Economist Friedman Quotes

We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas.

Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money,set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!

Thanks to economists, all of us, from the days of Adam Smith and before right down to the present, tariffs are perhaps one tenth of one percent lower than they otherwise would have been. … And because of our efforts, we have earned our salaries ten-thousand fold.

Economists have a term for these costs—a less reassuring one than Friedman’s “neighborhood effects.” They are “negative externalities”: negative because they aren’t beneficial and external because they fall outside the market system. Those who find this hard to accept attack the messenger, which is science.

I mean, to talk about "corporate greed" is like talking about "military weapons" or something like that―there just is no other possibility. A corporation is something that is trying to maximize power and profit: that's what it is. There is no "phenomenon" of corporate greed, and we shouldn't mislead people into thinking there is. It's like talking about "robber's greed" or something like that―it's not a meaningful thing, it's misleading. A corporation's purpose is to maximize profit and market share and return to investors, and all that kind of stuff, and if its officers don't pursue that goal, for one thing they are legally liable for not pursuing it. There I agree with Milton Friedman [right-wing economist] and those guys: if you're a C.E.O., you must do that―otherwise you're in dereliction of duty, in fact dereliction of duty. And besides that, if you don't do it, you'll get kicked out by the shareholders or the Board of Directors, and you won't be there very long anyway.

Many thinkers have tried to “naturalize” consumerism in that way, including most social Darwinists, Austrian School economists (Ludwig von Mises, Friedrich Hayek, Murray Rothbard), Chicago School economists (George Stigler, Milton Friedman, Gary Becker), Darwinian libertarians, globalization advocates, management gurus, and marketers. Their model (which I call the Wrong Conservative Model, because I think it’s wrong, and because it’s usually advocated by political conservatives) is: human nature + free markets = consumerist capitalism

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” – Milton Friedman, Free to Choose

Asking economists for investment advice is like asking a physicist to fix a broken toilet. Not their field, though sort of related.

Sometime during the 1960s, the Nobel laureate economist Milton Friedman was consulting with the government of a developing Asian nation. Friedman was taken to a large-scale public works project, where he was surprised to see large numbers of workers wielding shovels, but very few bulldozers, tractors, or other heavy earth-moving equipment. When asked about this, the government official in charge explained that the project was intended as a “jobs program.” Friedman’s caustic reply has become famous: “So then, why not give the workers spoons instead of shovels?” Friedman

Nowhere is the gap between rich and poor wider, nowhere are the rich richer and the poor poorer, than in those societies that do not permit the free market to operate.” – Milton and Rose Friedman, Free to Choose, Chapter 5

Minimum wage increases. The Nobel Prize economist Milton Friedman has observed that the minimum wage is "one of the most ... anti-black laws on the statute books" because it destroys entry level jobs for second paycheck earners, teens, and other unskilled workers.

To the despair of every economist, it seems almost impossible for most people other than trained economists to comprehend how a price system works. Reporters and TV commentators seem especially resistant to the elementary principles they supposedly imbibed in freshman economics. Second,

the economists Milton Friedman and Anna Schwartz pieced together an extraordinarily detailed history of money in America. They showed that the Fed’s policy of making money scarcer and raising interest rates—that is to say, following the rules of the gold standard—turned what would have been a nasty but ordinary downturn into a cataclysm. The Fed, and the gold standard it managed, caused the Great Depression.

Alas, I soon grew disillusioned, concluding that economics was largely a form of intellectual prostitution where you got rewarded for saying what the powers that be wanted to hear. Whatever a politician wanted to do, he or she could find an economist as advisor who had argued for doing precisely that. Franklin D. Roosevelt wanted to increase government spending, so he listened to John Maynard Keynes, whereas Ronald Reagan wanted to decrease government spending, so he listened to Milton Friedman.

