fixture in my life both professionally and personally for half a century," former Federal Reserve Chairman Alan Greenspan said in a statement yesterday. "My world will not be the same."

The current Fed chairman, Ben S. Bernanke, said in a statement that "Friedman had no peer" among economic scholars.

"Just as important, in his humane and engaging way, Milton conveyed to millions an understanding of the economic benefits of free, competitive markets, as well as the close connection that economic freedoms bear to other types of liberty. He will be sorely missed," Mr. Bernanke said.

In the 1960s, Mr. Friedman argued that personal retirement accounts made more sense than a mandatory system of Social Security, helping set the stage for the recent national debate.

Similarly, he contended that parents should be allowed to choose the schools their children attend, laying the foundation for continuing arguments about school choice.

The latter belief animated Mr. Friedman's final years, and promoting choice in schools became the mission of his foundation.

"Why do America's universities have a greater reputation around the world than its public schools?" he once asked. "You have choice. That makes all the difference in the world."

Opposed draft

His views did fall into a tidy right-left framework. He was a leading voice in the Vietnam-era movement to end the draft, a position ultimately endorsed by President Richard M. Nixon.

Mr. Friedman offered blunt advice on subjects including laws against prostitution -- he saw them as incursions into individual choice -- and the international system of relatively fixed exchange rates, which he sought to overturn and which collapsed in the early 1970s.

He became the human face of the influential "Chicago school" of economics, emphasizing the role of monetary policy, which affects interest rates, and the benefits of free-market approaches.

Political leaders listened, granting almost unparalleled influence to a scholar whose free-market views once seemed out of step with his times.

At one point, Stanford University tried to lure the influential professor from the University of Chicago to a "free enterprise" chair. But Mr. Friedman did not wish to be pigeonholed, and he turned down the offer.

"He felt it would have restricted him or branded him, and he didn't want to be branded," Mr. Meltzer recalled yesterday.

Not all of his ideas found lasting acceptance. The U.S. Federal Reserve, the Bank of England and other central banks eventually abandoned many of his monetary prescriptions.

After a series of corporate and financial scandals, the Friedman-style campaign for deregulation lost its allure for much of the public. Some of Mr. Friedman's social priorities, notably the legalization of drugs, never caught on.

Mr. Friedman acknowledged that in hindsight he might not have pushed the technical aspects of his money supply theories so aggressively. Yet he never wavered from his world view.

"You form a philosophy at a certain stage, and for the rest of your life it dominates," he told the Financial Times in June 2003. "On the big issues of policy, I don't think there is anything I've changed my mind about."

Jonathan Peterson writes for the Los Angeles Times.

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