Jews From The United States

"I was not in Chile as a guest of the government. I was in Chile as the guest of a private organization… I must say, it's such a wonderful example of a double standard, because I had spent time in Yugoslavia, which was a communist country. I later gave a series of lectures in China. When I came back from communist China, I wrote a letter to the Stanford Daily newspaper in which I said, '"It's curious. I gave exactly the same lectures in China that I gave in Chile. I have had many demonstrations against me for what I said in Chile. Nobody has made any objections to what I said in China. How come?""

"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."

"Friedman, go home! Friedman, go home! Long live the people of Chile! Freedom! Stop the capitalism!"

"Friedman came to Yale once and gave a talk called "Yale versus Chicago in Monetary Theory" before a house of 500 people. [...] It was quite interesting. I didn't get much involved at all in public, but we had a small private session afterwards. The thing I remember most about the occasion was that there was a very earnest, well-meaning graduate student who stood up at the big meeting and asked Friedman politely: "In your mode, money is the basic concept, and yet, you haven't ever told us exactly what money is conceptually. Could you help us understand it now?" Friedman cut the guy down in the withering way he can do by telling him that he didn't understand scientific methods. He said Newton didn't have to tell what gravity was; he only had to tell what it does. The same applied to money. That illustrates Friedman's methodology of positive economics which I think has done great damage. [...] You see that in Lucas, too. Their idea is the as-if methodology in which it is not a question whether the assumptions are realistic, but whether the results derived from the assumptions are consonant with the facts of observation. My reaction is that we are not so good at testing hypotheses so that we can give up any information we have at whatever stage of the argument. The realism of assumptions does matter. Any evidence you have on that, either casual or empirical, is relevant."

"While Friedman never really appreciated the limitations of the market, he was a forceful critic of government. Yet history shows that in every successful country, the government had played an important role. Yes, governments sometimes fail, but unfettered markets are a certain prescription for failure."

"In his early research, Galbraith attempted to explain what had brought on the Great Crash of 1929 – including the role of the stock market's speculative greed fed by (what would today be called) irrational exuberance. Friedman ignored speculation and the failure of the labor market as he focused on the failures of the Federal Reserve. To Friedman, government was the problem, not the solution."

"All the way back, I thought about the fact that I would be held responsible for what was said in that lecture, even though I never heard it. Thereafter, I was always in my seat when Milton Friedman walked in to give his lecture. On a term paper, I wrote that either (a) this would happen or (b) that would happen. Professor Friedman wrote in the margin: "Or (c) your analysis is wrong." "Where was my analysis wrong?" I asked him. "I didn't say your analysis was wrong," he replied. "I just wanted you to keep that possibility in mind.""

"Under Milton Friedman’s influence, the free-market ideology shifted toward unmitigated laissez-faire. Whereas earlier advocates had worried about the stringent conditions that were needed for unregulated markets to work their magic, Friedman was the master of clever (sometimes too clever) arguments to the effect that those conditions were not really needed, or that they were actually met in real-world markets despite what looked a lot like evidence to the contrary. He was a natural-born debater: single-minded, earnestly persuasive, ingenious, and relentless. My late friend and colleague Paul Samuelson, who was often cast as Friedman’s opponent in such jousts, written and oral, once remarked that he often felt that he had won every argument and lost the debate. As for relentlessness: Professor Friedman came to my department to give a talk to graduate students in economics. The custom was that, after the seminar, the speaker and a small group of students would have dinner together, and continue discussion. On one such occasion I went along for the dinner. The conversation was lively and predictable. I had a long drive home, so at about ten o’clock I excused myself and left. Next morning I saw one of the students and asked how the rest of the dinner had gone. “Well,” he replied, “Professor Friedman kept arguing and arguing, and after a while I heard myself agreeing to things I knew weren’t true.” I suspect that was not the only such occasion."

"As far as Friedman's arguments are concerned, I always thought that he sang two tunes. In the economic profession, he was absolutely reasonable. I could find no distinction between his modern quantity theory of money and eclectic Keynesian economics. But in writing for Newsweek, he argued a hard monetarism, as against the soft monetarism of the "modern quantity theory." In hard monetarism, velocity is constant and nothing but the money supply matters for nominal GNP. I thought that was just factually wrong."

"Everything reminds Milton of the money supply. Well, everything reminds me of sex, but I keep it out of the paper."

"Everybody loves to argue with Milton, particularly when he isn't there."

"Today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself... Everyone understands now, on the contrary, that there can be no solution without government. The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas."