The great irony, then, is that the nation’s most famous modern conservative economist became the father of Big Government, chronic deficits, and national fiscal bankruptcy. It was Friedman who first urged the removal of the Bretton Woods gold standard restraints on central bank money printing, and then added insult to injury by giving conservative sanction to perpetual open market purchases of government debt by the Fed. Friedman’s monetarism thereby institutionalized a régime which allowed politicians to chronically spend without taxing. Likewise, it was the free market professor of the Chicago school who also blessed the fundamental Keynesian proposition that Washington must continuously manage and stimulate the national economy. To be sure, Friedman’s “freshwater” proposition, in Paul Krugman’s famous paradigm, was far more modest than the vast “fine-tuning” pretensions of his “salt-water” rivals. The saltwater Keynesians of the 1960s proposed to stimulate the economy until the last billion dollars of potential GDP was realized; that is, they would achieve prosperity by causing the state to do anything that was needed through a multiplicity of fiscal interventions. By contrast, the freshwater Keynesian, Milton Friedman, thought that capitalism could take care of itself as long as it had precisely the right quantity of money at all times; that is, Friedman would attain prosperity by causing the state to do the one thing that was needed through the single spigot of M1 growth.

The same thing, notes Brynjolfsson, happened 120 years ago, in the Second Industrial Revolution, when electrification—the supernova of its day—was introduced. Old factories did not just have to be electrified to achieve the productivity boosts; they had to be redesigned, along with all business processes. It took thirty years for one generation of managers and workers to retire and for a new generation to emerge to get the full productivity benefits of that new power source. A December 2015 study by the McKinsey Global Institute on American industry found a “considerable gap between the most digitized sectors and the rest of the economy over time and [found] that despite a massive rush of adoption, most sectors have barely closed that gap over the past decade … Because the less digitized sectors are some of the largest in terms of GDP contribution and employment, we [found] that the US economy as a whole is only reaching 18 percent of its digital potential … The United States will need to adapt its institutions and training pathways to help workers acquire relevant skills and navigate this period of transition and churn.” The supernova is a new power source, and it will take some time for society to reconfigure itself to absorb its full potential. As that happens, I believe that Brynjolfsson will be proved right and we will start to see the benefits—a broad range of new discoveries around health, learning, urban planning, transportation, innovation, and commerce—that will drive growth. That debate is for economists, though, and beyond the scope of this book, but I will be eager to see how it plays out. What is absolutely clear right now is that while the supernova may not have made our economies measurably more productive yet, it is clearly making all forms of technology, and therefore individuals, companies, ideas, machines, and groups, more powerful—more able to shape the world around them in unprecedented ways with less effort than ever before. If you want to be a maker, a starter-upper, an inventor, or an innovator, this is your time. By leveraging the supernova you can do so much more now with so little. As Tom Goodwin, senior vice president of strategy and innovation at Havas Media, observed in a March 3, 2015, essay on TechCrunch.com: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.

Along with libertarians such as Milton Friedman, an especially influential economist, they pointed with alarm at the dramatic increase in the number of government programs, bureaucracies, and employees that the Kennedy and Johnson administrations had created.

IF THERE is one person to blame for economists’ habit of opining on everything, it is Gary Becker, who died on May 3rd. Not content with studying the world’s economies, he was the first prominent economist to apply economic tools to all aspects of life. His revelation was the sort that seems obvious only in hindsight: that people are often purposeful and rational in their decisions, whether they are changing jobs, taking drugs or divorcing their spouses. This insight, and the work that followed from it, earned him a Nobel prize in 1992. No less an eminence than Milton Friedman declared in 2001 that Mr Becker was “the greatest social scientist who has lived and worked in the last half-century”.

While these organized interest groups argue, most people ask themselves why they must always be presented with religious options? Why must they identify the single pure truth in order to avoid an apocalypse? Is there any difference between Vladimir Lenin the communist, Mikhail Makunin the anarchist and Milton Friedman the marketist? No. All three are ideologues. Like other ideologies, that of free trade contains unspoken contempt for the individual citizen. It is a despairing response to the complexities of the real world and the politics of despair always replace choice with inevitability. Indeed despair is the natural tone of economists when they are selling their theories of salvation.

