Treasured letters from Milton

Alan Reynolds
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Posted: Nov 23, 2006 12:01 AM
Treasured letters from Milton

The first significant article I ever published, in the summer of 1971, was about Milton Friedman. And he helped me to get it right.

Since he died, there have been numerous eloquent statements by Bruce Bartlett, David Boaz and others about Professor Friedman's academic accomplishments and his enormous influence over public policy at home and abroad. Perhaps this personal reminiscence may offer a different insight into what kind of man he was.

In 1971, I was managing the main floor at the J.C. Penney store in downtown Sacramento, Calif., while going to grad school at night. Murray Rothbard (normally a very pleasant fellow) published a harsh critique of Milton's proposed reforms in The Individualist. Friedman was called a "statist," for example, because he advocated a flat-rate tax rather than abolition of all taxes, school vouchers rather than the abolition of public schooling and so on.

I wrote a long reply unraveling Rothbard's article. Then I sent a copy to Milton Friedman on April 23. He soon sent it back covered with his handwritten comments on the letter itself and every page of my manuscript. He mentioned that his son David (who penned his own classic, "Machinery of Freedom," that same year) had also dashed off a reply.

"However, you, he and I all believe in competition, so do let me encourage you to revise yours and send it in with no veto or approval from me." And he responded to my plea for guidance with, "You do not need it." My revised comments were published in Reason magazine that July, as "The Purge of Chicago Economists." Although Reason had a circulation of about 630 at the time, that article launched an enduring friendship with David R. Henderson, now a frequent Wall Street Journal contributor and co-author of "Making Great Decisions."

Encouraged by getting published, and by Friedman's note, I sent "The Case Against Wage and Price Controls" to National Review a few weeks before Nixon imposed a wage-price freeze. That cover story was the main reason William F. Buckley hired me, with the approval of James Burnham and (a National Review editor later told me) Milton Friedman.

I cannot imagine anyone as famous and busy as Milton Friedman was in 1971 bothering to pen such a detailed and encouraging response to some unknown young man from J.C. Penney. He was writing a regular column for Newsweek, and 1971 was the year his monumental "Monetary History of the United States" appeared, co-authored by Anna Schwartz (who still goes to work in New York City every day, at 91, compiling an opus on foreign exchange intervention).

My first article appeared nine years after Friedman's "Capitalism and Freedom," which I later described as one of the two most influential books of its kind in the postwar era (along with Friedrich Hayek's "Road to Serfdom"). Shortly after making that indisputable comment, in the '80s, I had a chance to speak with Friedman at a Mont Pelerin Society meeting (there is a photo of us on my desk). I found him surprisingly embarrassed about receiving a compliment so obviously deserved. Yet humility was one of Milton Friedman's many virtues, along with kindness -- but humility was the one virtue he did not deserve. "Capitalism and Freedom" is once again among the top 10 best-sellers in economics, 44 years after it was first published.

This July, I e-mailed Milton Friedman with a copy of a paper I had presented to the Western Economics Association on "The Misuse of Tax Data to Estimate Income Distribution." I noted that "only data about the 'top 1 percent' taken from a sample of income tax returns support the often-repeated claim of a sustained increase in inequality since 1973-79. But that data is horribly distorted after 1981-86 by 1) shifting business income from the corporate tax to the individual tax, by 2) shifting investment income from taxable to tax-deferred accounts and by 3) the exclusion of rising transfer payments from total income."

I jokingly reminded Milton that this was the first time since 1971 that I had bothered him for guidance about something I had written. This is what he wrote back:

"Dear Alan: As the saying goes, 'It's a long time between drinks.' I recall with pleasure our correspondence in 1971 and have followed with satisfaction the career that developed after you decided to shift from accounting to economics, a wise shift. The paper you sent along is certainly both unique and important. The notion that there has been a substantial increase in inequality, especially at the upper levels, has become conventional wisdom. I am not a tax expert and yours is the first paper I have seen which explains why the tax figures are so misleading. I would not be surprised if accurate figures would show a substantial increase in inequality over the past 40 or 50 years. The deterioration of our educational system plus the large illegal immigration would seem to lead to that result. So also would the technological revolution. But whether that is so or not, you have certainly shown that it cannot be inferred from tax returns. ... Thanks for sending me your paper. Best regards, Milton"

You may wonder if I still have that original letter -- the one I sent to him back in 1971 with his handwritten comments on it. Of course I do. The first and last letters are, like the man himself, great memories I will always treasure.