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tomnoddy_uk
Fire-eater
Joined: Mar 14, 2006
Posts: 2903
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 Posted:
Nov 17, 2006 - 11:48 AM |
 
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| Post subject: Milton Friedman, Nobel Prize-Winning Economist, Dies (Update |
Milton Friedman, Nobel Prize-Winning Economist, Dies (Update8)
2006-11-16 19:30 (New York)
(Adds Bush statement in 10th paragraph.)
By Vivien Lou Chen
Nov. 16 (Bloomberg) -- Milton Friedman, the Nobel laureate
economist who shaped the philosophies of Ronald Reagan, Margaret
Thatcher and successive Federal Reserve chairmen, died of heart
failure today, his daughter Janet said. He was 94.
Friedman's view that inflation results from too much money
chasing too few goods inspired a generation of central bankers,
beginning with Paul Volcker, who was Fed chairman from 1979
until 1987. Alan Greenspan and Ben S. Bernanke also credit
Friedman's work as a blueprint for policy making.
``Among economic scholars, Milton Friedman had no peer,''
Bernanke said in a statement today. ``The direct and indirect
influences of his thinking on contemporary monetary economics
would be difficult to overstate.''
Friedman wrote, co-wrote or edited at least 32 books,
including ``A Monetary History of the United States, 1867-1960''
with Anna Schwartz in 1963, and argued that the goal of monetary
policy should be long-term, stable growth in the supply of
money. He championed individual initiative and deregulation and
influenced decisions from severing the dollar's peg to gold in
the early 1970s to ending the military draft.
``In the 20th century, the only economist to match Milton
for policy influence was John Maynard Keynes,'' said Robert
Barro, professor of economics at Harvard University, at a
conference at the Cato Institute in Washington today. ``Milton
won the intellectual battle'' with Keynes over the role of free
markets, he said.
Influence on Policy
Friedman died at a hospital in San Francisco, said Robert
Fanger, a spokesman for the Milton and Rose D. Friedman
Foundation in Indianapolis. He passed away at about 3 a.m. local
time, said Friedman's daughter Janet Martel.
In his later years, Friedman advocated that the Fed adopt
an inflation target, a numeric price goal which the central bank
should pledge to hit over a specified period of time. He
supported George W. Bush's failed effort to overhaul Social
Security, counseled California Governor Arnold Schwarzenegger
and predicted that European monetary union will ultimately fail.
``Milton Friedman will always be counted among the greatest
of economists,'' Treasury Secretary Henry Paulson said in a
statement today. ``His pioneering ideas about the nexus between
economic and political freedom paved the way for prosperity and
financial vitality in economies around the world.''
``My world will not be the same,'' Greenspan said in a
statement e-mailed by his Washington office.
``America has lost one of its greatest citizens,'' Bush
said in a written statement released in Singapore, where the
president was making a stop before attending an economic
conference in Vietnam.
Monetary Phenomenon
With his trademark pronouncement that inflation was
``always and everywhere a monetary phenomenon'' Friedman was
among the Fed's most vocal critics as inflation accelerated
through the 1960s and 1970s. He said the central bank failed to
control the supply of money, should be stripped of its autonomy
and forced to focus on keeping money supply growth steady at
about 3 percent.
The Fed kept its independence. Friedman's arguments were
acknowledged, though, when Volcker launched an attack on
inflation in 1979 by targeting money supply and pushing up
interest rates to crush inflation.
``It's hard to think of anyone who's had more of a direct
influence on social and economic policy in this generation,''
said Carnegie Mellon University Professor Allan H. Meltzer, who
is preparing a two-volume history of the Fed and has been an
adviser to the Bank of Japan. ``He, along with others, promoted
the idea of low inflation and a more disciplined central bank.''
The Brooklyn-born Friedman traveled the world promoting
balanced budgets and limited state spending. He joined Reagan's
Economic Policy Advisory Board in the early 1980s, helping guide
and reinforce the president's views on government largess and
tax reduction.