When the time came to apply for college, I decided against physics and other technical fields, and ended up at the Stockholm School of Economics, focusing on environmental issues. I wanted to do my small part to make our planet a better place, and felt that the main problem wasn't that we lacked technical solutions, but that we didn't properly use the technology we had. I figured that the best way to affect people's behavior was through their wallets, and was intrigued by the idea of creating economic incentives that aligned individual egoism with the common good. Alas, I soon grew disillusioned, concluding that economics was largely a form of intellectual prostitution where you got rewarded for saying what the powers that be wanted to hear. Whatever a politician wanted to do, he or she could find an economist as advisor who had argued for doing precisely that. Franklin D. Roosevelt wanted to increase government spending, so he listened to John Maynard Keynes, whereas Ronald Reagan wanted to decrease government spending, so he listened to Milton Friedman.

We economists don’t know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage.

When John Kenneth Galbraith rose to deliver the presidential address of the American Economic Association in 1972, the angular Harvard professor and supremely self-confident adviser to presidents was arguably the most famous living economist in America. From The Affluent Society in 1958 to The New Industrial State in 1967, his critical accounts of capitalism's tendencies to underfund social goods and concentrate corporate control had been fixtures on the best-seller lists. Galbraith's thirteen-part BBC television series on the workings of capitalism in 1977 was to help goad the production of Milton Friedman's counterassertion of 1980, the PBS series Free to Choose, an iconic statement of the new market ideology.

as the great economist Milton Friedman once asked, what economic system is “fair?” Is communism fair? Or socialism? Aren’t there always poor people and rich people anywhere you look?

Analysis predating [Milton] Friedman's gave a different answer to question of the Fed's policy errors [during the Great Depression] and new scholarship is validating the old wisdom. It now appears that Friedman will be merely an interlude between the sounder analysis of economists contemporary to the Great Depression and those who have rediscovered their insights. --Jeff Herbener

Education geared to industry demands has also got into the trap of producing commercial technologists for corporations. These corporations are not built for social responsibility in free-market capitalism. Milton Friedman said the biggest and only responsibility of a corporation is to increase shareholders’ wealth. If these corporations do research and find a vaccine eventually that costs $1,000, then those who are not able to afford it would be regarded by mainstream economists as having less willingness to pay. For the poor, it is not a choice, but a helpless situation. But, poor having less budget for essential needs is a problem that we do not start our economics textbooks with.

Most economic forecasts consist of extrapolations of current levels and long-term trends. And since the economy usually doesn’t depart much from those levels and trends, most extrapolation forecasts turn out to be correct. But those extrapolation forecasts are likely to be commonly shared, already reflected in the market prices for assets, and thus not generators of superior performance—even when they come true. Here’s how Nobel Prize–winning economist Milton Friedman put it:

1963 when economists Milton Friedman and Anna Schwartz indicted the Federal Reserve itself in their classic, A Monetary History of the United States, 1867-1960. To

faster. As I was closing this book, Walmart announced that to upgrade its ability to compete in e-commerce with Amazon—which still does eight times Walmart’s sales online—it was buying Jet, a year-old Internet retail startup. The Economist reported on August 13, 2016, that Jet’s appeal to Walmart was its “real-time pricing algorithm, which tempts customers with lower prices if they add more items to their basket. The algorithm also identifies which of Jet’s vendors is closest to the consumer, helping to minimize shipping costs and allowing them to offer discounts. Walmart plans to integrate the software with its own.” It turns out that “under a second” was just too damned slow.

Liberals including James Tobin, Paul Samuelson, and John Kenneth Galbraith and conservatives like Milton Friedman and Friedrich Hayek have all advocated income guarantees in one form or another, and in 1968 more than 1,200 economists signed a letter in support of the concept addressed to the U.S. Congress.4 The president elected that year, Republican Richard Nixon, tried throughout his first term in office to enact it into law. In a 1969 speech he proposed a Family Assistance Plan that had many features of a basic income program. The plan had support across the ideological spectrum, but it also faced a large and diverse group of opponents.5 Caseworkers and other administrators of existing welfare programs feared that their jobs would be eliminated under the new regime; some labor leaders thought that it would erode support for minimum wage legislation; and many working Americans didn’t like the idea of their tax dollars going to people who could work, but chose not to. By the time of his 1972 reelection campaign, Nixon had abandoned the Family Assistance Plan, and universal income guarantee programs have not been seriously discussed by federal elected officials and policymakers since then.* Avoiding

