Milton Friedman was born July 31, 1912, in Brooklyn, N.Y., the fourth and last child and first son of Sarah Ethel (Landau) and Jeno Saul Friedman, immigrants from Carpatho-Ruthe…
Milton Friedman was born July 31, 1912, in Brooklyn, N.Y., the fourth and last child and first son of Sarah Ethel (Landau) and Jeno Saul Friedman, immigrants from Carpatho-Ruthenia, then a province of Austria-Hungary. ◦ He received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy. ◦ Friedman is widely described as the most influential economist of the second half of the 20th century. ◦
Friedman held that "A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both." ◦ He insisted that "Underlying most arguments against the free market is a lack of belief in freedom itself." ◦ He framed the central political problem as one of dispersed power: "The problem in this world is to avoid concentration of power - we must have a dispersion of power." ◦ He argued that "the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere." ◦ He attacked the myth of costless government, stating that "Government cannot spend money at nobody's expense," and noting that unlike the federal government, a corporate executive paying taxes does not have a printing press in his basement. ◦ He maintained that "A society which is socialist cannot also be democratic." ◦ He argued that real change comes not from electing virtuous people but from incentives: "It's nice to elect the right people, but that isn't the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things." ◦
Friedman credited his intellectual rigor to a maxim about understanding opponents: "You cannot be sure that you are right unless you understand the arguments against your views better than your opponents do." ◦ He approached policy by focusing on structural incentives rather than personal virtue, arguing that "It's nice to elect the right people, but that isn't the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things." ◦ He advocated accepting "temporary evils" rather than intervening, based on the understanding that stepping in to fix problems may make them worse and create bad results elsewhere. ◦
Friedman viewed inflation through a strictly monetary lens: "Inflation is always and everywhere a monetary phenomenon." ◦ He saw power dynamics as central to political economy, warning that "The problem in this world is to avoid concentration of power - we must have a dispersion of power." ◦ He treated government spending as necessarily redistributive and costly, noting that "Government cannot spend money at nobody's expense." ◦ In corporate governance, he held that a corporate executive is an employee of the owners of the business, has direct responsibility to those owners (the shareholders), and that diverting corporate resources to general 'social responsibility' amounts to spending other people's money for a general social interest. ◦ He modeled social change through incentives rather than character, arguing that progress comes from making it politically profitable for the wrong people to do the right things. ◦
Friedman was awarded the Nobel Prize for research on consumption analysis, monetary history and theory, and the complexity of stabilization policy. ◦ He led the Chicago school and championed monetarism, arguing for a steady, small expansion of the money supply. ◦ He introduced the permanent income hypothesis. ◦ He theorized a 'natural rate of unemployment' and argued unemployment below it would accelerate inflation, rejecting the stable long-run Phillips curve trade-off. ◦ He held that "Inflation is always and everywhere a monetary phenomenon," and separately argued that "Inflation is the one form of taxation that can be imposed without legislation." ◦ On taxation, he stated that "in my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." ◦ In *Capitalism and Freedom* he advocated a volunteer military, freely floating exchange rates, abolition of medical licensing, a negative income tax, and school vouchers, and he opposed the war on drugs. ◦
Friedman employed direct, confrontational rhetoric when challenged, as when he told interviewer Phil Donahue: "Is there some society you know that doesn't run on greed? You think Russia doesn't run on greed? You think China doesn't run on greed?... none of us are greedy, it's only the other fellow who's greedy." ◦ He distilled complex arguments into aphoristic declarations, such as his claim that "Inflation is always and everywhere a monetary phenomenon." ◦
Friedman acknowledged an edge between his uncompromising free-market advocacy and the practical difficulty of sustaining liberty, stating that "the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere." ◦ His doctrine that "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud" stands in sharp tension with conventional corporate social responsibility. ◦ He characterized such social responsibility as diverting corporate resources to general 'social responsibility' and spending other people's money for a general social interest. ◦
To engage Friedman effectively, one must understand the arguments against his views better than his opponents do, per his own standard: "You cannot be sure that you are right unless you understand the arguments against your views better than your opponents do." ◦ He responded to moral framing with counter-examples drawn from comparative systems, as when he challenged Phil Donahue to name any society that does not run on greed. ◦ Persuasion should target incentives rather than virtue, since he believed that "The way you solve things is by making it politically profitable for the wrong people to do the right things." ◦