- The Washington Times - Saturday, August 3, 2002

Milton Friedman celebrated his 90th birthday this week, and people who cherish freedom in America and around the globe celebrated with him.

Mr. Friedman spent the first four decades of the second half of the 20th century on the ideological front lines as an intellectual general in the titanic, worldwide battle that pitted, literally, the morally good forces of democratic capitalism against the "evil empire" of Soviet totalitarianism. Born five years before the 1917 Bolshevik Revolution, Mr. Friedman has not only outlived the nearly 75-year-old Soviet regime. In testament to the total victory his ideas achieved, Russia, the primary successor state of the vanquished empire, has adopted one of the most revolutionary elements a flat tax on income that formed the foundation of Mr. Friedman's grand manifesto, "Capitalism and Freedom," which he co-wrote with his wife, Rose, and published in 1962.

To Mr. Friedman, the policy objective throughout his life has been a constant "the promotion of human freedom." In their 1980 blockbuster best-seller, "Free to Choose," which Ronald Reagan described as a "must read," the Friedmans observed: "We know of no society that has ever achieved prosperity and freedom unless voluntary exchange has been its dominant principle of organization." Emphasizing the binding correlation between political and economic freedom, he has also argued, "I know of no society that has been marked by a large measure of political freedom and that has not used something comparable to a free market to organize the bulk of economic activity." Indeed, fate decreed Mr. Friedman would win the Nobel Memorial Prize in Economic Sciences in 1976. No less than Yale economist James Tobin, a staunch Keynesian and intellectual adversary who would later win his own Nobel Prize, speculated that "an invisible hand led the Nobel jury to honor Milton Friedman in 1976, the twin bicentenaries of Adam Smith's 'The Wealth of Nations' and Thomas Jefferson's Declaration of Independence."

Forty years after the absolutely timeless "Capitalism and Freedom" was published, it is still breathtaking to comprehend how audacious and consequential its then-revolutionary arguments were. On the audacious front, the Friedmans, passionately believing that individual freedom is paramount, criticized President John F. Kennedy's call to "ask not what your country can do for you; ask what you can do for your country." As a consequence, at an early 90th birthday celebration on May 9, Mr. Friedman, who regards the elimination of the military draft as "my most important accomplishment" in the policy realm, heard another president, George W. Bush, praise the "dedication," the "quality," the "idealism" and the "skill" of America's all-volunteer military whose soldiers "serve in armed forces of their own free will."

When "Capitalism and Freedom" appeared four decades ago, the highest marginal income-tax rate in the United States was 91 percent; under President Reagan it fell to 28 percent, rose to nearly 40 percent under President Clinton and is now receding to 35 percent. Comparable revolutionary descents have occurred throughout the world. Nearly 50 years ago, in 1955, the Friedmans argued for school vouchers, a then-radical concept that only last month received the official imprimatur of the U.S. Supreme Court. "Capitalism and Freedom" argued for the establishment of personal investment retirement accounts, a concept both Chile and Sweden have already successfully implemented. With the world monetary system under an essentially fixed-rate regime with the U.S. dollar tied to gold in 1962, "Capitalism and Freedom" argued the benefits of flexible exchange rates, which made their appearance in 1971 when the dollar was permitted to float. A recent study for the National Bureau of Economic Research concluded that nations that adopted floating exchange-rate regimes over the past three decades have experienced, on average, significantly lower inflation and significantly greater growth in real per-capita economic output than nations that adopted other currency regimes.

Perhaps best known for the Monetarist Revolution he led beginning in the mid-1950s, Mr. Friedman also wielded the intellectual sword that annihilated the Keynesians' cherished Phillips Curve, which postulated an ostensibly stable tradeoff between inflation and unemployment in both the short and long runs. In his 1968 revolutionary presidential address before the American Economic Association, Mr. Friedman argued that such a tradeoff was unstable in the short run and nonexistent in the long run. The imminent stagflation of the 1970s completely vindicated Mr. Friedman's views, as did the U.S. experience of accelerating growth rates during the 1980s and 1990s, which occurred in an environment of declining inflation.

The intellectual dynamism of Mr. Friedman most recently manifested itself amid the dotcom "New Economy" mania that propelled the stock market to stratospheric levels throughout 1999 and early 2000. "The U.S. stock market exhibits some of the characteristics of a bubble," Mr. Friedman said in the summer of 1999, a view that generated much ridicule. He then offered two simple predictions: "If this turns out to be true, then the United States will experience a deep collapse of the stock market. That would be a true danger for the continuation of the unusual economic expansion of the past nine years." Subsequent events, of course, proved Mr. Friedman right on both counts.

Taking cognizance of Mr. Friedman's diminutive 5-foot frame and the brilliance that has over the years emanated therefrom, Federal Reserve Chairman Alan Greenspan, widely known for his obsession with the most nuanced statistic, once observed that Mr. Friedman undoubtedly possessed the world's biggest brain per square inch of body. In an historical context, Mr. Greenspan also recently opined that Mr. Friedman has been "the most formidable economist" of the 20th century. If the worldwide experience of the past 50 years constitutes a reliable guide, then Mr. Greenspan's observations will surely be validated.

As "the most formidable economist" of the 20th century marches into his 10th decade in the early years of the new millennium, it's worth speculating what his impact will be on the 21st century. With his wife of 63 years as his constant companion a wife, by the way, who spent part of her 1938 honeymoon completing the draft of her doctoral dissertation examining the contributions to capital theory by Longfeld and Senor today's largest, freedom-destroying political dictatorship ought to consider this unpleasant thought: The truly revolutionary work of the Friedmans has been translated into Chinese.



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