From the Archives: 30 years on, Swedish scholar revisits Friedman’s ‘Free to Choose’ in new film

Publisher's note: This article was originally published on Examiner.com on April 30, 2011. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

30 years on, Swedish scholar revisits Friedman’s ‘Free to Choose’ in new film
April 30, 2011 10:54 PM MST

Beginning in August, PBS television stations around the country will have the opportunity to broadcast a new documentary film, Free or Equal, presented by Swedish free-lance writer and Cato Institute senior fellow Johan Norberg.

Free or Equal revisits and distills some of the ideas found in Milton Friedman’s 10-part documentary series, Free to Choose, originally produced in 1980, focusing on the Nobel laureate’s views about the struggle between freedom and equality. Its release also coincides with a yearlong run-up to the centenary of Friedman’s birth.

In an interview with the Charlottesville Libertarian Examiner on Friday, April 29, after a special preview screening of Free or Equal at the Cato Institute's Hayek Auditorium, Norberg said that “I was an admirer of the [Free to Choose] series. When I was developing my own ideas on some different subjects, I was quite impressed by this.”


Still relevant after 30 years
As the 30-year anniversary approached, Norberg explained, “we thought, ‘How can we update this and show that these ideas are extremely relevant to the kind of discussion that we’re having [today] about spending, taxation, debts, bailouts, stimulus packages, all those things?'”

Compressing the ten hours of Friedman’s original series into the sixty minutes of Free or Equal required some creativity on the part of Norberg and the producers.

“I really had to skip most of our ideas to be able to do that, but we figured that it’s important to just get it out there and try to touch upon those important principles,” he explained. “Then if people are interested, we’re doing other things and a lot of other people are doing great things on expanding these ideas and getting them out there.”

This documentary, he added, is "in a way, a teaser.”

Vantage points
Norberg and his crew traveled to three continents and several different countries both to do research and to film on location, sometimes from the same vantage points that Friedman used in Free to Choose three decades ago.

“The most important stops along the way,” Norberg said, were the United States, Sweden, and Hong Kong, “because we thought that we should pick some sort of extremes in the way we’re thinking of political/economic alternatives.”

Free or Equal is not Johan Norberg’s first film.

“I have made films before,” he noted, “but mostly they’re based on my books. I’ve written a book on globalization and I made a documentary about that [Globalisation Is Good]. I wrote a book on the financial crisis, and I made a documentary about that [Overdose].”

It is a challenge, Norberg added, to make a documentary film, which requires a different sort of process than writing a book does.

“The processes are different,” he explained, because "what you’re doing when you’re writing is constantly expanding on your subjects and finding different things that you have to explain. Then you write a chapter about that, you do more research and so on.”

In contrast, "it’s really the opposite when you’re doing a documentary,” Norberg continued. “You have the ideas and then you’re trying to narrow it down, you’re trying to simplify it as much as possible, and make sure that you try to cover as much as [you can] in very, very little time.”

There is, he said, “almost nothing left of a book when it’s on the screen for an hour.”

Teenage anarchy
Norberg came to libertarian ideas after a period as an adolescent anarchist in his native Sweden.

“I started out as an anarchist in high school, neither left nor right, just generally opposed to authority and big things, big government, and big business,” he said.

He chuckled and explained:

“What made me more interested in classical liberal and libertarian ideas was my meetings with other anarchists and realizing that a lot of them really thought that, ‘Yeah, we want freedom for everything but not if people really start a factory or employ people because then we’re going to go over there and punch them.’”

At that point, he thought, “'Hmm, that’s not really according to my principles.'”

He was reaching for other ideas and, in a time before the World Wide Web and the Internet, he found them in the library.

He first discovered “the Manchester liberals -- Cobden and Bright -- and Adam Smith,” and then he found “modern libertarians” like Friedman and Nozick, as well as Ayn Rand, “slowly and steadily realizing that I probably agree more with them.”


Ask PBS
In the months between now and August, when Free or Equal hits people’s homes, Norberg will be lecturing about the ideas in the film and about Milton Friedman himself, and also will be releasing clips from the movie and “sending them around the world.”

While Free or Equal has been made available for PBS stations to broadcast, “it’s up to individual stations around the country” to choose to use it, Norberg explained.

