Milton Friedman

Milton Friedman ( born July 31, 1912 in Brooklyn, New York City; † November 16, 2006 in San Francisco) was an American economist, the fundamental work in the fields of macroeconomics, microeconomics, economic history and statistics wrote. He received the 1976 Alfred Nobel Memorial Prize in Economics for his achievements in the field of analysis of consumption, the history and theory of money and for his demonstration of the complexity of stabilization policy. Friedman is considered alongside John Maynard Keynes as the most influential economist of the twentieth century.

Friedman, who regarded themselves as classical liberals, particularly emphasized the benefits of a free market and the disadvantages of government intervention. His basic attitude comes in his bestseller Capitalism and Freedom (1962 ) for expression. In it he called for minimizing the role of the state, so as to promote political and social freedom. In his television series Free to Choose, the PBS broadcast in 1980, Friedman explained the workings of the free market and stressed particularly that other economic systems could not adequately solve the social and political problems of a society.

Friedman was a professor at the University of Chicago. He was a student of Frank Knight. The legal scholar David D. Friedman is his son, Patri Friedman, his grandson.

Life

Friedman was born as the son of Hungarian, Jewish immigrants in New York. His childhood and youth were spent in Rahway, New Jersey. At the age of 16, he began a math and economics studies at Rutgers University in New Jersey. In 1932 he graduated from there with a Bachelor of Arts. He decided to continue his studies at the University of Chicago with a focus on economics. There he received the title of Master of Arts.

Friedman published in the following years several articles in professional journals, including the Quarterly Journal of Economics, Harvard University. The Columbia University finally offered him a generous scholarship, which is why he decided to write his dissertation there. The work, entitled Income from Independent Professional Practice deals with the economic situation of members of the liberal professions. 1941-1943 he worked for the tax research department of the U.S. Treasury ( National Bureau of Economic Research). At this time his thesis was completed; but he had to hold until 1946 because of their political explosive force under wraps.

In 1938 he married the economist Rose Director. Her daughter was born in 1943, in 1945 their son David, the scientist was right. In 1946 he began teaching at the University of Chicago, a position he held until 1976. During this time, formed in economics, the term " Chicago School ," Friedman coined the content relevant.

Friedman was one of the participants of the inaugural meeting of the Mont Pelerin Society in April 1947, an association of liberal intellectuals. From 1970 to 1972 he was president of that initiated by Friedrich August von Hayek organization. In the 1950s he busied himself with the teachings of the demand-side policies of John Maynard Keynes. His critique of these appeared in 1957 under the title A Theory of the Consumption Function. In the 70s, his supply-side economic theory came into competition with the model of Keynesianism. According to Gerhard Willke Friedman was with Friedrich August von Hayek " pioneer and master thinkers of the neoliberal project ", an economic policy project for the realization of more market, more competition and more individual freedom. Friedman himself but not described himself as a neo-liberal.

His main work is the 1963 published A Monetary History of the United States, 1867-1960, which he wrote with economist Anna Schwartz, viewed. In it Friedman described the great impact of the money supply change on economic cycles and thus denied the Keynesian explanation of the Great Depression. This is not due Friedman to the instability of the private sector, but on monetary reduction of the Federal Reserve System. In the aftermath Friedman was popular scientific treatises, in particular by the 1963 published book Capitalism and Freedom, known to a wide audience. He also worked as a columnist for Newsweek magazine in the 1960er/1970er years. In the 1980s, Friedman made ​​in collaboration with his wife, entitled Free to Choose several programs on economic issues, which were shown on television.

Friedman was also involved in political decisions. So the U.S. government in 1971 abolished after the collapse of the Bretton Woods system on his advice, the fixed exchange rate peg of the dollar to other currencies. The predicted by Friedman economic stabilizing effect was soon a. He also was active in supporting numerous referendums to reduce taxes. In 2005 he advocated, together with 500 other signatories, in an open letter to the U.S. government the legalization of marijuana.

Friedman was a mentor to a group of Chilean economists, named after the Chicago School Chicago Boys. This specific under the military dictatorship of Pinochet in Chile largely a new liberal economic order, which was based on the ideas of Friedman. The fact that a military dictatorship introduced a liberal market economy, Friedman later described as a "miracle of Chile ". During his visit in 1975 in Chile Friedman also met briefly with Pinochet. That he made no allegations of the Pinochet dictatorship and human rights violations, Friedman has been heavily criticized. , And there were protests on the occasion of the awarding of the prize in 1976 to him. Orlando Letelier, a former minister of the overthrown by Pinochet Allende government, Friedman threw in an article for The Nation 1976 double standards in his understanding of " freedom " in terms of Chile. Friedman explained later, the Pinochet military dictatorship is a terrible ( " terrible" ) regime have been .. In the development of Chile to democracy he saw his conviction that free markets produce a free society, confirmed.

1977, after his retirement in Chicago, Friedman joined the Hoover Institution, Stanford University, for which he worked until his death. 1988 gave U.S. President Ronald Reagan Friedman, the Presidential Medal of Freedom, the highest civilian award in the United States. Even to old age expressed Friedman is the current economic events. So he said, for example 1999 euros, this will tear apart the first global recession. Friedman died in November 2006 of heart failure.