U.K. to Russia
He served as an adviser to Thatcher, U.K. Prime Minister
from 1979 to 1990, who pushed for a free-market economy, low
taxation, and the sale of state-owned industries. Bush credited
Friedman's ideas with bringing inflation under control in Chile,
the adoption of a flat tax in Russia, and the creation of
personal retirement accounts in Sweden.
``He had a major influence on post-war economic policy, not
least in establishing the importance of credibility in monetary
policy making,'' Gordon Brown, U.K. Chancellor of the Exchequer,
said in a statement today.
Friedman's teachings at the University of Chicago helped
foster the ``Chicago School'' of economics, known for theories
associated with free-market libertarianism.
`Chicago Boys'
Those ideas were put to use in Chile during the 1970s and
1980s, when a group of economists trained at the University took
key government positions under General Augusto Pinochet. The so-
called ``Chicago Boys'' advocated widespread deregulation and
privatization, helping Pinochet's military junta bring inflation
down from as high as between 700 percent and 1,000 percent.
``He has used a brilliant mind to advance a moral vision:
the vision of a society where men and women are free, free to
choose, but where government is not as free to override their
decisions,'' Bush said in a May 2002 speech at the White House
to honor Friedman on his 90th birthday. ``All of us owe a
tremendous debt to this man's towering intellect and his
devotion to liberty.''
Friedman was born on July 31, 1912, to immigrants from
Carpatho-Ruthenia, a province of the Austro-Hungarian empire
that later became part of the Soviet Union. His father was
involved in ``mostly unsuccessful'' ventures and his mother ran
a small dry-goods store, he wrote in his autobiography ``Two
Lucky People.''
``The family income was small and highly uncertain,''
Friedman wrote. ``Financial crisis was a constant companion. Yet
there was always enough to eat, and the family atmosphere was
warm and supportive.''
University Scholarship
After graduating from high school before his 16th birthday,
Friedman won a scholarship to Rutgers University in New Jersey,
where he was taught by Arthur Burns, who later served as Fed
chairman between 1970 and 1978. With plans to become an actuary,
Friedman initially studied mathematics, yet failed some of his
exams.
He later became interested in economics. After graduating
in 1932, he studied at the University of Chicago's economics
department, where he met his future wife, Rose Director.
``We were married six years later, when our Depression
fears of where our livelihood would come from had been
dissipated, and, in the words of the fairytale, have lived
happily ever after,'' Friedman said in his autobiography.
Stint at Treasury
Friedman graduated with a master's degree from the
University of Chicago in 1933, and earned a doctorate from
Columbia University in 1946. During World War II he worked in
the Treasury's tax research department, where he developed the
concept of federal tax withholding to finance wartime spending
and avoid inflation.
``I have no apologies for it, but I really wish we hadn't
found it necessary and I wish there were some way of abolishing
withholding now,'' he said in a June 1995 interview with Reason
magazine.
Friedman's rise to prominence began in the 1950s when he
challenged the popular views of economists who followed the
theories of John Maynard Keynes and virtually ignored the
significance of money supply and monetary policy in business
cycles and inflation.
``A Monetary History'' argued that the Great Depression
wasn't caused by the stock market crash of 1929, but by the
Fed's efforts to shrink the money supply because of inflation
fears. The lesson for central bankers was that monetary forces
could lead to powerful, destabilizing results, and the best way
to avoid such a crisis is with ``a stable monetary background,''
Bernanke said in a 2002 speech.
Pioneer
``There's just nobody comparable to him in the 20th century
and the beginning of the 21st,'' Schwartz, Friedman's co-author
on the book, told reporters in Washington today. ``He was trying
to elucidate problems nobody else had tackled.''
Friedman was also the first to show there's no permanent
tradeoff between unemployment and the inflation rate assumed by
policy makers because the jobless rate could vary based on
people's expectations for price increases.
``Milton Friedman was right,'' Minneapolis Fed President
Gary Stern, said in a speech on May 1 that praised Volcker's
battle against inflation, which saw the central bank lift its
benchmark rate to as high as 20 percent in 1980. At that point,
money supply growth was galloping along at 6.8 percent.