Thomas Sowell was born in North Carolina and grew up in Harlem. He moved out from home at an early age and did not finish high school. After a few tough years … read morehe joined the Marine Corps and became a photographer in the Korean War. After leaving the service, Sowell entered Harvard University, worked a part-time job as a photographer and studied the science that would become his passion and profession: economics. Sowell received his bachelor’s degree in economics (magna cum laude) from Harvard in 1958. He went on to receive his master’s in economics from Columbia University in 1959, and a Ph.D. in economics from the University of Chicago in 1968. In the early ’60s, Sowell held jobs as an economist with the Department of Labor and AT&T. But his real interest was in teaching and scholarship. In 1965, at Cornell University, Sowell began the first of many professorships. His other teaching assignments have included Rutgers, Amherst, Brandeis and the UCLA. In addition, Sowell was project director at the Urban Institute, 1972-1974; a fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford University, 1976–77; and was an adjunct scholar of the American Enterprise Institute, 1975-76. Dr. Sowell has published a large volume of writing, much of which is considered ground-breaking. His has written over 30 books and hundreds of articles and essays. His work covers a wide range of topics, Including: classic economic theory, judicial activism, social policy, ethnicity, civil rights, education, and the history of ideas to name only a few. Sowell has earned international acclaim for his unmatched reputation for academic integrity. His scholarship places him as one of the greatest thinkers of the second half of the twenty century. Thomas Sowell began contributing to newspapers in the late ’70s, and he became a nationally syndicated newspaper columnist 1984. Sowell has brought common sense economic thinking to the masses by his ability to write for the general public with a voice that get to the heart of issues in plain English. Today his columns appear in more than 150 newspapers. In 2003, Thomas Sowell received the Bradley Prize for intellectual achievement. Sowell was awarded the National Humanities Medal in 2002. In 1990, he won the prestigious Francis Boyer Award, presented by The American Enterprise Institute. Currently, Thomas Sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University in Palo Alto, California. —Dean Kalahar

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

Nobel Prize–winning economist Joseph Stiglitz thinks we need to rethink the laissez-faire economics of Rand and Friedman: “If markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.

These companies did not arrive at their dominant position solely because of the brilliance of their founders, even though the business press would have you believe so. Their monopolies are examples of the effects a political theory called libertarianism, based on the work of economist Milton Friedman and philosopher Ayn Rand, which quite simply posits that government is usually wrong and the market is always right. Strikingly, the Internet was created with government funding and built on the principles of decentralization—principles we need to find our way back to if we are to overcome the power of corporate monopolies in the digital age.

The social responsibility of business is to increase its profits,’ said Milton Friedman back in 1970, and the mainstream business world willingly believed him.

In a watershed article from 1970, Milton Friedman, the Nobel Prize–winning economist, who is considered one of the great theorists of today’s form of capitalism, laid out the foundation for the theory of shareholder primacy that is at the heart of so much finite-minded business practice today. “In a free-enterprise, private-property system,” he wrote, “a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” Indeed, Friedman insisted 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.” In other words, according to Friedman, the sole purpose of business is to make money and that money belongs to shareholders. These ideas are now firmly ingrained in the zeitgeist. Today it is so generally accepted that the “owner” of a company sits at the top of the benefit food chain and that business exists solely to create wealth, that we often assume that this was always the way that the game of business was played and is the only way it can be played. Except it wasn’t . . . and it isn’t.

Thus, in regard to the geography of the universe and to our place in it, the prevailing world view has rid itself of some parochial misconceptions. We know that we have explored almost the whole surface of that formerly enormous sphere; but we also know that there are far more places left to explore in the universe (and beneath the surface of the Earth’s land and oceans) than anyone imagined while we still had those misconceptions. In regard to theoretical knowledge, however, the prevailing world view has not yet caught up with Enlightenment values. Thanks to the fallacy and bias of prophecy, a persistent assumption remains that our existing theories are at or fairly close to the limit of what it is knowable – that we are nearly there, or perhaps halfway there. As the economist David Friedman has remarked, most people believe that an income of about twice their own should be sufficient to satisfy any reasonable person, and that no genuine benefit can be derived from amounts above that.

