Milton Friedman Quotes

“A student of the Great Depression drawn into the topic by Friedman and Schwartz, Bernanke retained a keen awareness of the Fed’s role and responsibility. Only a few years earlier, at a conference celebrating Friedman’s ninetieth birthday, Bernanke famously paid homage to the pair: “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”1 This connection between the Fed and economic depression—burned into public consciousness by Friedman and Schwartz’s pathbreaking book—would be the essential starting point for navigating the crisis.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Milton Friedman isn’t running the show anymore! —JOE BIDEN, 2020”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Never once, Harberger said admiringly, had he seen Milton resort to a personal attack, insinuation, or innuendo. Instead, it was “as if an iron will kept driving him to talk about the merits of the case, and only the merits of the case, all of the time.” Becker, a longtime veteran of the Chicago workshop tradition, admitted that Friedman was prone to attack. But it was always in the service of improving others’ ideas. Never would he “soften his view to curry favor.” Ever the optimist, animated by a “missionary zeal to convert the heathen,” Friedman took his case for markets and freedom to whomever would listen.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“It was obvious to all who knew him that Friedman loved being the smartest guy in the room. It was also clear he loved to smash idols. Pigou, Keynes, Samuelson—his whole life, names others worshipped were his targets. But underneath all this, imperceptibly running through the years, was a contrapuntal desire for a wise man, a counselor, a superior, someone to admire and esteem. Burns, arriving in the fatherless Friedman’s life just as he considered his professional future, had played this role for decades. “Arthur, there remains no one whom I so admire + feel so close to—Rose only excepted—and so hate to hurt,” Friedman told him in his closing lines.34 As a fellow Jewish man with immigrant roots who had risen fast and far, Burns was in some ways a natural father figure, but in other ways he never quite fit the role. Friedman’s closest relationships were always with those who shared his fundamental orientation to economics and politics. True, he retained cordial relationships with his opponents. But friendship, as it developed in his life, was rarely about the simple joy of companionship. From his student days in Chicago to his marriage with Rose, Friedman had always blended ideological, professional, and personal ties. Burns’s speech, with its reference to cost-push inflation, revealed a truth that was perhaps the most painful of all: Burns did not accept Friedman’s theory of inflation.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“It was even almost true, as Stigler liked to joke, “the people at MIT and Harvard didn’t know what they were going to work on until Milton made a speech.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Everything reminds Milton of the money supply. Well everything reminds me of sex, but I keep it out of the paper. —ROBERT SOLOW, 1966”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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?”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Friedman’s version diverged from the general departmental approach. Rather than being a closed community, Money and Banking was open to bystanders and visiting scholars. Unlike other workshop leaders, Friedman did not allow the featured scholar to present. Instead, he led a discussion through the paper, page by page. The overall gist of the workshop was simple, according to one participant: “prove it.” In this hothouse environment student research grew into papers, and then dissertations. For Friedman, the workshop became an essential forum to test, refine, and expand his ideas about money, while forming a school of rising scholars steeped in his approach to the subject.33 Friedman saw a direct link between his research, his students, and what he called “an aberrant tradition” of Chicago monetary economics, focused on the quantity theory of money. In a 1956 volume, he celebrated the “subtle and relevant version” of quantity theory developed at Chicago in the Depression era by Simons, Mints, Knight, and Viner. This version of the quantity theory, Friedman argued, was “a flexible and sensitive tool for interpreting movements in aggregate economic activity and for developing relevant policy prescriptions.” Here, he was no doubt referring to the 1933 Chicago plan, the department’s response to the Great Depression.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Hayek disagreed with the widespread idea that large industrial economies required planning. To the contrary, he argued it was only the hidden hand of the market—what he would later term spontaneous order—that could bring structure to an infinitely complex web of interdependent economic relationships. Along the lines of Frank Knight and Henry Simons, Hayek contended that the allocation in a mass society was best handled by the price system. Only prices could instantaneously respond to a multivalent onrush of human wants, desires, and constraints. Planners would always be one beat behind. Their plans would distort and disorient buyers and sellers.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“In retrospect, The General Theory would set the intellectual agenda for Friedman’s entire career, but when it appeared, he barely noticed. As Keynes’s ideas were making landfall in American universities, Friedman offered a course through the Columbia University extension school that was a throwback to the early 1930s. Focused on individual demand curves, individual marginal utility, and individual economic decision-making, Friedman’s course, Structure of Neo-classical Economics, made no mention of business cycles, national income, or current economic conditions. Drawing on the approach pioneered by Knight and Simons, it placed the question of “how free enterprise system solves economic problem” front and center.45 At the same time, Friedman did offer an implicit critique of the fiscal revolution, particularly Hansen’s concept of secular stagnation. Picking up a theme from Knight, Friedman told his class, “Once wants are satisfied, new wants are going to be formed; the process of want formation is part of the basic drive.”46 There were two critical implications. First was that perpetual wanting would keep economies always in motion: “Impossibility of completely satisfying all wants. If the greatest want is the desire for new wants … the notion of satiety is silly.” It was more than a philosophical point. Not only was it impossible for the economy to stagnate, but it would be impossible to design a government program that would adequately satisfy wants, which tended to continually increase. Friedman drew out the second implication in another comment. “Attitude toward all policies will be affected by our ideas concerning wants,” he argued.47 In a letter to Arthur Burns, he was more direct. Reflecting on a road trip to visit Rose’s family, he wrote, “The whole West, particularly California, and more particularly Southern California, gives you the feeling that the frontier is not yet gone and makes you feel like telling the stagnationites to come out and take a look.”48 Although he worked for the New Deal, Friedman was not a New Dealer. Nor was he a Keynesian. He thoroughly rejected the ideas that would most profoundly shape economics in the years ahead.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“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.”
― Jennifer Burns, Milton Friedman: The Last Conservative

“Keynes’s ideas provided a theoretical rationale for continued New Deal spending.”
― Jennifer Burns, Milton Friedman: The Last Conservative