Friedman’s Cruel Legacy

Friedman’s Cruel Legacy

Milton Friedman’s free-market faith produced a bastardized system of interest-group politics that favors sectors of citizens at the expense of many others.

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Now that the economists and their camp followers have mourned and celebrated the life of Milton Friedman, allow me to kick a little dirt on the icon. Without question, Friedman was the most influential economist of the second half of the twentieth century, as his admirers claim. What they do not say is that he was also the most destructive public intellectual of our time.

Friedman actually failed as a scientific economist but succeeded as a moral philosopher. His greatest scholarly accomplishment–his monetarist theory of how to regulate money and credit–was intellectually flawed at its core and collapsed when the Federal Reserve tried to follow it. The central bank wisely discarded Friedman’s money-supply approach before it did more damage. It is now a forgotten relic at the Fed.

Friedman’s broader argument–that a society should be governed by self-regulating markets instead of big government–did better but also did not lead to the utopia he promoted. His “free market” faith has produced instead the very thing Friedman regularly denounced: a bastardized system of interest-group politics that serves favored sectors of citizens at the expense of many others. Enterprise and markets were indeed set “free” of government regulation, but big government did not go away (it grew bigger). Only now government acts mainly as patron and protector for the largest, most powerful interests–the same ones that demanded their liberation. Instead of serving the broad general welfare, government enables capital and corporations to feed off the taxpayers’ money and convert public assets into private profit centers, shielded from the wrath of any citizens trying to object. If that is what Friedman really had in mind, he should have said so.

His most profound damage, however, was as a moral philosopher. He championed an ethic of unrelenting, unapologetic self-interest that effectively pushed aside human sympathy. In fact, humans’ responsibility to one another has been delegitimized–portrayed as an obstacle to the hardheaded analysis that maximizes returns. Friedman explained: “So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no, they do not.”

Pay no attention to the collateral consequences. Your only obligation is to the bottom line. Friedman’s message was highly appealing–he promised people a path to freedom–but it triumphed, ultimately, because it served the powerful forces of capital over labor, economic wealth over social concerns. Government was indeed failing on many fronts, especially inflation, and liberalism had no answer. Friedman’s answer was alluringly simple. Get rid of government.

People everywhere now understand what Friedman’s kind of “freedom” means. America has been brutally coarsened by his success at popularizing this dictum–millions of innocents injured, mutual trust gravely weakened, society demoralized by the hardening terms of life. Most people know in their gut this is wrong but see no easy way to resist it. Friedman’s utopia is also drenched in personal corruption. The proliferating scandals in business, finance and government flow directly from his teaching people to go for it and disregard moral qualms. When you tell people in power that their highest purpose in life is to maximize their own returns, there is no limit to how much “good” they will do for the rest of us. I don’t recall hearing Friedman express any discomfort. Perhaps he regarded looting and stealing as natural features of capitalism that market forces would eventually correct.

This is what the memorials left out: the cruel quality of Friedman’s obliviousness. Art Hilgart, a retired industrial economist, recalls hearing Friedman lecture in 1991 and recommend the destruction of Medicare, welfare, the postal system, Social Security and public education. The audience was dumbfounded.

Finally, a brave young woman asked what this would mean for poverty. “There is no poverty in America,” Friedman instructed. A clear voice arose from the back of hall: “Bullshit!” The audience cheered wildly.

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