Today, Adam Smith is famous as the father of capitalism and an advocate of a central tenet of free market thought: that greed is supposedly good and it drives markets. This was an idea pushed by neoliberal economists, inspired by Friedrich Hayeck and Milton Friedman, who had no knowledge of the history of moral philosophy, or of Scotland. What they missed is that no gentleman of his time could ever espouse greed, least of all a professor of moral philosophy. Indeed, Adam Smith recognized greed as an economic driver, and saw it as necessary, but also realized that it was a problem for society. His work was not an espousal of greed, but rather a response to it. His work was an attempt to find a way to reign in commercial greed to support the agrarian order, which he believed to be inherently more productive than business.

Then in the 1970s, the established order came under attack. A cadre of economists including Milton Friedman reimagined the purpose of the corporation and its role in society, laying the philosophical groundwork for an upending of the economic order.

The Chicago boys and their mentors had the good sense to maintain the highly efficient, nationalized copper producer Codelco, the world’s largest. That’s, of course, a radical violation of market principles, of neoliberal principles, but worthwhile since the company was the source of much of Chile’s export earnings and the basis of the state’s fiscal revenues. In general, it was close to a perfect experiment. It looked like a great success, if you ignored the human costs. In 1982, Friedman published the second edition of his manifesto, Capitalism and Freedom, celebrating the triumph of the cause. The timing was auspicious. In 1982 the Chilean economy crashed and had to be bailed out by state intervention. The state then controlled more of the economy than it had under Allende. Analysts who had their eyes open called it “the Chicago road to socialism.” The prominent OECD (Organisation for Economic Co-operation and Development) economist Javier Santiso described the “paradox [that] able economists committed to laissez-faire showed the world yet another road to a de facto socialized banking system

Bork, along with economists like F. A. Hayek, Milton Friedman, and James Buchanan—figures whose work I had never studied or even read until after that night in Harlem—advocated not the conservation of traditional structures but the abolition of them; they wished to eliminate all real checks on private enterprise; and they believed, in contradiction not only to all common sense but also to Gödel’s theorem, that the Market could be depended on to regulate its own aberrations and idiosyncrasies. In other words, however much Bork and others like him may have inveighed against personal liberties in the public sphere, they were positively gaga over individualism’s most wanton, unfettered forms in the private sector. Indeed, I’ve come to think that the central political paradox of our time is that the so-called conservatives of the past half century have sought to conserve almost nothing of the societies they inherited but instead have worked to remake them with a vigor reminiscent of the leftist revolutionaries they despise.

As the late economist Milton Friedman once stated,

As we know, integrationists saw EMU as a decisive step toward European unification, while different national leaders had different, but in each case political, reasons for supporting it. In contrast, most ‘neo-liberal’, or simply old-fashioned liberal, economists – from Milton Friedman to Martin Feldstein, from Kenneth Rogoff to Paul Krugman and the majority of German economists – opposed the idea of a centralized monetary policy for structurally diverse economies. After the introduction of the common currency, and even before the debt crisis of the euro zone, most competent economists continued to remain sceptical about the long-term success of the project – for good reasons.

On November 16, 2006, an era ended when economist Milton Friedman died. A torrent of eulogies followed. The Wall Street Journal mourned his loss with the same tribute Friedman had credulously used when Ronald Reagan passed, saying “few people in human history have contributed more to the achievement of human freedom”—this about a president responsible for massive human misery. More myth than man, Reagan’s lawless, scandal-plagued tenure deserved condemnation, not praise.

To Friedman, a free society is a more moral society, because it respects the moral primacy of the individual. It is only through their own free choices that people express their values, and therefore their individuality and their humanity. Without that freedom, we count no more than sheep. To be truly human, we must be free, and responsible for our own actions. The majority may not approve of what we choose, or may think they know what is best for us; but that gives them no right to dictate what we may drink or inject, nor to force us into military service, nor to steal our property and income for their own purposes.

Economists talk about an invisible hand, in which the self-interested, short-term activities of people lead to what Adam Smith called “the wealth of nations.” Geopolitics applies the concept of the invisible hand to the behavior of nations and other international actors. The pursuit of short-term self-interest by nations and by their leaders leads, if not to the wealth of nations, then at least to predictable behavior and, therefore, the ability to forecast the shape of the future international system.

