As Richard Nixon commented at the time, in one of his many misapprehensions, we're all Keynesians now. Mr. Nixon certainly was, and it showed in his inability to get a grip on economic reality. His idea of an economic remedy was to order wage-and-price controls, which proved about as effective as using leeches on a dead man.
Not until Ronald Reagan came along were Milton Friedman's ideas put into practice. In the rosy afterglow of the long-running economic boom that the Reagan tax cuts launched, it is easy to forget what a shock Dr. Friedman's ideas produced when the Fed first put them into effect under Paul Volcker and, later, by the now sainted Alan Greenspan. The immediate result of Dr. Friedman's ideas was the Reagan Recession and the near-hysterical reaction to it.
It took courage to stick with Dr. Friedman's ideas, but courage was just what Ronald Reagan brought to the presidency, and it eventually paid off. Eventually can be a long, cruel time when the intellectual elite are constantly warning that these new ideas, or rather old ones, will never work. When they did, no one was more surprised than conventional economists. Some were so surprised they could never admit it. John Kenneth Galbraith, for example, would never wholly renounce his Keynesian faith.
Doctors Friedman and Galbraith were personal friends despite their profoundly different ideas. These two boon companions would on occasion stage one of their Mutt-and-Jeff debates. The 6-foot-8 Dr. Galbraith would tower over the 5-foot-3 Dr. Friedman until the debate started. Then it would soon become clear who towered over whom. In the world of economists, Milton Friedman proved to be the little giant.
When he began propounding his old/new ideas, established economists either ignored Dr. Friedman or denounced him. Here is Lawrence Summers, the former secretary of the Treasury in the Clinton administration, but a fair and candid man nevertheless, on the subject of Milton Friedman: "He was the devil figure of my youth. Only with time have I come to have large amounts of grudging respect. And with time, increasingly ungrudging respect." Much like the rest of the world.
By the time of his death at 94, Milton Friedman bestrode the world of economics the way Keynes had before him. The next great figure in that field will have to displace Friedman as he displaced Keynes. It's hard to imagine such a thing ever happening, imprisoned as each generation is in its own time. But whatever Milton Friedman's reputation in the years ahead, it will always be tied to the one great idea and ideal to which he devoted a vigorous mind, an indomitable spirit, and a most civil manner: the freedom of man.
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