For more than a decade, I was privileged to be the Milton Friedman Distinguished Fellow at the Oklahoma Council of Public Affairs. More than once during those years, many people, including students and even the occasional legislative leader, asked me who is Milton Friedman?

The easy answer is that Milton Friedman was one of the greatest economists of the 20th century. His scholarship illuminated how to think about numerous questions at the heart of his discipline, including the central importance of monetary policy to a sound economy, the real relationship between income levels and personal consumption, and understanding what caused the Great Depression. In 1976, he was awarded the Nobel Prize in economics, the highest honor in his profession.

But those of us who labor in the vineyards of public policy care most about the work Friedman did outside of academic economics—he was perhaps the most fertile conservative policy mind of his time. The intriguing title of historian Jennifer Burns’s superb biography, Milton Friedman: The Last Conservative, suggests the magnitude of his influence. 

In addition to lucidly elucidating Friedman’s scholarly accomplishments, Burns thoroughly recounts Friedman’s remarkable record of seminal policy innovations. These achievements include replacing the military draft with a volunteer force; explaining why burdensome occupational licensing requirements should be abolished; the alleviation of poverty through direct income supports (embodied in the modern earned income tax credit) rather than through degrading welfare programs; and, what many consider his most important policy legacy, advocating the reform of a sclerotic public school monopoly by the establishment of school choice programs.

The most valuable lesson, however, that both practitioners and students of policy can learn from Friedman is not only what to think about policy problems, but how to think about them. Burns describes how Friedman, as a graduate student at the University of Chicago (accompanied by his wife Rose, also an accomplished student of economics), became the leading member of a cohort of young economists that included future Nobelist George Stigler and Friedman’s brother-in-law Aaron Director, one of the leading founders of the discipline of law and economics.

This cadre of thinkers, which soon became known as the Chicago School, was grounded in what economists call price theory, the foundation of classical (or what today we call free-market) economics. The core insight of the Chicago thinkers is that no person or group of people, no matter how brilliant or expert, possesses enough knowledge to effectively plan or coordinate complex human affairs. The most sensible way to make decisions is to rely on prices, which aggregate both the decisions and the preferences of thousands, if not millions, of people. Both private and public decision-makers need not be omniscient to make wise choices. If you run a restaurant you don’t need to understand why the price of eggs is so high. You just have to decide whether to raise your price or change your menu offerings to account for price changes.

But the true significance of the Chicago School thinkers, led by Friedman, is that they realized that the power of price theory could transform fields outside of economics, most especially the operation of government. Public agencies too often provide inferior services because they are managed by inefficient and self-serving bureaucracies who, because they have no competitors, refuse to reform. The Chicago School thinkers contend that we can improve the housing or the education we supply to the disadvantaged if, instead of forcing them to accept only government products, we provide them the resources to shop in the private market. Not only will people have more and likely better services to choose from, but the resulting competition will force the public actors to improve their performance.

One of the most unappreciated and powerful insights of the Chicago School generally, and Friedman in particular, is that because individual reason is fallible, institutions, whether it be the Federal Reserve or a state legislature, work better if they are governed by formal rules and structures rather than ad hoc decision-making. Friedman’s most famous economic policy prescription was his insistence that the Federal Reserve establish firm rules for the management of the money supply. More relevant to our local concerns, he also was one of the first to advocate the enactment of constitutional spending and taxing limits that would constrain the growth of government.

If they are wise, our state leaders should pay close heed to Friedman’s counsel and construct structural mechanisms that will institutionalize sound policy judgments. One good example is a law forbidding the legislature from increasing public pension payments unless these increases are properly funded under a set and strictly enforced formula. It is too much to expect legislators to withstand political temptation—good policy should be built into the system.

Despite his manifold successes, Friedman did have critics, and not just on the left. Some conservatives decried what they believed was his single-minded emphasis on increasing individual freedom and economic growth. He did not spend his time thinking or opining about our degraded culture or the collapse of morals. Put differently, he didn’t think it was his or the state’s business what people chose to do with their freedom or money. 

But what must be remembered is that Freidman did understand that much of our social disintegration has been caused by an overly intrusive and avaricious state. It is Leviathan that is often behind the destruction of our communities and only by taming it can we restore the agency and resources families need to pursue flourishing lives. There is nothing, for example, that is more likely to increase our prospects for an improved quality of life than empowering families with the economic capacity to provide their children with an excellent education that will foster their intellectual and spiritual development. In a free and pluralistic society, political leaders cannot force people to conform to a particular conception of how to live. They can, if they take Friedman as their guide, craft policy structures that will enable us to pursue genuine happiness.

[Photo Credit: Reason.com]