If people are interested in seeing the film on TV, he said, they should call or email their local PBS program directors and request that they schedule Free or Equal for broadcast in their communities.

“That will help to get it out,” Norberg said.


Suggested Links

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UVA historian explains Ayn Rand's unusual popularity in 2010
Revisiting a libertarian classic - Charles Murray's 'In Pursuit of Happiness and Good Government'
After Microsoft and Google, is Apple next in line for a parasitical government shakedown?
'Deep doo-doo': Virginia author Jim Bacon warns of coming financial crisis in 'Boomergeddon'

From the Archives: Is 'income inequality' a serious problem?

Publisher's note: This article was originally published on Examiner.com on April 7, 2010. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

This was my third article published on Examiner.com. Eventually I wrote about 500 articles that appeared on the now defunct news site over the six years between April 2010 and June 2016.

Is 'income inequality' a serious problem?
April 7, 2010 6:02 PM MST

One doesn’t expect The Sabre, a web site devoted to sports at the University of Virginia, to be a place to find long discussion threads about political and economic issues. Yet on March 30, a lively exchange of ideas ensued when one of its contributors posted a quotation from former Federal Reserve Board Chairman Alan Greenspan: “Income inequality is where the capitalistic system is most vulnerable."

In his 1996 book, Hidden Order: The Economics of Everyday Life, legal scholar and economist David Friedman wrote:

“When a psychiatrist wants to get his audience’s attention, he talks about sex. Economists talk about the income distribution. In both cases the audience’s interest is prurient (what are other people doing?), puritanical (that they shouldn’t be?), and personal (how am I doing?). In both, there is the thrill of violating taboo; although sex is gradually becoming an accepted topic of conversation, asking how much money someone makes is still beyond the pale.”

Though asking about someone’s income is still not permitted in polite conversation, it is not forbidden in political discourse. Members of Congress and political candidates talk about it all the time, sparking the question: Is “income inequality” something that should worry us?

George Mason University economist Tyler Cowen put the question in perspective in the New York Times. “What matters most is how well people are doing in absolute terms,” he wrote. “We should continue to improve opportunities for lower-income people, but inequality as a major and chronic American problem has been overstated.”

Fears about income inequality stem from a pre-modern understanding of economics, in which because some people “have,” others “have not.” In the pre-industrial, pre-capitalist world, this was largely true. If Midas had a lot of gold, it meant he was taking it from his subjects, who had no gold.

But the fabled Midas hoarded his gold; he neither spent it nor invested it. Today’s affluent people both spend and invest their earned incomes. They don’t hide it under their mattresses. As a consequence, they create products that fulfill our needs and wants, hire workers, and make other people wealthy in the process – or at least more wealthy than they would have been in the absence of spending and investment.

In his magnum opus, Human Action: A Treatise on Economics, Austrian economist Ludwig von Mises wrote:

“The inequality of incomes and wealth is an inherent feature of the market economy. Its elimination would entirely destroy the market economy.

“What those people who ask for equality have in mind is always an increase in their own power to consume. In endorsing the principle of equality as a political postulate nobody wants to share his own income with those who have less. When the American wage earner refers to equality, he means that the dividends of the stockholders should be given to him. He does not suggest a curtailment of his own income for the benefit of those 95 per cent of the earth’s population whose income is lower than his.”

In other words, “more wealth for me, but not for thee” is the principle at play.

Redistributing unequally distributed wealth would require one of two things:

One option is passing laws that forbid businesses from paying their employees – including high-level management, rock stars, and Oscar-winning actors and actresses – what they (the businesses) and the market think they are worth. That is, set ceilings on earnings.

The other option is to establish a system of confiscatory taxation that would take earnings from the person who earned it, in order to bring their income beneath an arbitrary ceiling, and give it to the government, which in turn will spend it on goods and services provided by other rich individuals and the companies they own. That is, rob Peter to pay Paul.

Commenting on the “economic consequences of confiscatory policies,” Mises wrote that “in the long run such policies must result not only in slowing down or totally checking the further accumulation of capital, but also in the consumption of capital accumulated in previous days. They would not only arrest further progress toward more material prosperity, but even reverse the trend and bring about a tendency toward progressing poverty.”