``Volcker's quasi-monetarist approach to policy
successfully broke the back of inflation,'' Stern said, setting
``the stage for the long economic expansions of the 1980s and
1990s.''
The consumer price index, hovering at around 12 percent
when Volcker took office, soared to 14.8 percent in March 1980
and retreated to 6.8 percent two years later. It's stayed below
5 percent for the past 15 years, while the U.S. enjoyed its
longest expansion ever between March 1991 and March 2001.
Inflation Battle
``Volcker used the language of monetarists such as Friedman
to describe what he was doing to control money growth,'' said
Meltzer, a member of Reagan's Council of Economic Advisers.
``The extent to which he did it is less clear, but he deserves
enormous credit for persisting long enough to bring the
inflation rate down.''
Greenspan, who succeeded Volcker, showed it was possible
for central banks to quell inflation and thus avoid recession,
Friedman wrote in the Wall Street Journal on Jan. 31. Price
stability reduces uncertainties, allowing the businesses to
muster resources more efficiently, Friedman wrote.
Some of the ideas conceived of or improved on by the
economist and his wife include vouchers to help parents select
children's schools, legalization of drugs, and privatization of
Social Security.
Friedman served as an economic adviser during Republican
Senator Barry Goldwater's presidential campaign in the 1960s,
won the Presidential Medal of Freedom in 1988, and was most
recently a senior research fellow at the Hoover Institution at
Stanford University. He also advised Richard Nixon in his
successful 1968 run for president.
Goldwater Campaign
While Goldwater was trounced by Lyndon Johnson in 1964,
he's been credited as an influence by Republicans such as former
House of Representatives Speaker Newt Gingrich, Reagan and Bush.
``Freedom is a great objective,'' Friedman said in a Dec.
27, 2005, interview with PBS's Charlie Rose. ``It enables people
who hate one another, who don't speak the same language, who
would fight one other if they had the chance, to cooperate
together economically.''
He opposed one form of economic integration: the monetary
union of 11 European Union nations in 1999 that resulted in the
replacement of national currencies with the euro. Greece joined
in 2001, bringing the number to 12.
Euro Doomsayer
As Europe was preparing for the euro's introduction,
Friedman told German weekly Die Zeit in September 1997 that the
euro would make conflict more, not less, likely.
The continent's many borders and diverse cultures make a
single currency unit unfeasible, as Europeans are more dependent
on their own country rather than the ``common market or the idea
of ``Europe.'' The introduction of the euro would turn economic
shocks into political conflict, Friedman said.
The euro went ahead as planned and the introduction of
notes and coins two years later went off without a hitch.
In addition to his wife, Friedman is survived by two
children, Janet and David; four grandchildren; and three great-
grandchildren. |
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foreverinchina
PopStar
Joined: Nov 21, 2005
Posts: 1249
Location: 徐家汇
Status: Offline
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| Posted:
Nov 18, 2006 - 01:38 AM |
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| Post subject: Re: Milton Friedman, Nobel Prize-Winning Economist, Dies (Up |
| tomnoddy_uk wrote: |
| Milton Friedman, Nobel Prize-Winning Economist, Dies |
He was the ultimate defender of the taoist principle: |
_________________
To govern a big country is like cooking a small fish.
Stir as little as possible.
- Lao Zi, Daode Jing 256 BC |
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theAutumn45
Rocker
Joined: Oct 28, 2005
Posts: 796
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| Posted:
Nov 18, 2006 - 08:39 AM |
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(1)
| Quote: |
| “inflation results from too much money chasing too few goods” |
Now we have too much goods chasing too little money in developing countries, too much money chasing the real estate in the developed world.
(2)
| Quote: |
| “He championed individual initiative and deregulation and influenced decisions from severing the dollar's peg to gold.” |
Now we have the dollar hegemony and the world economy backed by the printing press of US central bank.
He is a champion of free market economy, but like the free market economy, the effectiveness of his economic theory is controversial. |
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