Rose
and Milton Friedman
The Romance of Economics
PALO ALTO, Calif. --
One doesn't interview a man like Milton Friedman -- the Nobel laureate in
economics in 1976 and among the five or six most consequential thinkers of the
20th century -- without doing some assiduous homework. So I gathered his
books -- reading some, re-reading others -- and made pages and pages of notes.
I also emailed several intellectual heavyweights, asking them what they might
enquire of Mr. Friedman -- now 94 years of age -- if they had him cornered at a
cocktail party. Replies flooded back. "Inflation targeting," wrote a
(marginally) younger Nobel economist. "Education," said another Nobel
laureate. "Does the recent record of spending with a Republican president
and Congress make him reconsider his support for the party?" wrote a man
who, until a while ago, worked on economic policy in the White House. "Is
there something distinctly difficult for capitalism in the Islamic world?"
wondered a Middle East scholar. "What music does he listen to?" a
Democratic political economist mused, unpredictably. More predictably, a
big-cheese blogger was "dying" to know whether "Milton reads
blogs -- and will he ever write one?" Everyone had a
question -- and many had more than one (an economist in Chicago had 10). For
Milton Friedman is everyone's idea of an American oracle, an American
sage. Sages, of course, have
their oddities, and the interview last week -- at Mr. Friedman's surprisingly
petite office at the Hoover Institution, on the campus of Stanford University
-- got off to a surreal beginning. By his desk hangs a map of Belize -- one of
those stylized souvenirs made of cloth, embroidered to catch the eye. Why, I
asked him, did he have a map of Belize on his wall? Mr. Friedman turned,
looked at the object, and said: "I don't know. I really don't know."
Not a good start to the interview, some might say; so I asked, by way of
ice-breaker, whether he was keeping well. "Oh, yes!" was the spirited
reply. "But my wife has gone through a session of shingles, and she's not
quite through it." Here, he paused, and asked: "Have you had shingles
yet?" Maladies
behind us, we moved to economics, and here I made a reflexive apology for not
being an economist myself. "You mean you're not a trained
economist," was Mr. Friedman's comeback. "I have found, over a long
time, that some people are natural economists. They don't take a course, but
they understand -- the principles seem obvious to them. Other people may have
Ph.D.s in economics, but they're not economists. They don't think like an
economist. Strange, but true." Was Keynes a
"natural economist"? "Oh, yes, sure! 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!" It cannot be said of
too many economists that they "altered the shape of economics." Would
Mr. Friedman say -- modesty aside -- that he was one of them? A long silence
ensued -- modesty, clearly, was hard to put aside -- before he mumbled, as if
squeezing words out of himself, "Er . . . very hard to say . . ." And
then he was saved by the belle: The door opened, and in walked Rose, his wife,
bringing a waft of panache into the drab office, her impact enhanced by a
beautiful mink coat -- worn, it should be said, on a late afternoon when it was
80 degrees outside. "It will be very cold tonight," she forecast with
a shiver. The Friedmans were dining al fresco that night -- along with 1,200
others at the Stanford quad -- and Rose had come prepared for the mercury to
plummet to, oh, the late 60s. "It's a crazy time to have a dinner
outside!" Mrs. Friedman settled
herself in a chair, her eyes twinkling, and my questioning resumed. If they
were to throw a small dinner party -- indoors! -- for Mr. Friedman's favorite
economists (dead or alive), who'd be invited? Gone was his tonguetied-ness of a
moment ago, as he reeled off this answer: "Dead or alive, it's clear that
Adam Smith would be No. 1. Alfred Marshall would be No. 2. John Maynard Keynes
would be No. 3. And George Stigler would be No. 4. George was one of our
closest friends." (Here, Mrs. Friedman, also an economist of distinction,
noted sorrowfully that "it's hard to believe that George is dead.") Had it helped their
marriage -- now in its 68th year -- that they are both economists? Rose
(nodding affirmatively): "Uh-unh. But I don't argue with him . . . very
much." Milton (guffawing): Don't believe her! She does her share of
arguing . . ." Rose (interrupting): ". . . and I'm not competitive,
so I haven't tried to compete with you." Milton (uxoriously): "She's
been very helpful in all of my work. There's nothing I've written that she
hasn't gone over first." The spark between the
Friedmans is clear, and rather touching. So I'm tempted to ask whether there is
a romantic side to economics, in the way there is to history, or to philosophy.
"Is there a romantic side to economics?" Mr. Friedman repeats after
me, sounding incredulous, and then chuckling. "No, I don't think so.
There's a romantic side to economics in the same way there's a romantic side to
physics. Fundamentally, economics is a science, like physics, like chemistry .
. . It's a science about how human beings organize their cooperative
activities." Was that his preferred definition of economics? "Well,
the standard definition is the study of how a society organizes its resources.
In that sense, it's not particularly romantic." Is immigration, I
asked -- especially illegal immigration -- good for the economy, or bad?