"It’s that the profession has gone very much to the right ideologically. And guess who was the most important person responsible for that … it was Milton Friedman, not Friedrich Hayek."

"There is as an unearthly, mystical element in Friedman's thought. The mere existence of a stock of money somehow promotes expenditure. But insofar as he offers an intelligible theory, it is made up of elements borrowed from Keynes."

"As a libertarian, Mr. Friedman advocated legalizing drugs and generally opposed public education and the state's power to license doctors, automobile drivers and others. He was criticized for these views, but he stood by them, arguing that prohibiting, regulating or licensing human behavior either does not work or creates inefficient bureaucracies."

"I don't give a good goddamn what Milton Friedman says. He's not running for re-election!"

"He's very influenced by Savage and by this Bayesian way of thinking about probabilities. So when I talk about people "knowing" a probability, he just can't reach that language."

"One thing all of us admired about Friedman's book on consumption was the way Friedman integrated the aggregate time-series evidence and cross-sectional survey evidence. He gave a unified explanation of very different samples in a single theoretical model."

"Friedman was the big influence here. [...] Friedman is a really gifted teacher plus a superb economist. He spent almost all his time on applying economics. He would start with some real world situation, some quote from newspaper, some Wall Street Journal editorial, some sentence. And then he would try and get into a class discussion."

"Friedman is the right's Chomsky. Non-experts (can) rarely appreciate the depth of their academic contributions."

"Now, I don’t want to put Friedman on a pedestal. In fact, I’d argue that the experience of the past 15 years, first in Japan and now across the Western world, shows that Keynes was right and Friedman was wrong about the ability of unaided monetary policy to fight depressions. The truth is that we need a more activist government than Friedman was willing to countenance. The point, however, is that modern conservatism has moved so far to the right that it no longer has room for even small concessions to reality. Friedman tried to save free-market conservatism from itself — but the ideologues who now dominate the G.O.P. are beyond saving."

"It’s a tribute to the importance of Friedman’s work that questions about his legacy bear so directly on contemporary policy issues. But for that reason it’s also important not to engage in hagiography. Friedman was a great economist, but like every other great economist in history, he was also wrong about some important things."

"In the long run, great men are remembered for their strengths, not their weaknesses, and Milton Friedman was a very great man indeed—a man of intellectual courage who was one of the most important economic thinkers of all time, and possibly the most brilliant communicator of economic ideas to the general public that ever lived. But there’s a good case for arguing that Friedmanism, in the end, went too far, both as a doctrine and in its practical applications. When Friedman was beginning his career as a public intellectual, the times were ripe for a counterreformation against Keynesianism and all that went with it. But what the world needs now, I’d argue, is a counter-counterreformation."

"Friedman was right, on a very big issue. His insight deservedly raised his prestige and that of the Chicago School of economics to new heights, and gave his earlier, monetarist critique of Keynesianism new respectability. But it is important to realize the limits of what Friedman's analysis of stagflation achieved."

"On the whole, the monetarism for which Friedman first became famous seems clever, brilliantly argued, but shallow—and perhaps even a bit disingenuous. Friedman's writings from that period have the feel of a smart man who knows what he wants to believe looking hard for supporting arguments."

"Milton Friedman may well be the world's best-known economist. He has turned his unprepossessing stature and manner into a trademark persona; a feisty conservative David battling the Goliath of Big Government. But his influence is not merely a matter of skill at propaganda. It rests on the long campaign that he waged against the ideas of Keynesian economics, a campaign that eventually bore fruit in radical changes in both economic ideology and real-world economic policy."

"The basic error, which was widespread long before Friedman and the new monetarism, lies in the assumption that regards the money supply as the source of the demand for goods and services."

"Although Humans are not irrational, they often need help to make more accurate judgments and better decisions, and in some cases policies and institutions can provide that help. These claims may seem innocuous, but they are in fact quite controversial. As interpreted by the important Chicago school of economics, faith in human rationality is closely linked to an ideology in which it is unnecessary and even immoral to protect people against their choices. Rational people should be free, and they should be responsible for taking care of themselves. Milton Friedman, the leading figure in that school, expressed this view in the title of one of his popular books: Free to Choose."

"Friedman argued that the sole duty of a company is to its shareholders, not to the interest of workers and surrounding communities. ...Workers may toil their entire lives, communities may tax themselves to create infrastructure a corporation needs, and vendors may invest their entire fortune to supply the corporation—but none of these parties, Friedman said, has significant legal rights or moral claims. The idea was radical. It was not supported by the development of the law, the regulation of business and the advancement of civilization over thousands of years. But in a surprisingly short time, Friedman's ahistorical thinking has come to dominate society."

