Happy Birthday, Milton Friedman

Milton Friedman was born in New York City on July 31, 1912, to working-class Hungarian Jewish immigrants; he was the youngest of four children and the only boy. Friedman’s parents kept a dry goods store in Rahway, New Jersey, and struggled financially. But they were determined to send their son to college. Friedman was the first of his family to attend college, graduating from Rutgers University with a degree in math. Friedman then received a full scholarship from the University of Chicago to study economics. In 1937, Friedman joined the research staff of the National Bureau of Economic Research in New York City and, thanks to his steady salary, finally married fellow economist Rose Director, whom he had met while studying in Chicago.

Friedman’s decision to attend the University of Chicago was prompted by the economic conditions during the Great Depression. Friedman had wanted to keep studying math and could have accepted a math scholarship from Brown University. But he accepted the scholarship in economics from the University of Chicago instead. “His choice was inspired by the ongoing Great Depression and his belief that economists could help solve it,” Reason magazine reports. “That decision guided the rest of Friedman’s career, as his reputation would be forever intertwined with the University of Chicago, the colleagues and students he met there, and the intellectual tradition its economics department came to represent.”

Friedman received his PhD from Columbia University in 1946. He used as a doctoral thesis his 1945 essay “Income from Independent Professional Practice,” coauthored with Simon Kuznets. In the paper, Friedman argued that licensing procedures limited entry into the medical profession, and drove doctors’ fees up, which would not happen if competition were more open. In 1951, he won the John Bates Clark medal, which honors economists younger than 40 for outstanding achievement. Another essay, “A Theory of the Consumption Function” (1957), provided evidence against the Keynesian view of individual incomes, noting that instead of adjusting their expenditures in response to their current income, consumers’ annual consumption actually reflected their expected lifetime earnings. According to the Library of Economics, the work was particularly significant because most economic theory at the time did not challenge established Keynesian philosophy. In his 1962 book “Capitalism and Freedom,” Friedman argued in favor of the free market, using terms accessible to the lay reader. The book “Free to Choose” (coauthored with his wife) further outlined Friedman’s economic theories and was the best-selling nonfiction book of 1980.

Friedman died on November 16, 2006 at age 94. According to BusinessWeek’s Peter Coy, Friedman’s death ended “the greatest rivalry in modern economics”: a 60-year competition between Friedman and the liberal economist Paul Samuelson of MIT. Samuelson said on the day of Friedman’s death, “Milton Friedman was a giant. No 20th-century economist had his importance in moving the American economic profession rightward from 1940 to the present.”

The Milton Friedman Institute is under development at the University of Chicago. According to President Robert J. Zimmer. “The Milton Friedman Institute will continue Chicago’s extraordinary tradition of creating new ideas that stimulate the academic world and innovative approaches that influence policy.” The Institute will create economic dialogue between students, teachers and theorists worldwide.

The Friedman Foundation for Educational Choice is dedicated to preserving the educational theories of Milton and Rose Friedman, who argued in favor of school vouchers throughout their careers. Friedman and his wife established the organization in 1996. Today, the foundation “builds upon the Friedmans’ vision, clarifies its meaning to the public and amplifies the national call for true education reform through school choice.”