Put more simply, by constricting the capacity of the rich to create jobs and buy things, one ends up creating more unemployment and ultimately punishing the poor and middle classes.

In a PBS documentary film about his life, The Power of Choice, the late Milton Friedman said, “The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.”

That is a lesson well-learned by policymakers in Washington and in Richmond.

Iranian Journalist Wins Milton Friedman Liberty Prize

The Cato Institute has announced that it has awarded Iranian journalist Akbar Ganji the 2010 Milton Friedman Liberty Prize.

From the news release that was distributed today:

Akbar Ganji, an Iranian writer and journalist who spent 6 years in a Tehran prison for advocating a secular democracy and exposing government involvement in the assassination of individuals who opposed Iran's theocratic regime, has been named the 2010 winner of the Cato Institute's Milton Friedman Prize for Advancing Liberty.

Ganji may be best known for a 1999 series of articles investigating the Chain Murders of Iran, which left five dissident intellectuals dead. Later published in the book, The Dungeon of Ghosts, his articles tied the killings to senior clerics and other officials in the Iran government, including former President Ali Akbar Hashemi Rafsanjani....

Ganji now lives in New York. His first book in English, The Road to Democracy in Iran, was published in April 2008. He was chosen to receive the award through a public, worldwide nomination process.

The award presentation will take place in Washington on May 13.

More details are available on the Cato Institute's web site.

Cato Awards Friedman Prize to Venezuelan Student

The Cato Institute has announced that this year's winner of the Milton Friedman Prize for Advancing Liberty is a 23-year-old student activist from Venezuela, Yon Goicoechea.

Cato's news release follows, in English and in Spanish.

Venezuelan Student Movement Leader Awarded
$500,000 Milton Friedman Liberty Prize

Washington, D.C. –The Cato Institute has announced that Yon Goicoechea, leader of the pro-democracy student movement in Venezuela that successfully prevented President Hugo Chávez’s regime from seizing broad dictatorial powers in December 2007, has been awarded the 2008 Milton Friedman Prize for Advancing Liberty.

A 23-year-old law student, Mr. Goicoechea plays a pivotal role in organizing and voicing opposition to the erosion of human and civil rights in his country. In his commitment to a modern Venezuela, Goicoechea emphasizes tolerance and the human right to seek prosperity.

Venezuela’s student movement emerged in May of 2007 in response to a government-ordered shutdown of the nation’s oldest private television station, RCTV. In the face of ongoing death threats and continual intimidation due to his prominent and vocal leadership, Mr. Goicoechea has been indispensible in organizing massive, peaceful student protest marches that have captured the world’s attention.

By December of 2007, the student movement was credited with defeating a proposed constitutional reform that would have concentrated unprecedented political and economic power in the hands of the government.

“Yon Goicoechea is making an extraordinary contribution to liberty,” said Edward Crane, President of the Cato Institute. “We hope the Friedman Prize will help further his non-violent advocacy for basic freedoms in an increasingly militaristic and anti-democratic Venezuela.”

Renowned Peruvian novelist Mario Vargas Llosa remarked, “Freedom and complacency are incompatible and this is what we are seeing now in countries like Venezuela where freedom is disappearing little by little, and this has produced a very healthy and idealistic reaction among young people. I think Yon Goicoechea is a symbol of this democratic reaction when freedom is threatened.”

Established in 2002 and presented every two years, the Milton Friedman Prize for Advancing Liberty is the leading international award for significant contributions to advancing individual liberty. The Nobel laureate economist Milton Friedman passed away in November of 2006.

The Milton Friedman Prize for Advancing Liberty's Biennial Dinner and award presentation will be held at the Waldorf-Astoria in New York City on May 15, 2008.

