Saturday, November 18, 2006

So long, Friedman

Most of you would know by now that Milton Friedman has passed away at 94. What can we say that has not already been said by Brad DeLong, Marginal Revolutionaries or Greg Mankiw?

I can note my personal thoughts.

Like many of their generation (born in the late 1940s, Baby Boomers in the West, Midnight’s Children in Desh), my parents thought socialism was the way of the future. They were involved in ‘people’s revolutions’ — but this was before I was born. By the time of my first memories, their revolutionary zeal had subsided, but socialist literature and Soviet books still abounded in our house. I learnt Russian folklore before Desi ones, and read Lenin for kids at seven.

Then, by the end of the 1980s, like many others of their generation, my parents underwent an ideological conversion. Faced with the failures of ‘socialism’ (or ‘social justice’ in the Kleptocratic Republic of Desh), they accepted the logic of the market. That was when I first heard of Milton Friedman. Or rather, I saw a signed photo of a Desi uncle with him — the photo was placed in a very prominent place in the lounge shelf, right next to (I think) the aunty’s wedding photo. I later discovered that Friedman’s writings played a large role in the intellectual conversion of many of that generation.

Galbraith, not Friedman, was the first economist I heard of. But it was Friedman whose ideas I found appealing. Free to choose was watched with a bunch of nerdy brothers at the same time as The Age of Uncertainty, and liberty was chosen almost unanimously (you can watch it here or here — the uninitiated might want to read this). Then I read Capitalism and Freedom, whose opening contains these electrifying words:

President Kennedy said, "Ask not what your country can do for you - ask what you can do for your country." Neither half of that statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society.

I can note what Friedman said about India half a century ago (hat tip: The Indian economy blog.

He was optimistic:

… [T]he fundamental problem for India is the improvement of the physical and technical quality of her people, the awakening of sense of hope, the weakening of rigid social and economic arrangements, the introduction of flexibility of institutions and mobility (of) people, the opening tip of the social and economic ladder (to) people of all kinds and classes. And what … makes one feel that India is on the move and will continue (to) move, is that so much is being done and such a good beginning has been made on this fundamental problem of creating the human and social basis for a dynamic and progressive economy.

But he was also pessimistic:

Favor and harassment are counterparts in the Indian economic scheme. There is no significant impairment of the willingness of Indian capitalists to invest in their industries, except in the specific industries where nationalization has been announced, but they are not always willing to invest and take the risks inherent in the free enterprise system. They want the Government to support their investment and when it refuses they back out and cry "Socialism".

Half a century on, both paragraphs are still relevant. And his fights for individual freedom also remain relevant. To spend is to tax — this is still relevant, in West as well as in Desh. Money matters — this is still relevant, ask Ben Bernanke. Flat taxes and school vouchers are still not reality in most countries, and futile wars on drugs and ‘vices’ are still waged. Friedman will be missed, but his work will remain important for a long time to come.