Work

Capitalism and Freedom (1962 )

As representatives of economic liberalism, the freedom of the individual was the focus of Friedman's argument. He held the free choice of individuals for beneficial than state regulations. Therefore, he supported a reduction in the government's share, floating exchange rates, the elimination of government restrictions on trade, the abolition of restrictions on access to certain occupational groups and a reduction in state care. Friedman also set up the Luxusguthypothese of money.

The tasks of the state he described as follows:

" A state of law and order would receive upright, property rights defined, served as a medium through which we could modify property rights and other rules of the economic game, entschiede disputes over the interpretation of the rules, the fulfillment of contracts prevailed, the competition promoted a monetary constitution ready made ​​, developed activities to counter technical monopolies and to overcome such proximity effects, which are widely regarded as sufficiently considered to justify government intervention, and the private charity added as the family in an effort to babes, whether mentally disabled or child protect - such a state would have to clearly fulfill important functions. "

He took up the idea of negative income tax by Juliet Rhys- Williams from the 1940s into the 1960s. Then would the tax office each taxpayer whose income tax liability is below a determined minimum, a certain percentage ( max. 50 %) refer to the difference without further testing.

In addition to the core areas of economics, Friedman joined for more freedom in other areas. He sat down always for the abolition of conscription in peacetime, called for the legalization of marijuana and fought for an education voucher model.

Murray Rothbard comes in the 1971 essay published Milton Friedman Unraveled to the conclusion that it is difficult to regard Friedman as the representative of a free market economy.

The role of monetary policy (1968 )

Friedman's theory of the natural rate of unemployment postulated for each economy a "natural rate of unemployment", which is determined by the institutional setting: frictional and structural factors as well as market imperfections such as lack of information, mobility barriers, adjustment costs and demographic change. In the long run, however, let reduce by structural reforms, the rate of natural unemployment. In the ideal case, ie, in a perfect market, it amounts to zero.

There exists therefore in reality no trade-off between inflation and employment policy, as economic theory had claimed earlier. A monetary policy with the objective of full employment is thus doomed to fail and lead to the worst case increase in inflation.

The optimum quantity of money (1969 )

Milton Friedman is a leading representative of monetarism. In the center of its monetary theoretical considerations on the thesis that there is a solid long-term relationship between money supply and inflation (or deflation). This is a purely monetary phenomenon, which the central bank could meet by a strict control of the money supply for inflation him. He took up the idea Walter Eucken, banks impose a 100-percent reserve requirement.

At the same time he rejected the term fiscal policy as a tool of demand management. Inflation is created according to his theory, whenever the money supply grows faster than the value in the real economy. Government spending to stimulate the economy would fall flat in the medium term. The often Keynes attributed countercyclical fiscal policy to cushion the cyclical fluctuations would not work therefore. Two of his significant contributions to the economic debate are the quantitative theory of money and expectations - augmented Phillips Curve The ( the Phillips curve ).

Opportunities that I mean (1980 )

In the work of Rose and Milton Friedman opportunities I he called the welfare state and the inflation as the greatest enemies of the economy my (1980).

For Friedman, the welfare state is a fraud on the people who are still working and paying taxes. To this end, he pointed to the ways in which way money is spent:

For him there is a clear gap between the methods from one to four. The levity of the man manages with money, suppose clearly from one to four. For Friedman, the methods are three and four of the reason for the inflation and the cause of the decline of the western industrialized nations. While claiming to support the poor, draw the welfare state with its powerful welfare bureaucracy to the man in the office and at the workbench the money from his pocket. Parts one but the amount that was until shortly before 1980 issued in the U.S. in the fight against poverty, by the number of people who are in need, according to official statistics, then have the income of needy and a half to twice as large as the average income of the population. In reality, would remain for the needy little left. Because the money was mainly used for the bureaucracy and personnel costs.

Publications

• A Theory of the Consumption Function. 1957, ISBN 0-691-04182-2
• Money supply, price and production changes. In: ORDO 11, 1958, pp. 193-216, ISSN 0048-2129
• Real and fake gold standard. In: ORDO 13, 1960, pp. 121-140
• Capitalism and Freedom. 1962 Capitalism and Freedom. Seewald, Stuttgart- Degerloch 1971; last Piper, Munich / Zurich 2004, ISBN 3-492-23962-5
• Radical idea, review by Isabelle grains in time, 1999 ( TIME Library of Economics )

• The optimum quantity of money and other essays. Verlag Moderne Industrie, Munich, 1970, ISBN 3-478-34332-1

• There is no free lunch. Why every mark must be earned in an economy. Verlag Moderne Industrie, Munich 1979, ISBN 3-478-37090-6

• The theory of prices. Verlag Moderne Industrie, Munich 1977, ISBN 3-478-37070-1
• The theory of prices. ISBN 3-478-37070-1

• Opportunities that I mean. A personal confession. Ullsteinhaus, Berlin / Frankfurt / Vienna 1980, ISBN 3-550-07930-3

• The tyranny of the status quo. Wirtschaftsverlag Langen-Müller/Herbig, Munich 1985, ISBN 3-7844-7152-8

• Money rules the world. New provocations from the pioneers of modern economic policy. ECON -Verlag, Dusseldorf [ua ] 1992, ISBN 3-430-12985-0
• Review by Alan Reynolds in the National Review, August 3, 1992