Noble Prize-Winning Economist, Milton Friedman, Tyranny of the Status Quo, 1984: “Nothing is so permanent as a temporary government program.

The economist John Maynard Keynes once said, “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” He should have included defunct law professors. The state we find ourselves in today can be traced back to the economists of the Chicago School. We would not have highly concentrated industries if it were not for Robert Bork and the Chicago School. Like all revolutions, an organized group of ideologues developed the ideas and spread them zealously. The Chicago School, led by Milton Friedman and George Stigler, was the vanguard of attack against antitrust laws. The great irony is that they decried monopolies and concentration of power, but in practice they created all the conditions necessary for them.

Milton Friedman, the Nobel Prize–winning economist who was the pope of the neoliberal right, and a leading critic of the drug war.

The people subject to price-setting laws have seldom remained passive, as if they were inert chess pieces. How many governments understood this before they passed such laws is unknown. But what is known is that a President of the United States— Richard Nixon— who was fully aware of the adverse economic consequences of price controls, imposed those controls anyway. His response to criticism of that decision by economist Milton Friedman was: “I don’t give a good goddamn what Milton Friedman says. He’s not running for re-election.”18 President Nixon was in fact re-elected, by a larger majority than that which first put him in the White House.

In late eighteenth-century America, “it took 19 out of 20 workers to feed the country’s inhabitants and provide a surplus for export,” wrote the economist Milton Friedman. Two hundred years later, only 1 of 20 American workers was needed to feed a far larger population while also making the United States “the largest single exporter of food in the world.

This convergence between policy-makers and professors was significant. Keynes’s ideas provided a theoretical rationale for continued New Deal spending. In turn, Keynesianism suggested a route to power for economists. Going far beyond the sort of technical work that Friedman had done, Keynes’s ideas positioned economists as strategic policy experts, even arbiters of the government’s role in society.

It was a strike against the edifice of policy and politics coming to rest upon Keynesian concepts of savings and consumption. Years later, Friedman spelled out the ultimate implications. Dorothy and Rose’s paper fed into a much larger body of research, the permanent income hypothesis, that “removes completely one of the pillars of the ‘secular stagnation’ thesis.” It also had implications for the Keynesian proposition that there was “no automatic force in a monetary economy to assure the existence of a full-employment equilibrium.”9 On the surface, Dorothy and Rose had published a basic research report. Considered in the bigger picture, their conclusions spoke to the politically charged question of consumption. Was the paper deliberately framed as an attack upon Keynes?10 Both women were dedicated empiricists, and the problem in the data was compelling. At the same time, the solution they came up with dovetailed nicely with each woman’s intellectual inclinations. The paper’s emphasis on relative income reflected the traditional approach of consumption research that Dorothy knew well. Dorothy’s long tenure in reformist D.C. agencies suggests that like most consumption economists, she was probably sympathetic to New Deal social spending. By contrast, although Rose has left little trace of her thinking in this period, she was among the most loyal of Frank Knight’s students. His teachings would have primed her to be skeptical of both the New Deal and the Keynesian concepts that were newly popular among economists.

But this work paled in comparison to the force and impact of A Monetary History of the United States. What had begun as a favor to Arthur Burns had become a book that would turn the conventional wisdom of academic economists, policy-makers, and politicians alike upside down. The American Historical Review put it simply: “This is one of the most important books of our time.”39 Friedman and Schwartz presented voluminous data on nearly a century of U.S. history; but beyond piling up facts, they also advanced a theory of how money worked in the economy. How did money affect business cycles? Friedman and Schwartz had an answer they considered definitive: money mattered. It was the hidden force behind the ups and downs, the breadlines and the bubbles. Friedman knew the book would make an impact. He knew it was the best work he had ever done, or would ever do. He knew that for all his deviationist politics, for all the force of Keynesian assumption, for all the habitual scorn heaped upon the quantity theory of money, their book would have to be answered. It would compel conversation. The book’s centerpiece was its stunning analysis of the Great Depression. Friedman and Schwartz’s data showed a precipitous 33 percent decline in the quantity of money during what they called “the great contraction.” They convincingly argued that this lack of money transformed an unremarkable dip in the business cycle into a crisis of global proportions. Here was a provocative new explanation for a disaster that continued to cast its shadow across the century. But threaded through the economic argument was another thesis. In 1914, the United States had created a central bank system designed expressly to stabilize the economy. As the lender of last resort, the Federal Reserve Board could have opened the spigots and flooded the economy with cash. Why did it fail to do so?

