Economist Friedman dies aged 94

Economist Friedman dies aged 94
Milton Friedman
Friedman was seen as the leader of the Chicago school of monetarism
Nobel prize-winning US economist Milton Friedman has died at the age of 94.

Mr Friedman died in San Francisco, a spokesman for his family said. The cause of death is not yet known.

Mr Friedman, who coined the phrase "there's no such thing as a free lunch", was awarded the Nobel Prize for economics in 1976.

Known as the high priest of monetarism, his ideas gained popularity in the 1980s when they influenced the policies of Margaret Thatcher and Ronald Reagan.

'Intellectual'

The leaders were won over by Mr Friedman's idea that the supply of money was the key factor in determining economic growth and the rate of inflation.

Lady Thatcher paid tribute to Mr Friedman, calling him "an intellectual freedom fighter".

"He revived the economics of liberty, when it had been all but forgotten," she said.

"Never was there a less dismal practitioner of the dismal science. I shall greatly miss my old friend's lucid wisdom and mordant humour."

America has lost a true visionary and advocate for human freedom
Gordon St Angelo, Friedman Institute

Obituary: Milton Friedman
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And Chancellor Gordon Brown described Mr Friedman as "one of the great economic theorists" of the 20th century.

"He had a major influence on post-war economic policy not least in establishing the importance of credibility in monetary policy making," he said.

'Visionary'

Mr Friedman was also a key advocate of deregulation and privatisation.

Throughout his more than 30 years as Professor of Economics at the University of Chicago, Mr Friedman was a champion of the free market, and his approach became known as the "Chicago School."

He was also viewed as an accomplished and fluent speaker who, it was said, had never lost an argument.

"America has lost a true visionary and advocate for human freedom. And I have lost a great friend," said Gordon St Angelo, president of the Friedman Foundation.

Mr St Angelo added that Mr Friedman had been a highly influential figure who had "transformed the minds of US Presidents, world leaders, entrepreneurs and freshmen economic majors alike".

The Cato Institute - a free market think tank in Washington that Mr Friedman advised - added that Mr Friedman had "revolutionised" economic thinking.

"If (John Maynard) Keynes dominated economic thinking in the mid-20th century, Friedman dominates economic thinking at the end of the century, and well into this century," an institute spokesman told AFP news agency.

And Ben Bernanke, the head of the US central bank, the Federal Reserve, said in a speech in 2003 that "his thinking has so permeated modern macroeconomics that the worst pitfall in reading him today is to fail to appreciate the originality and even revolutionary character of his ideas."

Libertarian

Friedman was born on 31 July 1912, in Brooklyn, New York, the son of Jewish immigrants, and worked his way through university..

During his lifetime he also advised US Presidents Reagan and Nixon and was also a prolific writer.

His books included A Theory of the Consumption Function, Tyranny of the Status Quo and Free To Choose - the two later titles accompanied TV series of the same name.

However, his work was not just limited to the economic realm. He was also a libertarian campaigner who supported home schooling as well as the decriminalisation of drugs and prostitution.

As part of his campaigning Mr Friedman advocated the abolition of the military draft in the US after the Vietnam War, something he said was one of his proudest achievements.

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Milton Friedman: Free Market Thinker
The American economist, Professor Milton Friedman, who was awarded the Nobel Prize for Economics in 1976, has been called the high priest of monetarism.

Milton Friedman

Friedman's career

His death marks the passing of a giant in the world of economics whose approach to deregulation and free markets have become the centrepiece of economic policy across the world.

He was a major influence on the economic thinking of the governments of both Mrs Thatcher and President Reagan, and has influenced the thinking of most central banks today.

His economic theories are still the subject of fierce debate, but he has been enormously influential in the economics profession as well.

Mr Friedman's central message was that markets work, but that governments could undermine markets by excessive spending and fuelling inflation.

His theory - that an increase in the money supply was the cause of inflation - was controversial, and most banks today target the rate of inflation instead.

The Chicago School

But his belief in markets, and his critique of the attempts by governments to control unemployment by spending more money, have endured.

He was a leading exponent of the Chicago school which held that the supply of money was the key factor in determining economic growth and the rate of inflation.

He argued that the money supply should be kept strictly under control, as should government spending.

Professor Friedman became widely known as a broadcaster and as a kind of instant oracle on the economic ills of many countries.

He presented a BBC television series in 1980.

Living the American dream

Milton Friedman was born in Brooklyn in New York, the son of Jewish immigrants from a region in Carpathia, now part of the Ukraine.

He was 15 when his father died, and worked his way through university by earning his keep as a waiter and shop assistant.

He took an economics degree in 1932, and spent three years on a graduate scholarship at the University of Chicago.

Saul Bellow and Milton Friedman
Mr Friedman was a close friend of the writer Saul Bellow

He was already attracting attention with his contributions to economic journals.

Just after World War II, he joined the Faculty of the University of Chicago, and spent more than 30 years there as Professor of Economics.

After his retirement, he became senior research fellow in the Hoover Institution at Stanford University in California.

From 1948 until 1981 Professor Friedman was also a member of the staff of the National Bureau of Economic Research, and in the late 1960s he became one of President Nixon's economic advisers.

His popular reputation as an economic wizard at that time rested largely on his predictions about the rate of economic growth and activity in the United States, where he attacked Keynesian economic policies.

His approach was adopted by Ronald Reagan in the 1980s, who also believed in reducing the role of government - and in cutting taxes.

Thatcherism

In Britain, he attracted a following by attacking the 1960s Labour government's failed attempt to preserve the value of the pound.

Inflation, he insisted, came from one place only - the government.

He called for an end to nationalisation, to government intervention in things such as tariffs and import quotas, and to frequent tampering with the course of economic policy.

Instead he wanted a regular growth of 4% to 5% a year in the money supply.

When she came to power in 1979, Mrs Thatcher adopted many of his approaches.

But the government found it harder to control the money supply that it had thought it would be.

Free market radical

Milton Friedman described himself as a free-enterprise radical, and was an unswerving champion of competitive markets.

Professor Friedman held that there was a natural rate of unemployment and that attempts to bring it below that level by stimulating demand caused only an ephemeral reduction and added permanently to prices.

The International Monetary Fund came to accept his insistence on the importance of steadiness in monetary growth, and by the 1980s his approach had become popular in many developing countries, especially in Latin America.

However, a series of economic crises in the region in the 1990s led to an attack on the approach of the "Chicago School", especially towards privatisation.

Polished performer

Professor Friedman was an impressive television performer.

He could speak off the cuff for an hour at a stretch with devastating fluency.

It was said that he never lost an argument.

His great talent was in seeming to make a complicated theory simple, and the conviction he showed could be very persuasive.

At the same time, his theories seemed too simplistic to many, and often aroused controversy.

He produced about 20 books, many of them with collaborators, and a seemingly endless flow of scholarly papers and articles.

His best-known book (written with a co-author, Anna Schwartz, and first published in 1963) is the massive Monetary History of the United States 1867-1960.

His wife Rose was also an economist. They were married in 1938, and lived for many years in Vermont in a house overlooking the valley of the Connecticut River before moving to Northern California.

Their son was an economist, their daughter a lawyer.