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DECEMBER 2002
Volume 95, Issue 2
 
 
   
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Birthday party for a revolutionary
To celebrate the ideas and influence of Milton Friedman, Chicago threwwhat else?an economics conference.

The same man who skewered the anticompetitive practices of the American Medical Association and attacked rent control was present at the creation of the federal income-tax withholding system during World War II. Then Milton Friedman, AM'33, fresh from stints with the National Bureau of Economics Research (NBER), the Department of the Treasury, and Columbia University's Statistical Research Group, joined Chicago's economics faculty in 1946.

Over the next 30 years he revitalized monetary theory, publishing Studies in the Quantity Theory of Money (1956), A Theory of the Consumption Function (1957), and the seminal A Monetary History of the United States, 1867-1960 (1963, cowritten with the NBER's Anna J. Schwartz). In the words of his former Chicago colleague Gary S. Becker, AM'53, PhD'55, Friedman became "simply the greatest economist of the 20th century."

IMAGE: More than a face in the economics crowd: Milton Friedman, AM'33, at 90.Photograph by Dan Dry

More than a face in the economics crowd: Milton Friedman, AM'33, at 90.

And so on November 8 more than 450 economists, government officials, policy makers, students, and other fans participated in what the economics department billed as "A Conference to Honor Milton Friedman, the Paul Snowden Russell Distinguished Service Professor Emeritus, on the Occasion of his Ninetieth Birthday." Friedman actually turned 90 on July 31, but if the conference was not the first event marking his nonagenarian status, it was the only event dedicated to exploring the 1976 Nobel laureate's work and its continuing influence and implications.

Seated front and center in Max Palevsky Auditoriumand mobbed by autograph seekers during the breakswere Friedman and his wife and research partner, Rose Director Friedman, PhB'32. Their side-by-side seating, Chicago president Don M. Randel noted in his welcoming remarks, recalled the couple's first day on campus, when alphabetical order brought them together in Jacob Viner's Economics 301: Price and Distribution Theory. They went on to coauthor theories, articles, and books, including Free to Choose (1980).

During sessions built around Friedman's contributions to macroeconomic thought, theory, and policy, a standing-room-only audience that included former Secretary of State George Schultz and a virtual who's who of contemporary economists enjoyed scholarly give-and-take. John B. Taylor, undersecretary for international affairs in the U.S. treasury department, discussed "Monetary Policy in the Post-War Economy." James J. Heckman, the Henry Schultz distinguished service professor in economics, led a panel on incentives and policy, while Harvard economist Carolyn Hoxby gave a lunchtime talk on educational choice and school vouchers. (Although Friedman insisted that the idea of school vouchers didn't originate with him but rather founding father Thomas Paine, the Friedmans have long been proponents of a voucher system, establishing the Milton and Rose D. Friedman Foundation, devoted to school choice.)

The afternoon sessions began with a panel on Friedman's theory of permanent income (whatever the variations in their incomes, consumers will try to average out their patterns of consumption), moderated by economics chair Lars Peter Hansen. The final session, "Depression and Recovery," moderated by U of C economist Robert E. Lucas Jr., AB'59, PhD'64, focused on Friedman and Schwartz's contention, voiced in A Monetary History of the United States, that the Federal Reserve Board's post-1929 monetary policy, rather than bringing the nation out of the Depression, actually slowed recovery. Concluding his remarks, Ben S. Bernanke, a Princeton economist who joined the U.S. Federal Reserve System's board of governors in August 2002, addressed Milton directly: "You're right. We did it. And we're very sorry." As the audience's laughter subsided, Bernanke continued, "But, thanks to you, we won't do it again."

Then UCLA economist Lee E. Ohanian walked the audience through overheads of equations built to quantify the effects that Friedman and Schwartz saw as the outcome of the New Deal policies. Ohanian was followed by Schwartz herself, who delivered a quick but blow-by-blow analysis of Ohanian's research. The Q&A period took on the air of a Chicago workshop (Friedman, by the way, established the still thriving Workshop in Money and Banking in 1953), and a good time was had by all.

The day ended with dinner at the Quadrangle Club. After praise from a trio of economistsMartin Feldstein of Harvard and the NBER, Allan Meltzer of Carnegie Mellon, and Gary Beckerthe diminutive Friedman stood up, just to the podium's right. Voice and smile strong, he thanked everyone for creating an "overwhelming" occasion. Then he told about the time he almost left Chicago for an institution in a warmer clime. "Rose, who always gives me good advice," he said, "urged me to go. But because of the quality and the spirit and the attitude of the economics department and the institution at large," he stayed on. Free to choose, he'd chosen Chicago. The applause was loud and genuine.

M.R.Y.

 

 

 

 


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