"It's neither one nor the other," Mr. Friedman replied. "But
it's good for freedom. In principle, you ought to have completely open
immigration. But with the welfare state it's really not possible to do that. .
. . She's an immigrant," he added, pointing to his wife. "She came in
just before World War I." (Rose -- smiling gently: "I was two years
old.") "If there were no welfare state," he continued, "you
could have open immigration, because everybody would be responsible for
himself." Was he suggesting that one can't have immigration reform without
welfare reform? "No, you can have immigration reform, but you can't have
open immigration without largely the elimination of welfare. "At the moment I
oppose unlimited immigration. I think much of the opposition to immigration is
of that kind -- because it's a fundamental tenet of the American view that
immigration is good, that there would be no United States if there had not been
immigration. Of course, there are many things that are easier now for
immigrants than there used to be. . . ." Did he mean there was
much less pressure to integrate now than there used to be? Milton: "I'm
not sure that's true . . ." Rose (speaking simultaneously): "That's
the unfortunate thing . . ." Milton: "But I don't think it's true . .
." Rose: "Oh, I think it is! That's one of the problems, when
immigrants come across and want to remain Mexican." Milton: "Oh, but
they came in the past and wanted to be Italian, and be Jewish . . ." Rose:
"No they didn't. The ones that did went back." Mrs. Friedman, I was
learning, often had the last word. With Mr. Friedman,
personal questions are often inextricable from the currents of history. How did
he cope, I ask, with the great opposition to his views in and out of the
economics profession during much of his active career? And how does it feel to
have gone from being a person reviled in certain quarters as Evil, to one
revered across the world? Milton (suppressing a
laugh): "I don't think I was ever regarded as 'evil.'" Rose (alluding
to the protests that followed him everywhere, especially after he gave economic
advice to the Pinochet regime): "It was very difficult to go to the
colleges . . ." Milton: "I remember a fellow who came to see me from Harvard
or somewhere . . . he wanted to see 'that devil from the West'!" Rose:
"Harvard probably still feels that way!" Here, Mr. Friedman
explains "the story of the postwar period" in the U.S. "In
1945-46, intellectual opinion was almost entirely collectivist. But practice
was free market. Government was spending something like 20%-25% of national
income. But the ideas of people were all for more government. And so from 1945
to 1980 you had a period of galloping socialism. Government started expanding
and expanding and expanding." Mr. Friedman stopped, as if deciding whether
to use the word "expanding" a fourth time, before continuing:
"And government spending went from 20% to 40% of national income. "But what was
happening in the economy was producing a reverse movement in opinion. Now
people could see, as government started to regulate more, the bad effects of
government involvement. And intellectual opinion began to move away from
socialism toward capitalism. That, in my view, was why Ronald Reagan was able
to get elected in 1980." I noted, here, that Mr. Friedman, too, had some
role to play in this shift in opinion. He was, characteristically, reluctant to
take any credit. "I think we have a tendency to attribute much too much
importance to our own words. People saw what was happening. They wouldn't have
read my Newsweek columns and books if the facts on the ground hadn't been the
way they were." (Rose: "Oh, don't be so modest!") Does it disappoint Mr.
Friedman that the Bush administration hasn't been able to roll back spending?
"Yes," he said. "But let's go back a moment. During the 1990s,
you had the combination that is best for holding down spending. A Democrat in
the White House and Republicans controlling Congress. That's what produced the
surpluses at the end of the Clinton era, and during the whole of that era there
was a trend for spending to come down. Then the Republicans come in, and
they've been in the desert, and so you have a burst of spending in the first
Bush term. And he refuses to veto anything, so he doesn't exercise any real
influence on cutting down spending. In 2008, you may very well get a Democratic
president" -- (Rose, interjecting: "God forbid!") -- "and
if you can keep a Republican House and Senate, you'll get back to a combination
that will reduce spending." Mr. Friedman here
shifted focus. "What's really killed the Republican Party isn't spending,
it's Iraq. As it happens, I was opposed to going into Iraq from the beginning.
I think it was a mistake, for the simple reason that I do not believe the United
States of America ought to be involved in aggression." Mrs. Friedman --
listening to her husband with an ear cocked -- was now muttering darkly. Milton: "Huh?
What?" Rose: "This was not aggression!" Milton (exasperatedly):
"It was aggression. Of course it was!" Rose: "You count it as
aggression if it's against the people, not against the monster who's ruling
them. We don't agree. This is the first thing to come along in our lives, of
the deep things, that we don't agree on. We have disagreed on little things,
obviously -- such as, I don't want to go out to dinner, he wants to go out --
but big issues, this is the first one!" Milton: "But, having said
that, once we went in to Iraq, it seems to me very important that we make a
success of it." Rose: "And we will!" Mrs. Friedman, you
will note, had the last word. Mr. Varadarajan
is editorial features editor at The Wall Street Journal. URL for this article:
Wall Street Journal, July 22,
2006; Page A10
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