ONE of the infinite numbers of ways in which I have been blessed is in the friends I inherited from my lecturers and colleagues.
There’s Alexander Flanigan, investment banker and assistant to former Goldman Sachs CEO Lloyd Blankfein.
Esther George, one of my thesis supervisors, invited me to volunteer at the Jackson Hole Symposium.
Daniel Kahneman, who “tortured” me—an experience I’ve written about in previous columns.
Jim Mietus, the genius economist at the Office of Management and Budget.
Thank you for the incredible tour of the Cash Room at the Treasury and for welcoming me into your home in Washington, D.C.
And of course, Andrew Gelman: brilliant teacher, statistician, mathematician and emeritus professor of economics at Columbia.
And Stanley Fischer … the list goes on and on.
But at the top of the totem pole for their contributions to humanity’s progress and understanding come Milton Friedman.
Every year on July 31, we celebrate the birthday of Milton Friedman — he was born on that day in 1912 and would have been 113 years old this year.
He died on November 16, 2006, at the age of 94.
Last Thursday, a grand fête was held in his honor in the office.
I was supposed to be the master of ceremonies, tasked with preaching the good gospel of freedom and gratitude that evening.
Regrettably, duty called me elsewhere.
I had to represent a colleague at a World Bank event in Shanghai, China.
I’ll be writing about the meeting in a column coming out this Wednesday.
So now, let me tell you a bit about this giant of a man.
In addition to being an emeritus professor of economics at Chicago, where he taught from 1946 to 1976, Milton Friedman was:
1. A brilliant mathematician;
2. A spectacularly original and insightful economist (winner of one of the first Nobels in economic science, in 1976, when they were being given to truly heavy hitters instead of the uneven selection we sometimes see today);
3. A gifted writer;
4. A tireless crusader for education for the disadvantaged;
5. Above all, a fearless fighter for individual freedom.
I came across Friedman’s work through Mike Thaddeus, one of his former students and a visiting professor at Columbia during my time there.
At that point, my wife Jillian and I were living in separate cities—she was in Chicago finishing her hepatology fellowship, and I was trying to keep pace in New York.
When I visited Thaddeus’s office, I vented about the distance, saying I didn’t think I’d ever meet another person who made me feel the way she did.
“Medecci,” he said, “I can tell you as a mathematician that if there were only one right woman for every man, they would never find each other. Go out and experiment with someone else.”
It was a flashing insight and, indeed, I soon found a much more pleasant girl named Mary right across the street at Barnard.
Today, she’s a senior economist at BlackRock Singapore.
A few days later, when I was crossing Broadway at 116th Street to get to lunch at a Chock full o’Nuts restaurant with Thaddeus, I urged him to run ahead and cross against the light.
A very Malaysian suggestion, I thought.
“Medecci,” he said, “why should we risk the rest of our lives to save 20 seconds?”
These were my first hints that I was in the presence of genius.
Even though he was assigned to another group of postgraduate students, Thaddeus made the unusual decision to mentor me personally.
If memory serves, the text we used was the book Friedman had written with Anna Jacobson Schwartz (one of the truly great unsung heroes of economics), “The Monetary History of the United States.”
This book was the culmination of their analysis of the connection between the quantity of money and business cycles in the United States economy.
Until “The Monetary History,” the prevailing view of economists was that the supply of money affected the price level but not the real level of economic activity.
By dint of painstaking research and formulas, they showed that changes in the money supply greatly affected real levels of output and employment.
The main thesis of the book was that the Great Depression had been caused not by changes in tariff laws (always a questionable notion at best), not by the stock market crash (even more questionable), but by catastrophically wrongheaded decisions by the Federal Reserve Board in the period 1929-33 and again in 1936-37.
The Fed, obsessed with fears of inflation even as the economy was collapsing, shrank the money supply drastically and basically choked the life out of the economy.
(There was also a fascinating ethnic and racial angle to the story, which Thaddeus later related to me: certain potentates at the Fed were doing this in part as an anti-Semitic reaction to the views of a Jewish Fed official named Eugene I. Meyer, who was also the owner of The Washington Post and father of Katharine Meyer Graham.)
In the world of economics, this was a discovery on a par with the theory of relativity in physics or Copernican astronomy.
There is simply no way to exaggerate its importance.
The use of the money supply to regulate the economy and to prevent future depressions was largely born of the work by Friedman and Schwartz.
It was, in every way, lifesaving.
There was an immense additional amount of work by Friedman in economics and econometrics, and much of it had to do with the relation of the price level, monetary aggregates, output and unemployment to each other, and especially the key role of expectations in thwarting economic policy.
For this work, he won the Nobel.
But economics was merely the opening act.
In about 1965, the whole world was worshiping at the altar of John F. Kennedy’s words, “Ask not what your country can do for you — ask what you can do for your country.”
Friedman, in his writing, said that neither was a fitting question in a free society.
People should be asking what they can do for themselves and their friends and communities, not how they can serve the state or what they could get as wards of the state.
This became the beginning of Friedman’s 1980 PBS series “Free to Choose,” also about the role of individual freedom in creating a prosperous, politically free society.
At a time when the prevailing liberal ethos was all about the state, planning and direction from on high, Friedman stood up for the glory of the rights and choices of the individual.
From the individual, not from the state, came creativity, progress, freedom and prosperity.
From the state came oppression and stagnation.
While (just as a humble opinion) I see the state having a vital role in securing freedom for minorities and defending the society against aggression, Friedman’s basic point is certainly correct.
I was genuinely taken aback when Thaddeus pointed out that two of Friedman’s most capable disciples were Ronald Reagan, and another is the former California governor, Arnold Schwarzenegger.
There are a few great names in standing up for the individual in a world where the beautiful people always seem to want the state to tell us how to live, but they all pale before the brain power and ingenuity of Friedman.
If we have a free society today, if we have avoided anything close to another Great Depression, if we have prosperity and fairly stable prices, we owe much of it to Friedman.
If we have a free market economy that will yet pull us through our much travail and will be the beacon of hope to the whole world, if we still have a majority of the economy not in the hands of the state, much of the credit goes to Friedman.
It is not a stretch to say that when great buildings of the world have vanished, intelligent people will still find inspiration in the works of Friedman.
He will be in a pantheon of economists along with Adam Smith, F.A. Hayek, Ludwig von Mises, Carl Menger, Eugen von Bohm Bawerk, David Ricardo and John Stuart Mill.
So much so that I named my boy Hayek, for example, as a small tribute to a towering mind.
And Thaddeus, whose wisdom made me realise the odds were better with Jillian than with statistics and, quite literally, kept me from getting run over.
Happy birthday, Milton Friedman, and many more to come.
The views expressed here do not necessarily represent the views of Sarawak Tribune. The writer can be reached at med.akilis@gmail.com