Yon Goicoechea is a fifth year law student at Universidad Católica Andrés Bello. He was chosen to receive the award from a public, worldwide nomination process. The members of the 2008 International Selection Committee are:

• Kakha Bendukidze – Head of the Chancellery, Republic of Georgia
• Edward H. Crane – President, Cato Institute
• Francisco Gil Díaz – Former Minister of Finance, Mexico
• Rose D. Friedman – Co-Founder, Milton and Rose D. Friedman Foundation for School Choice
• Karen Horn – Director, Berlin Office, Institut der deutschen Wirtschaft (Germany)
• Charles G. Koch – Chairman and CEO, Koch Industries Inc.
• Andrew Mwenda – Research Fellow, Advocates Coalition for Development (Uganda)
• Mary Anastasia O’Grady – Member, Editorial Board, The Wall Street Journal
• Fareed Zakaria – Editor, Newsweek International

24 de abril de 2008
Líder estudiantil venezolano recibe Premio Milton Friedman por la Libertad

Yon Goicoechea gana premio de $500.000 en efectivo

Washington, DC — El Cato Institute ha anunciado que Yon Goicoechea, líder del movimiento estudiantil venezolano que derrotó la reforma constitucional que le habría otorgado al presidente Hugo Chávez amplios poderes dictatoriales, es el ganador del Premio Milton Friedman por la Libertad 2008.

Goicoechea, un estudiante de 23 años, juega un papel decisivo en la oposición a la erosión de los derechos humanos y civiles en su país. En su compromiso por una Venezuela moderna, Goicoechea enfatiza la tolerancia y el derecho de las personas a aspirar a la prosperidad.

El Movimiento Estudiantil de Venezuela nació en mayo del 2007 en respuesta a la clausura gubernamental de la estación de televisión privada más antigua del país, RCTV. Enfrentando amenazas de muerte e intimidación continua por su destacado liderazgo, Goicochea jugó un papel decisivo en la organización de marchas pacíficas de protesta que capturaron la atención mundial.

En diciembre del 2007, el Movimiento Estudiantil es reconocido por la derrota de una propuesta de reforma constitucional que habría concentrado en las manos del gobierno un poder político y económico sin precedentes.

“Yon Goicoechea realiza una contribución extraordinaria por la libertad,” dice Edward Crane, presidente del Cato Institute. “Esperamos que el Premio Friedman le ayude a continuar su campaña no violenta por las libertades básicas en una Venezuela cada vez más militarista y menos democrática”.

El célebre novelista peruano Mario Vargas Llosa declaró: “La libertad y la indiferencia son incompatibles y eso es lo que estamos viendo en países como Venezuela donde la libertad está desapareciendo poco a poco, y eso ha producido una reacción idealista muy sana entre la gente joven. Pienso que Yon Goicoechea es un símbolo de esta reacción democrática cuando la libertad está siendo amenazada”.

Establecido en el 2002 y otorgado cada dos años, el Premio Milton Friedman por la Libertad es el premio internacional más destacado por contribuciones significativas al avance de la libertad individual. Milton Friedman, premio Nóbel en economía, falleció en noviembre del 2006.

La cena bienal del Premio Milton Friedman por la Libertad y la presentación del premio se realizará en el Hotel Waldorf-Astoria de la Ciudad de Nueva York el 15 de mayo del 2008.

Yon Goicoechea es un estudiante de Derecho en la Universidad Católica Andrés Bello. Fue escogido para recibir el premio a través de un proceso mundial de nominación. Los miembros del Comité de Selección Internacional son los siguientes:

• Kakha Bendukidze – Jefe de Gabinete, República de Georgia
• Edward H. Crane – Presidente, Cato Institute
• Francisco Gil Díaz – Ex Ministro de Hacienda, México
• Rose D. Friedman – Cofundadora, Milton and Rose D. Friedman Foundation for School Choice
• Karen Horn – Directora, Oficina Berlín, Institut der deutschen Wirtschaft (Alemania)
• Charles G. Koch – Presidente y CEO, Koch Industries, Inc.
• Andrew Mwenda – Académico de Investigación, Advocates Coalition for Development (Uganda)
• Mary Anastasia O’Grady – Miembro del Consejo Editorial, The Wall Street Journal
• Fareed Zakaria – Editor, Newsweek International

Acerca del Cato Institute

El Cato Institute fue fundado en 1977 como una fundación sin fines de lucro para la investigación de políticas públicas, y su sede se encuentra en Washington, D.C. El Instituto busca ampliar los parámetros de la discusión de políticas públicas para promover alrededor del mundo alternativas que sean consistentes con los principios de libertad individual, gobierno limitado, mercados libres y paz.

Is 'Income Inequality' a Legitimate Worry?

