A paean to a free-market warrior

Posted: Nov 23, 2006 12:01 AM
A paean to a free-market warrior

WASHINGTON -- The death of Milton Friedman, pre-eminent champion of free markets, free trade and low taxes, has silenced the world's most articulate defender of capitalism and individual freedom.

The Nobel Prize-winning economist's passing leaves a gaping hole in the science of economics on many fronts, but perhaps none more pivotal and troublesome than the continuing battle on behalf of free-market policies that have led to a new wealth of nations.

Friedman's vast academic contributions to monetary policy, controlling inflation and numerous other economic issues are legendary and lasting. But it was his robust and heroic defense of the power of the marketplace here and around the world that will be his most important legacy.

It is hard to think of another economist who wrote and spoke about economic issues with more clarity and intellectual heft than Friedman or with more influence on a global stage.

He helped to promote, nurture and expand the worldwide movement to privatize state-owned enterprises, lower tariffs and other obstacles to the free exchange of goods and services and foreign investment. In the process, he moved many countries away from the socialist, protectionist policies that had kept them locked in a perpetual state of poverty and social decay.

He certainly had a huge impact on Ronald Reagan, who embraced his economic prescriptions for lowering tax rates and free-trade agreements with other nations, which led to Reagan's vision for a North American Free Trade Agreement and to similar trade pacts with other nations. Britain's Margaret Thatcher similarly credited Friedman for her policies to privatize state-funded companies that lifted England out of its economic lethargy.

He advised countries to free their economies from anticompetitive rules and oppressive taxation that prohibited foreign investment, new enterprise, job creation and economic growth. The dramatic economic changes, as seen in Russia and the rest of Eastern Europe, Latin America and throughout the Pacific Rim countries, Southeast Asia and India, were due in large part to his free-market teachings that helped lift global economies to a higher level of freedom and prosperity.

Those policies, however, remain under attack from the forces of statism, socialism and pessimism here and abroad, blaming the world's ills on what the left calls "globalism." In fact, by every economic measure, global economies are growing and people at the lowest end of the income scale are doing better, too.

In a recent study, economist Kevin Hassett of the American Enterprise Institute found that "the steadily rising tide of economic development is making everyone better off, big time.

"More important, the rate of economic growth in poor countries has been significantly higher than in rich countries since about 1980," wrote Hassett in the latest issue of National Review. "This means that the gap between rich and poor countries is closing, and that globalization is delivering prosperity to the world's poor in a manner unprecedented in world history."

Friedman had a lot to do with this because of the force of his free-market beliefs, which he preached from China to Chile, arguing that the free market was far more efficient than government bureaucracies in the production and distribution of goods and services. Countries that had the freest economies, like Hong Kong, were the most prosperous and those that were the least free were the poorest, he said.

Who can forget the scene in his "Free to Choose" PBS series, where he held a pencil and showed how all of its component parts -- wood, lead, rubber, metal and paint -- were produced in sufficient quantities to meet the demands of the marketplace? The free market was responsible for always producing enough pencils at the cheapest possible price without a central authority in charge of the means of production.

Milton Friedman is gone, and I fear the defenders of capitalism and free markets, especially here in the United States, are in dangerously short supply. To be sure, tax-cut crusaders Jack Kemp, Larry Kudlow and Art Laffer are among the most articulate proponents of Friedman's views, and they have kept the lamp of economic freedom burning bright in the post-Reagan era -- as has President Bush. But the anti-free market, anti-free trade forces are growing.

Now we hear the gloom-and-doom voices -- on the left and the right -- selling trade protectionism and proposing higher tariffs (another word for taxes) on everything we buy to keep the rest of the world's goods out of our economy. Others are pushing for higher taxes on incomes, as well as on investors and corporations and small businesses, the entrepreneurs who produce most of our new jobs.

When I interviewed Friedman last year at his spectacular hilltop apartment overlooking San Francisco Bay, he acknowledged the forces of socialism had been kept "at bay, but we have not defeated them."

If those forces are to be conquered, the benefits of economic freedom, he said, must be taught to each succeeding generation. While Friedman's teachings live on in his books, columns and TV lectures, there is still a critical need for reinforcements.