"You see, in one respect, Milton Friedman is still a Keynesian, not on monetary theory, but on methodology. Keynes, very much against his own intentions, and it still dominates the economic theory, and Milton Friedman is one of the apostles of macroeconomics, which has the effect that while we completely agree on general economic policy, we wholly disagree on monetary policy, because his theory is based on supposed regularities between statistical magnitudes."

"I don't like criticizing Milton Friedman not only because he is an old friend but because, outside of monetary theory, we are in complete agreement. Our general views on what is desired and what is not are almost identical until we get on to money. But if I told him what I said before, that I very much doubt whether monetary policy has ever done anything good, he would disagree. He personally is convinced that a good monetary policy is a foundation for everything."

"I don't know what monetarism is. If monetarism just means a good old-fashioned quantity theory, of course it has not failed. If it means the particular version of Milton Friedman, I think it has because he imagines that he can achieve — ascertain — a clear quantity relationship between a measurable quantity of money and the price level. I don't think that is possible. In fact, just about 40 years ago in the opening sentences of my book, Prices and Production, I wrote that it would be a great misfortune if people ever cease to believe in the quantity theory of money. It would be even worse ever to believe it literally. And that's exactly what Milton Friedman does."

"His views have had as much, if not more, impact on the way we think about monetary policy and many other important economic issues as those of any person in the last half of the twentieth century."

"The classical support for as-if models in the social sciences stems from the economist Milton Friedman (1953), who, like the psychologist B. F. Skinner, saw little value in modeling cognitive processes. In contrast, our aim is to understand actual decision processes, not only the outcomes. There is a good reason for this. Without modeling the cognitive blade of Simon's scissors, it is utterly impossible to determine in what environments heuristics succeed, that is, their ecological rationality."

"Waiting his time in the 1960s and early 1970s was, however, perhaps the most influential economic figure of the second half of the twentieth century. This was Milton Friedman (1912- ) of the University of Chicago, later of the Hoover Institution on War, Revolution and Peace, a diligent, even indefatigable, advocate of the policy that was to fill the post-Keynesian void, especially in the English-speaking countries. A small, vigorously spoken man, uniquely determined in debate and discussion, entirely free of the doubt that on occasion assails intellectually more vulnerable scholars, Friedman was, as he remains, the leading American exponent of the classical competitive market, which he held still to exist in substantially unimpaired form except as it had suffered from ill-advised government intrusion. Monopoly, oligopoly and imperfect competition played no important part in his thinking. Friedman was a powerful opponent of government regulation and government activity in general. Freedom, he held, was maximized when the individual was left free to deploy his own income as he wished. On the other hand, Friedman, unlike less sophisticated practitioners of his faith, was not wholly indifferent to the freedom that accrues from having income to spend. To this end, he was the author of the most radical welfare proposal in the years following World War II. The income tax, he proposed, should, as always, diminish to zero as the lower income brackets are approached. And then in the lowest brackets it should return income, the amount increasing with increasing impoverishment. This was the negative income tax, a secure minimum income for all. Not many economists of the left could lay claim to such an impressive innovation. Friedman's central contribution to the history of economics was, however, his insistence on the controlling influence of monetary action on the economy and specifically on prices. After a lag of a few months, prices, he held, would always reflect movements in the money supply. So if one controlled the money supply limited its increase to the slowly expanding requirements of trade, the T in Fisher's historic equation prices would remain stable. In a statistically impressive demonstration, Friedman, in company with Anna Jacobson Schwartz, sought to show that this relationship had held, or appeared to have held, long in the past. So, presumably, it must in the future."

"The Bank [of Canada] gave it a college try, it really did. It just doesn't work that way."

"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

"It was actually a gradual process. Certainly Milton Friedman had a great influence on me here. He was by far the greatest living teacher I have ever had. He really opened my eyes to economics as a powerful engine of analysis. Milton Friedman was just number one. He was a great man."

"In fact, the only person to rival Friedman for policy influence in the twentieth century is John Maynard Keynes, who had a strikingly different view of the role of government. Keynes was influential because he advocated more government intervention into what he perceived as poorly functioning private economies caught up in the Great Depression. In contrast to Keynes, Friedman put the main blame for the Depression on government failures, especially of monetary policy. Hence, the Depression did not make Friedman a fan of big government. He also found in the Federal Reserve’s failure to prevent deflation an argument in favor of monetary rules. As the world evolved— with low inflation becoming the major mission of central banks and free markets and secure property rights becoming the main policies to promote economic growth—Friedman surely won the intellectual battle."

