July 31, 2012


Milton Friedman's century : How his ideas shaped our world (Chicago Tribune, July 31, 2012)

Friedman is best remembered among economists for making the case for the central importance of monetary policy in the performance of the economy. No one really disputes that view anymore, which is why in the current economic morass, everyone looks to Federal Reserve Chairman Ben Bernanke for rescue.

One of the favorite debates among experts is what would Friedman would do now. Some say he would reject Bernanke's use of quantitative easing, which they see as sowing the seeds of future inflation. Others say the Fed has repeated the error Friedman blamed for Japan's lost decade by failing to generate sufficient growth of the money supply. But on the value of his theories, there is no dispute.

His influence can be seen in other places too. Friedman was one of the earliest proponents of expanding educational choices, an idea that has led to vouchers and charter schools. He advocated opening up the airline business to competition, which made air travel affordable to the masses.

Floating exchange rates, one of his ideas, are now the norm. He played a key role in abolishing the military draft, which has never come back. The earned income tax credit, which supplements the earnings of lower-income workers, grew out of a Friedman proposal.

If all that weren't enough, free markets and reduced government involvement in the economy have gained adherents around the world, from Chile to China -- unleashing economic progress that has raised living standards and lifted billions of people out of poverty.

School choice is only a portion of the panoply of Third Way ideas Mr. Friedman pioneered, most successfully in Chile, with its mandated personal retirement accounts, personal unemployment accounts, etc. 

Posted by at July 31, 2012 5:26 AM

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