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Commentary

Milton Friedman


     
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WASHINGTON—When I was growing up, Milton Friedman was widely reviled in most of South America. He was seen as Chilean dictator Augusto Pinochet’s accomplice. In Britain, where I also spent part of my adolescent years, he was seen by leftists as an intellectual mentor of Margaret Thatcher’s effort to crush the little guy under the mastodon of big business. I started reading him, therefore, as novitiates might read erotic literature in a convent: with an irresistible sense of the forbidden.

The Latin American charge was an unfair exaggeration—but one, alas, to which Friedman himself contributed somewhat. The British charge was a fundamental misrepresentation of everything the Nobel laureate stood for.

Yes, he briefly met Pinochet and, during his rule, visited Santiago to talk about free markets. Friedman was by no means a permanent adviser and many of his admirers who undertook the reforms under Pinochet had little relationship with him. But his argument that free markets would eventually undermine the dictatorship sounded like a rationalization for the status quo rather than a wish to terminate it. His critics used that charge against him even as they had the good sense to preserve Friedman-style reforms when democracy came to Chile.

As for Friedman’s supposed espousal of big business to the detriment of the little guy, the truth was exactly the opposite. For him, the separation between government and business was as important as the separation between church and state. He understood that businesses prefer for governments to bend the rules in their favor rather than compete, and he wanted the little guy—that is, the consumer, and not the legislator and his cronies in big business—to determine success and failure in the marketplace. The expression “free to choose” said it all: It was about expanding choice for the little guy. In those countries where Friedman’s ideas triumphed, workers became shareowners, tenants in housing projects became proprietors, kids without college degrees became entrepreneurs and many a corporate giant came tumbling down, unable to withstand the daily choices of the common folk empowered by the separation between state and business.

Most people paying tribute to Friedman since his death last week mention his theoretical contributions. They deserve unmitigated praise, of course. Particularly his idea that consumer patterns are not influenced by short-term factors but by long-term expectations, meaning that government efforts to boost output by artificially placing money in people’s pockets are doomed to fail. Or his debunking of the superstition that inflation was the price to pay for reducing unemployment. Precisely because that was not true, the word “stagflation,” used until then in academic circles, became almost a household term in the 1970s, when inflation and unemployment proved to be able to coexist quite comfortably. And finally, his impugning of the Federal Reserve as the culprit of the Great Depression for failing to loosen monetary conditions in the early stages of a recession went a long way toward making politicians align monetary policy with the real economy.

But other dimensions to Friedman need to be pointed out. He did not let his area of specialization get in the way of his humanist vision. He absorbed a wealth of knowledge from all sorts of disciplines that told him how rich and unpredictable the human experience is. This taught him humility—even in his approach to economics. Realizing how elastic and free the human psyche is, he refused to see society as a mathematical equation.

Above all else, Friedman symbolized the power of ideas. Millions of people who have never heard of him lead better lives today in Asian and Central European countries (and in Britain, too) in part because his ideas proved more resilient than the prejudices that surrounded his name in political and intellectual circles, than the social engineers who tried to impose their bureaucratic whims under the cloak of altruism, or the police states that thought themselves eternal.

Ironically, Friedman was considered a moderate in free market circles; he accepted government action in many spheres in which others did not (his own son is an anarchist). In the wider world, he was seen as the ultimate radical. But that is purely a matter of perception. His denunciation of the U.S. military draft in the 1960s seemed as radical then as those currently arguing for its reinstatement sound today—which means that many of the things he stood for were nothing but common sense.


Alvaro Vargas Llosa is Senior Fellow of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. His Independent Institute books include Global Crossings: Immigration, Civilization, and America, Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.

(c) 2006, The Washington Post Writers Group

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