MILTON FRIEDMAN, STARTING HIS NINTH DECADE

Abstract

Some six years ago, Milton Friedman delivered his presidential address to our Association in this same place, the San Francisco Hyatt Regency Hotel. From its humble start some seventy years ago, the Western Economics Association has grown and prospered. Milton is one of many individuals including Armen Alchian, William Allen, Karl Brunner, and many others who were responsible for the success of the Association. When I learned that Milton would be participating in our seventieth annual meetings, I proposed to Eldon Dvorak that a session should be organized to celebrate Milton Friedman's eightieth birthday which actually takes place on July 31, 1992. I asked three individuals to speak: Tom Sargent who is Milton's colleague at the Hoover Institution, Stanford University, Allan Meltzer, a noted monetary economist in his own right, who followed Milton as the President of WEA, and Anna Schwartz who has collaborated with Milton on several books and was a colleague at the National Bureau for many years. All enthusiastically agreed to join in this celebration, and Jerry Jordan took time from his new position as President of the Cleveland Federal Reserve Bank to chair the session. The papers prepared by these participants at the session held on July 11, 1992 were combined with additional papers dealing with Friedman's contributions to economic science. Milton Friedman received an A.B. degree from Rutgers College in 1932 where he was a student of Arthur F. Burns. He enrolled at the University of Chicago along with Homer Jones, George Stigler, and W. Allan Wallis who came to study under Frank Knight. There he met and later married Rose Director. I understand that letters concerning the care and cultivation of roses were routed to Rose when she was an employee of the U.S. Department of Agriculture. In addition to his work in Washington, D.C. and with the Statistical Research Group at Columbia University during World War II, Friedman held teaching positions at the University of Minnesota and the University of Chicago, 1946-77. In the first twenty years of his professional life, Friedman mainly produced the scholarly papers which established his reputation as an economic theorist. The sixth decade of his life saw the publication of Capitalism and Freedom, |1963~. Honors and awards followed, the Nobel Prize in 1976, the Presidential Medal of Freedom in 1988. In introducing Milton Friedman's Nobel Lecture (December, 1976), Prof. Eric Lundberg emphasized his contributions in monetary economics. I reproduce excerpts from Prof. Lundberg's speech. Friedman's name is primarily associated with the renaissance of the idea of the importance of money,... This marked emphasis on the role of money should be seen in light of how economists--often successors to Keynes--over a long period of time almost totally neglected money and monetary policy in the analysis of the course of business cycles and inflation.... Friedman was the first to show that the prevalent assumption of a 'simple' trade-off between unemployment and the rate of inflation only held temporarily as a transient phenomenon... At the beginning of the 1950s, Friedman was the pioneer in proposals for a new order for the international currency system based on free exchange rates.... Friedman was one of the first to perceive--and to explain--that the Bretton Woods system with relatively fixed exchange rates must sooner or later break down.... One of Friedman's most important contributions is his reshaping of consumption theory with the help of the hypothesis about 'permanent income' in place of current annual income.... Professor Milton Friedman is awarded the 1976 Nobel Memorial Prize in Economics for his contributions to consumption analysis, to monetary history and theory including his observations of the perplexity of stabilization policies. |Nobel Lectures Economic Sciences 1969-1980, pp. 259-261~ The breadth and depth of Friedman's intellectual capacities and curiosity go well beyond the reasons identified by Professor Lundberg. …