An Exceptionally Familiar Tale

As a representative of the latest generation at Chicago, it is my privilege to say a few things about how I've been influenced by Milton and Rose Friedman. What’s so exceptional about my tale is how familiar it is. The stories I’m going to tell could and have been told by classmates, colleagues, students, and neighbors of the Friedmans. But I’m generations too late to have been any of those. Indeed, by the time the Friedmans had reached normal life expectancy, I had yet to attend high school or even know that there was a University of Chicago.

Free To Choose

And high school brings me to my first prop: A golf ball. You see, Milton and Rose Friedman’s Free To Choose acquired an enthusiastic fan in a high-school student who liked to play hooky, and thought it was immoral for the government to compel a kid to attend school during weather that was better suited for golf. And while they baited me with opposition to compulsory schooling, they hooked me with critiques of the AMA and so-called consumer advocates.

Even decades after the Friedmans’ retirement, the typical high school and college lecturer still falls prey to some of the fallacies pointed out in Free To Choose. So I made it a hobby, in the middle of their committing one of them, to ask, “What about the Friedmans’ argument against this quota, that tax, or that regulation?” Although during my undergraduate studies I posed such questions to at least twenty Harvard professors, I never heard a decent answer.

Monetary History

One professor’s attempt at an answer is pretty amusing. He told me to go read Milton Friedman’s Monetary History [second prop] (a book written by another very important character in Two Lucky People, Anna Schwartz), find the errors in the analysis, and report back. I’m sure he was making the sensible forecast that, when I got to the library and saw the sheer size of the book, I would never bother him again. Unfortunately for him, I opened the Monetary History and was again hooked. This was how economics ought to be done, I thought. I read it cover to cover like it was one of Stephen King’s latest, and prepared a few hours worth of notes for the evasive professor.

Capitalism and Freedom

Those of you who are a bit closer in age to the Friedmans may be surprised that I read Capitalism and Freedom [third prop] after reading Free To Choose. While intrigued and largely agreeing with the relatively contemporary Free To Choose, I and many others felt that the Friedmans had a bunch of ideas that were politically infeasible at best and plain crazy at worst. And clearly, Capitalism and Freedom was viewed in much the same way at the time of its first printing. But, when reading Capitalism and Freedom thirty years later, one realizes that many of these crazy proposals became reality: Flexible exchange rates, a permanent departure from the gold standard, a volunteer army, a negative income tax, trucking and airline deregulation, competition for the post office, and a broader-based income tax. Such a reading of Capitalism and Freedom suggested to me that the apparently crazy ideas in Free to Choose might in fact be future policy and, more important, that years of scholarship at a place like Chicago might be the best way to influence economic policy despite the heavily-beaten paths between Washington and some other universities.

Old Wine in New Bottles

My fourth prop illustrating today’s influence of the Friedmans on Chicago is our audience. A number of them are both Friedman students and Chicago faculty. I have always suspected that Milton Friedman’s words were occasionally coming out of their mouths, and Two Lucky People finally provided me with a little proof. You see, Gary Becker often advises dissertation writers, saying, “Nine times out of ten, sloppy writing reflects (and advertises) sloppy thinking.” (I believe I was one of the students so advised.) To my delight, I read on page 76 of Two Lucky People that Gary received the same advice on his dissertation from Milton Friedman!

Personal Communication

When I arrived at Chicago as a graduate student, I was, and continue to be, impressed by the Chicago faculty who used the latest economic tools to derive the government policies that are optimal from the consumer’s point of view. I had written a few amateur papers along these lines and wholly intended to write such a dissertation. But a co-author and I mailed one of these papers to Milton Friedman. We received a letter back [fifth prop]. I was surprised by the detail with which he examined the paper but even more surprised at his punch line. We were naïve, he said, to expect any policy maker to use our analytical and empirical results to adjust policy and that we ought to familiarize ourselves with public choice theory. I threw my first drafts of a normative dissertation in the trash and have never thought the same about public policy issues since.

Withholding

My last prop is a pay stub. It represents both a positive and a negative influence of Milton Friedman, but one I could not resist mentioning. Let me draw your attention to the small print on this stub. There are two lines denoting monies withheld by the Federal Treasury. The Treasury erected this pillar of tax collection during World War II. And guess who was advising the Treasury on these and other ways to improve tax collection—Milton Friedman. So this is an influence that I feel at the end of every month, but I’ve drawn a slightly more cheerful lesson: Don’t go to Washington and, if you must, leave your good ideas at home.