Capitalism and Freedom stuck it to the Man years before doing so became trendy. Expecting “the usual espousal of big government and the welfare state that all intelligent people—especially intelligent economists—are known to support,” an audience at Haverford College jolted awake when Friedman laid down theses from the book. “The speaker attacked almost every institution dear to the modern liberal, among them socialized medicine, public housing, foreign aid, large government agencies and farm price supports,” reported the student newspaper. Campus liberals rallied to counterattack, only to be overwhelmed “by a bevy of facts and quick retorts.”34 The Friedmans rejected the idealism of Kennedy liberalism. At the same time, their provocative, anti-establishment proposals foreshadowed another rising mood of the decade.

In the course of the 1960s, the left adopted almost wholesale the arguments of the right,” observed Daniel Patrick Moynihan, a domestic policy adviser to all three of the decade’s presidents. “This was not a rude act of usurpation, but rather a symmetrical, almost elegant, process of transfer.” Exaggerating for effect—but not to the point of inaccuracy—Moynihan remembered that by decade’s end, “an advanced student at an elite eastern college could be depended on to avow many of the more striking views of the Liberty League and its equivalents in the hate-Roosevelt era; for example that the growth of federal power was the greatest threat to democracy, that foreign entanglements were the work of demented plutocrats, that government snooping (by the Social Security Administration or the United States Continental Army Command) was destroying freedom, that the largest number of functions should be entrusted to the smallest jurisdictions, and so across the spectrum of this viewpoint.”2 Driven primarily by the expanding war in Vietnam, this new current on the left took up individualistic and anti-statist themes that were once the province of the right. Another part of this convergence was the rise of the economics profession. The new economics appeared a success on its own terms; growth had picked up across the Kennedy years. By 1965, GNP had increased for five straight years. Unemployment was down to 4.9 percent, and would soon drop below the 4 percent goal of full employment. As James Tobin reflected, “economists were riding the crest of a wave of enthusiasm and self-confidence. They seemed, after all, to have some tools of analysis and policy other people didn’t have, and their policy seemed to be working.”3 With institutional economics a vanquished force, most economists accepted the tenets of the neoclassical revolution: individuals making rational choices subject to the incentives created by supply and demand. Approaching policy with an economic lens cut across established political lines, which were often the creation of brokered coalitions, habit, or historical precedent. Economic analysis was at once disruptive, since it failed to honor these accidental accretions, and familiar, since it spoke a market language resonant with business-friendly political culture.4 Amid this ideological confluence, Friedman continued his dour rumblings and warnings. Ignoring the positive trends in basic indicators of economic health, from inflation to unemployment to GDP, he argued fiscal demand management was misguided, warned Bretton Woods was about to collapse, predicted imminent inflation, and castigated the Federal Reserve’s basic approach. Friedman’s quixotic quest—and the media attention it generated—infuriated many of his peers. Friedman, it seemed, was bent on fixing economic theories and institutions that were not broken.

Chicago faculty liked to hire Chicago graduates. “Our department is too homogenous in several ways,” worried the faculty authors of a 1957 internal committee report. It was not for want of trying, the memo continued: “First, we more or less agree that we ought to diversify by seeking a socialist, or an institutionalist, or something of the sort. Then we consider names of economists who might qualify, and one by one we reject them on the grounds that they are not really good economists. The discussion ends when someone says, ‘There’s really nobody good in that category.’” Friedman’s response to the memo perfectly encapsulated this dynamic. Near a passage that identified history of economic thought as an area of interest, he scribbled one word: “Stigler.

The nation is teetering on financial ruin due to the unconscionable profligate spending, borrowing, taxing, and money printing by the federal government. Several decades ago, Dr. Milton Friedman, an iconic economist and Nobel laureate, concluded that “it is not in the interest of a legislator to vote against a particular appropriation bill if that vote would create strong enemies while a vote in its favor would alienate few supporters.