In his 1996 book, Hidden Order: The Economics of Everyday Life, polymath economist David Friedman wrote:

When a psychiatrist wants to get his audience’s attention, he talks about sex. Economists talk about the income distribution. In both cases the audience’s interest is prurient (what are other people doing?), puritanical (that they shouldn’t be?), and personal (how am I doing?). In both, there is the thrill of violating taboo; although sex is gradually becoming an accepted topic of conversation, asking how much money someone makes is still beyond the pale (p. 195).

Though asking about someone’s income is still not permitted in polite conversation, it is not forbidden in political discourse. So it should come as no surprise that congressional Democrats have made income distribution the centerpiece of their legislative program in the early days of their new majority.

Both the House and the Senate have passed minimum wage legislation, which is one way to redistribute income. (It is also a way to deny employment to poor minority youth, but that is a column for another day.)

Under the leadership of Senator Charles Schumer (D-New York), the Joint Economic Committee sponsored a hearing about income inequality in which the “bad guys” are corporate executives with generous pay packages made up of salaries, bonuses, and stock options, and the “good guys” are federal legislators claiming to look out for the poor and middle class.

The Washington Post reported on February 1, referring to testimony from Princeton University economist Alan Blinder,

"The basic story is very clear," Blinder said. "Inequality was mostly falling for 30 or 35 years or so until the late 1970s and has been mostly rising since then." He offered a vivid example: In 1979, the average taxpayer in the top one-tenth of 1 percent earned about as much as 44 average taxpayers in the bottom half. In 2001, the rich taxpayer earned as much as nearly 160 less affluent people.

Is “income inequality” something that should worry us? Even President Bush seems concerned, telling a Wall Street audience on January 31 that "income inequality is real -- it's been rising for more than 25 years” – though the larger thrust of his remarks were about how strong the U.S. economy is.

George Mason University economist Tyler Cowen put the question in perspective in a recent article for the New York Times:

What matters most is how well people are doing in absolute terms. We should continue to improve opportunities for lower-income people, but inequality as a major and chronic American problem has been overstated.

Fears about income inequality stem from a pre-modern understanding of economics, in which because some people “have,” others “have not.” In the pre-industrial, pre-capitalist world, this was sometimes true. If Midas had a lot of gold, it meant he was taking it from his subjects, who had no gold. (He and other ancient rulers used force to pry the gold from the hands of people who had genuinely earned it, through slavery and confiscation.)

But the fabled Midas hoarded his gold; he neither spent it nor invested it. The “affluent people” of Alan Blinder’s illustration both spend and invest their earned incomes. They don’t hide it under their mattresses. As a consequence, they create products that fulfill our needs and wants, hire workers, and make other people wealthy in the process – or at least more wealthy than they would have been in the absence of spending and investment.

In his influential treatise, Human Action, Austrian economist Ludwig von Mises wrote:

The inequality of incomes and wealth is an inherent feature of the market economy. Its elimination would entirely destroy the market economy.

What those people who ask for equality have in mind is always an increase in their own power to consume. In endorsing the principle of equality as a political postulate nobody wants to share his own income with those who have less. When the American wage earner refers to equality, he means that the dividends of the stockholders should be given to him. He does not suggest a curtailment of his own income for the benefit of those 95 per cent of the earth’s population whose income is lower than his (third revised edition, p. 840)

In other words, “more wealth for me, but not for thee” is the principle at play.

Redistributing unequally distributed wealth would require one of two things:

One option is passing laws that forbid businesses from paying their employees – including high-level management, rock stars, baseball players, and Oscar-winning actors and actresses – what they (the businesses) and the market think they are worth. That is, set legal ceilings on earnings.

The other option is to establish a system of confiscatory taxation that would take earnings from the person who earned it, in order to bring their income beneath an arbitrary ceiling, and give it to the government, which in turn will spend it on goods and services provided by other rich individuals and the companies they own. That is, rob Peter to pay Paul.

Commenting on the “economic consequences of confiscatory policies,” Mises wrote that

in the long run such policies must result not only in slowing down or totally checking the further accumulation of capital, but also in the consumption of capital accumulated in previous days. They would not only arrest further progress toward more material prosperity, but even reverse the trend and bring about a tendency toward progressing poverty (Human Action, third revised edition, p. 844).

Put more simply, by constricting the capacity of the affluent to create jobs and buy things, one ends up creating more unemployment and ultimately punishing the poor and middle classes.

