Milton Friedman is an American economist who received the Nobel Prize in 1976 for his research on consumption, monetary history, and the complexities of stabilization policies. Together with George Stigler, he was the intellectual leader of the second generation of the Chicago School. Among his students are such distinguished economists as Gary Becker, Robert Vogel, Ronald Coase, Robert Lucas Jr. Friedman's main ideas concern monetary policy, taxation, privatization, and deregulation of state policy, especially in the 1980s. Monetarism also influenced the decisions of the US Federal System during the global financial crisis.
A Brief Biography of Milton Friedman: The Early Years
The future scientist was born in Brooklyn, one of the poorest areas of New York. His parents were emigrants from Hungary. The city from which they emigrated is now located on the territory of Ukraine (the city of Beregovo in the Transcarpathian region). Friedman's parents were engaged in the sale of textiles. Soon after the birth of the child, the family moved to the city of Roway, New Jersey. In childhood, Friedman got into an accident, the scar on his upper lip remained with him for life. He graduated from high school in 1928 and entered Rutgers University. The young man specialized in mathematics and economics. Initially, he intended to become a secretary. However, during the training, he met two scientists - Arthur Burns and Homer Jones, who convinced him that economics could help bring the world out of the Great Depression.
After graduation, he was offered two scholarships: in mathematics in Brown and in economics in Chicago. Friedman chose the latter and received a master's degree in art in 1933. Jacob Wiener, Frank Knight and Henry Simons influenced his views. There he met his future wife, Rose. He then studied statistics under the guidance of renowned economist Harold Hotelling and worked as an assistant to Henry Schulz. At the University of Chicago, Friedman met his two best friends, George Stigler and Allen Wallis.
Community service
After graduation, Friedman at first did not manage to find a job as a teacher. Therefore, he decided to go to Washington with his friend Allen Wallis, where Roosevelt was just beginning to realize his “new course”. Friedman later concluded that all government interventions are "ineffective cures for the wrong disease." In 1935, he worked at the Committee of National Resources, where he first began to think about the interpretation of the consumption function. Then Friedman got a job at the National Bureau of Economic Research. He worked as an assistant to Simon Blacksmith.
In 1940, Friedman became a professor at the University of Wisconsin, but returned to public service due to anti-Semitism. He worked on the federal government's military tax policy as an adviser. On duty, he advocated Keynesian state intervention in the economy.
Career and Achievements
Milton Friedman was an adviser to the US President from the Republican Party of Ronald Reagan and British conservative Prime Minister Margaret Thatcher. His political philosophy extolled the virtues of a free market with minimal government intervention. Once Friedman noted that he considers his main achievement the elimination of draft in the US. During his life he wrote many monographs, books, articles in scientific journals and newspapers, was a guest of television programs, and lectured at various universities. His works were popular not only in the USA and Great Britain, but also in the countries of the socialist camp. The Economist magazine called him the most influential economist of the second half of the 20th century, and possibly of the whole century. Although some polls give the palm to John Maynard Keynes.
Economic views
Milton Friedman is best known for drawing attention to money supply. Monetarism is a set of views associated with quantitative theory. Its traces can be found back in the 16th century. Together with Anna Schwartz, Friedman wrote a book entitled The Monetary History of the United States of America, 1867-1960 (1963). Several regression analyzes have confirmed the primacy of money supply before investing and government spending. Natural unemployment is inevitable, so it makes no sense to fight it. The government does not need to direct the economy through fiscal policy.
Statistical developments
Sequential analysis was developed by Milton Friedman. The main ideas came to him during his service at the military research department in Colombia. Then a consistent statistical analysis turned into a standard estimation method. Like many of Friedman's other discoveries, today he seems unusually simple. But this is an indicator of a genius who managed to penetrate into the very essence of phenomena. Today, consistent statistical analysis is a key tool of modern economists.
Milton Friedman: Capitalism and Freedom
The concept of monetarism began with a refutation of Keynesian theory. Later, Milton Friedman will call many of her positions naive. In the 1950s, he made his interpretation of the function of consumption. Capitalism and freedom are two concepts that Milton Friedman reintroduced into scientific circulation. Monetarism uses the "Keynesian language and methodological apparatus", but denies the initial assumptions of the theory of state regulation of the economy. Friedman does not believe in the possibility of a full load of production capacity. In his understanding, there is always a natural level of unemployment, which is meaningless to deal with. The economist argued that in the long run, the Phillips curve looks like a vertical straight line, and predicted the possibility of such a phenomenon as stagflation. Therefore, the only effective state policy is a gradual increase in money supply.