"First, I think that his concept of freedom was much too shallow. The idea that low income is a restriction on freedom—something that I think is a fairly elementary point—is something he just never recognized. His idea of somehow equating the market with freedom, well, I don’t think they’re unconnected but to assume it’s a simple matter— as he seemed to assume—is to my mind disregarding the facts of life, and disregarding the values that are put on these ideas. Now Friedman did make some exceptions. He thought extreme poverty was a subject of government policy, but by and large I think this emphasis on freedom is misplaced because it has very little to do with the freedom of the individual, with the individual employee. It was the freedom of the employer, of a minority, that really he was pushing. I think freedom’s important. I certainly wouldn’t say freedom’s an unimportant matter. But the question is: What do you mean by freedom? Expanding the scope by which people can act is an important matter. And it was not just income transfers and other methods. I think Friedman let himself make rather absurd statements, like for example he opposed the licensing of physicians on the grounds that it was a restriction on freedom. So this is an illustration of how his narrow conceptualization of what freedom means led him to kind of absurd statements."

"I agree with specific planks in the Friedmans' program, but I remain disappointed at the lack of guiding principles, the casual recommendation of sweeping changes without consideration of their systematic effects, and the one-sided selection of evidence and problems."

"On one hand, they are opposed to any support of academic research by the government, through the National Science Foundation and similar agencies; on the other hand, their book is replete with praise for the voluntary gift-giving for charities and intellectual life by the rich. I assume, then, that they would have no objection to having research in economics and the social sciences solely supported by gifts from the wealthy. That this state of affairs would result in unbiased research is beyond the scope of belief."

"The strength of the Friedman's critique of active policy does not lie in general principles or broad sweeps of history. It lies in the itemization of government failures: industrial regulation that is primarily in the interests of the special groups regulated, inefficient post offices, disappointing schools, welfare " messes," the failure of public housing. To some extent the Friedmans document these changes; to a greater extent they rely on current popular perceptions. These failures are in part real, and the Friedmans are not wrong in suggesting that the pursuit of social goals is very apt to be carried on much less efficiently than the pursuit of one's own self-interest. They do not question the theoretical need for internalization of externalities, as in pollution, but argue that the arrangements are bound to be inefficient (actually, they are rather muted on this particular argument, and nowhere flatly assert that the social gains do not exceed the costs). They are strongly opposed to testing drugs for efficacy but do not seem to question testing them for safety. In short, the critique tends to be selective, They are very ingenious at suggesting alternative policies for some problems, such as the voucher system for elementary education, the negative income tax to replace welfare, or the abolition of licensing for physicians. But when advocating comprehensive changes, it is important to consider the effects on the entire system."

"The question of criteria of judgment assumes particular force when the Friedmans deal with income distribution. They explicitly and strongly repudiate equality of outcome. But their reasoning is less clear. Part of the argument is that fair allocations are hard to define; but the difficulties of defining freedom are not even mentioned, let alone admitted as an argument against some attempt to achieve freedom."

"The concept of freedom, though it appears in the title of the book, is not analyzed. The commonplace idea that poverty is in many ways a restriction of personal freedom is not even mentioned. Implicitly, there are several not completely compatible strands in the Friedmans' analysis. As the title suggests, the Friedmans' advocate an emotional libertarianism. No action is valid which is not the outcome of voluntary action and agreement, the argument made, for example, by Robert Nozick in Anarchy, State, and Utopia. This position does not rest on economic efficiency at all. Still, the Friedmans' training as economists cannot be shed so easily. Economic progress matters a good deal to them, and economic success is a major argument for laissez-faire. They are also aware that economic theory shows that the market cannot always be successful in achieving efficiency, for there are externalities, such as pollution, with which it does not deal."

"Corruption is government intrusion into market efficiencies in the form of regulations."

"The business of business is business."

"Never underestimate the role of luck in the fate of individuals or of nations."

"Over short periods, the relation between growth in money and growth in nominal income is often hard to see, partly because the relation is less close for short than for long periods, but mostly because it takes time for changes in monetary growth to affect income. And how long a time is itself variable. Today's income growth is not closely related to today's monetary growth; it depends on what has been happening to money in the past. What happens to money today affects what is going to happen to income in the future"

"For both long and short periods there is a consistent though not precise relation between the rate of growth of the quantity of money and the rate of growth of nominal income. If the quantity of money grows rapidly, so will nominal income, and conversely. The relation is much closer for long than for short periods"