In the recent PBS documentary film about his life, The Power of Choice, the late Milton Friedman said, “The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.”

That is a lesson well-learned by policymakers on Capitol Hill and at the other end of Pennsylvania Avenue.

Congress Honors Friedman

It was little noted -- except as a passing snigger in a story syndicated by the St. Louis Post-Dispatch -- but the U.S. House of Representatives last week passed a resolution honoring the life and work of Milton Friedman, who died last month at the age of 94.

Introduced by Representative Cliff Stearns (R-Florida), the resolution had 55 cosponsors and passed on a voice vote on December 6. As a non-binding resolution, it was not conveyed to the Senate and will not require the President's signature.

One of the cosponsors, Scott Garrett of New Jersey, said in a news release from his congressional office:

“Millions all over the world have benefited from this dedicated man’s work. I am pleased to introduce this bill with my colleague, Cliff Stearns of Florida, honoring a noble life,” said Garrett. “I will continue to work to further the effort he began: expanding people’s liberty and improving their opportunities to live out their dreams for a better life.”

The resolution, designated H. Res. 1089, states in part:

Whereas Doctor Milton Friedman is widely regarded as the leader of the Chicago School of economics, and the developer of the theory of monetarism that stresses the central importance of the quantity of money as an instrument of government policy and as a determinant of business cycles and inflation;

Whereas Doctor Friedman's writings and ideas have influenced Presidents, other world leaders, entrepreneurs, and students of economics, and he gave himself generously to public service as an economic adviser to Senator Barry Goldwater's campaign for the presidency in 1964, Richard Nixon's presidential campaign in 1968, the Nixon Administration, Ronald Reagan's 1980 presidential campaign, and the Reagan Administration as a member of President Reagan's Economic Policy Advisory Board;

Whereas Doctor Friedman is a 1976 Nobel Laureate economist and received the John Bates Clark Medal in 1951 honoring the top economists under the age of forty, the Grand Cordon of the First Class Order of the Sacred Treasure by the Japanese government in 1986, the Presidential Medal of Freedom in 1988, the National Medal of Science in 1988, and honorary degrees from universities in the United States, Japan, Israel, and Guatemala;

Whereas Doctor Friedman's ideas were the model for the free market reforms undertaken in eastern European countries as they emerged from communist domination in the early 1990s, helping extend the blessings of prosperity to millions who had long been denied them;

Whereas Doctor Friedman was a prolific producer of both scholarly and popular articles, essays, books, and broadcast media, including the books Capitalism and Freedom and Free to Choose, tri-weekly columns for Newsweek, commentaries in the Wall Street Journal, and two multi-part Public Broadcasting Service television series;

Whereas Doctor Friedman was one of the world's foremost champions of liberty, not just in economics but in all respects;

Whereas Doctor Friedman will be remembered both as one of the most influential economists in history and as one of the twentieth century's greatest heroes of freedom...

It concludes:

Resolved, That the House of Representatives, on the occasion of the death of Doctor Milton Friedman--

(1) mourns Doctor Friedman's passing and expresses its deepest condolences to his family, including his widow Rose Friedman, who is herself an accomplished economist and was instrumental in co-authoring some of his major works; and

(2) honors Doctor Friedman's lifetime of achievements and recognizes his outstanding contributions to freedom, the study of economics, the United States of America, and the world.

One must only hope that the Members of Congress who voted for this resolution actually understand what Milton Friedman said and what principles he propounded. (At least three of the H. Res. 1089's cosponsors -- Jeff Flake, Ron Paul, and Dana Rohrabacher -- surely do understand.)

Looking at this resolution somehow brought to mind an essay written by former Vice President Dan Quayle when he was in his first term as a member of the House of Representatives. It appears in a slim volume published in 1979 by Hillsdale College as Volume 6 of The Ludwig von Mises Lecture Series, entitled Champions of Freedom. (That volume seems to be out of print, but Volume 33 in the series, published in January 2006, is available at Amazon.com.) As a historical note, the other contributors to that volume were former Treasury Secretary William E. Simon, former CIA director George Bush, and economists Benjamin Rogge and Alan Reynolds.

In his own essay, "Von Mises Looks at Congress," Quayle quoted the distinguished Austrian economist as saying:

As Professor von Mises proclaimed, "The idea that political freedom can be preserved in the absence of economic freedom, and vice versa, is an illusion. Political freedom is a corollary of economic freedom. It is no accident that the age of capitalism became also the age of government by the people. If individuals are not free to buy and sell on the market, they turn into virtual slaves dependent on the good graces of the omnipotent government, whatever the wording of the Constitution may be" (p. 4).

A few pages later, Quayle offers some observations in his own words. Keep in mind he was writing in the dark days of stagflation and the Carter administration; Ronald Reagan's election was still more a year in the future. Then-Congressman Quayle noted at the time:

We must reassert the capitalist system. We have drifted -- and what we have now is not capitalism, but a strange perversion in which the government can and does step in and dictate the rules of the game. Business must always obey. Under these circumstances, business is never free to compete. It must take into account during every business transaction the unknown factor of government interference and regulation. Business cannot plan for the future when a supply of capital can be so threatened by restrictive tax law changes, or when the profits needed to survive can be curtailed at any time by wage and price controls (p. 9).

If anyone wants to see how things have not changed much in the nearly three decades since Quayle was writing, take a look at this front page story from Sunday's Washington Post, which demonstrates how powerful business interests can persuade Congress to punish competitors through regulation, subsidies, and coercion: "Dairy Industry Crushed Innovator Who Bested Price-Control System." (That this sad episode occurred during the Republicans' control of Congress provides little hope or consolation for the future under the Democrats -- or the distant future under the Republicans again.)

Anyway, Quayle went on to say:

We do not have an easy road to travel. Von Mises understood what we must now understand if our economy is to make the changes necessary for its survival. Economic freedom is not just the ability of businesses to operate at will -- it is the absolute freedom of the individual to make decisions for himself regarding the conduct of his own life. It is the freedom to own property, to enter into business transactions, to grow and to prosper. We must learn again -- and the whole world with us -- that economic freedom is the indispensable prerequisite for individual political freedom. You cannot have one without the other (pp. 9-10).

Milton Friedman couldn't have said it better himself.

I have always maintained that Vice President Dan Quayle was severely underestimated. He was the true champion of freedom (to coin a phrase) in the Bush 41 administration, standing up for classical liberal principles when others around the Cabinet table failed to do so. He was (and is) also highly intelligent. Unfortunately, his treatment by the press and by late-night comics deep-sixed any future he might have had in political leadership. Our country is poorer for that.

Now a lot has changed in the 27-plus years since Quayle lectured in memory of Ludwig von Mises. The Soviet Empire collapsed and countries like Estonia are among the freest in the world. China -- Red China, that is -- is opening up its banking industry to foreign investors. The United States and Vietnam have regularized trade relations. Fidel Castro is on his deathbed (Santa, there's one thing you can do for Cuban boys and girls this Christmas...)

And, in the United States, we still live with the legacy of the Reagan years. Regulation has been (somewhat) reduced. Tax rates are (somewhat) lower. Productivity and employment are at record high rates. The cost of living is lower than ever, the middle class has expanded, and Americans enjoy more luxury products at lower prices than at any time in history. But that doesn't mean we should be complacent. The lessons taught by Friedman, von Mises, and even Quayle still need to be heard and heeded.

Will members of the 110th Congress follow the advice of Dan Quayle during the 96th Congress?

Milton Friedman and the Pencil

In Free to Choose, the influential 1980 PBS series written and hosted by Milton Friedman and his economist wife, Rose, there is a short (less than three minutes) sequence that has become legendary. In it, Friedman explains that no single person can manufacture something as simple as a pencil:



When I saw this video on YouTube earlier today, it struck me as resonant of Leonard Read's famous essay, "I, Pencil." Read was the founder of the Foundation for Economic Education (FEE), which was the first free-market think-tank in the United States -- preceding the creation of the Mont Pelerin Society, American Enterprise Institute, Hoover Institution, Heritage Foundation, Cato Institute, and Future of Freedom Foundation.

On FEE's web site, Dr. Friedman gives credit to Read and "I, Pencil" for inspiring that segment from Free to Choose. He wrote in 1996:

Leonard Read's delightful story, “I, Pencil,” has become a classic, and deservedly so. I know of no other piece of literature that so succinctly, persuasively, and effectively illustrates the meaning of both Adam Smith's invisible hand—the possibility of cooperation without coercion—and Friedrich Hayek's emphasis on the importance of dispersed knowledge and the role of the price system in communicating information that “will make the individuals do the desirable things without anyone having to tell them what to do.”

We used Leonard's story in our television show, “Free to Choose,” and in the accompanying book of the same title to illustrate “the power of the market” (the title of both the first segment of the TV show and of chapter one of the book). We summarized the story and then went on to say:

“None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some among them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted—goods and services we produced in order to get the pencil we wanted. Every time we go to the store and buy a pencil, we are exchanging a little bit of our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil.

“It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, may even hate one another—yet none of these differences prevented them from cooperating to produce a pencil. How did it happen? Adam Smith gave us the answer two hundred years ago.”

“I, Pencil” is a typical Leonard Read product: imaginative, simple yet subtle, breathing the love of freedom that imbued everything Leonard wrote or did. As in the rest of his work, he was not trying to tell people what to do or how to conduct themselves. He was simply trying to enhance individuals' understanding of themselves and of the system they live in.

That was his basic credo and one that he stuck to consistently during his long period of service to the public—not public service in the sense of government service. Whatever the pressure, he stuck to his guns, refusing to compromise his principles. That was why he was so effective in keeping alive, in the early days, and then spreading the basic idea that human freedom required private property, free competition, and severely limited government.

If "I, Pencil" is not required reading in high school economics classes, then Milton Friedman's 3-minute summary of it should be shown to students in its place. In just a few words, he explains how and why the worldwide market works, why cooperation is better than autarky, and why freedom is better than centralized planning.

Milton Friedman, R.I.P.

Nobel-prize winning economist Milton Friedman is dead at age 94, various news outlets are reporting.

Friedman was a great intellect and great innovator. A monetarist who taught at the University of Chicago from 1946 to 1976, he also worked for the Federal Reserve Bank in St. Louis, where he did much of his seminal research on monetary policy. Friedman invented tax withholding (a temporary solution to the problem of the government's lack of cash flow during the Second World War), which he regretted years later. He also was the first to suggest ideas like vouchers for housing and education, and that the solution to overbooked airline flights should be to ask for volunteers who would receive vouchers for later travel in return for taking a later flight.

With his wife, Rose Director Friedman, he was the author of Free to Choose, a best-selling book that became a television documentary and set the economic tone for the 1980s. He is also the author of the groundbreaking Capitalism and Freedom (1960), which introduced the general public to classical liberal thought.

This is now breaking news, but I expect it to be a major topic of conversation in the libertarian blogosphere in the hours and days to come.

Updates: Ed Crane, president of the Cato Institute, issued this statement today:

"Here's a guy who won the Nobel Prize in economics for his work in monetary theory and he was a great Chicagoan, a great empiricist and theoretician of economics. But ultimately, what Milton believed in was human liberty and he took great joy in trying to promote that concept... Milton would say, 'Maybe I did well and maybe I led the battle but nobody ever said we were going to win this thing at any point in time. Eternal vigilance is required and there have to be people who step up to the plate, who believe in liberty and who are willing to fight for it.'"

The New York Times offers this extensive obituary. A Reuters story in the Washington Post quotes California Governor Arnold Schwarzenegger:

"When I was first exposed to his powerful writings about money, free markets and individual freedom, it was like getting hit by a thunderbolt. I wound up giving copies of his books and 'Free to Choose' videos to hundreds of my friends and acquaintances."

Milton Friedman: End Marijuana Prohibition

More than 500 economists from colleges and universities across the United States have signed on to a report calling for the end of marijuana prohibition, and Nobel laureate Milton Friedman, still active at 92 years of age, has put his name at the top of the list.

The report, called "The Budgetary Implications of Marijuana Prohibition," is written by Harvard University economist Jeffrey Miron. In an accompanying "open letter" addressed to President George W. Bush, members of Congress, governors, and state legislators, the 500+ economists state:

We, the undersigned, call your attention to the attached report by Professor Jeffrey A. Miron, The Budgetary Implications of Marijuana Prohibition. The report shows that marijuana legalization -- replacing prohibition with a system of taxation and regulation -- would save $7.7 billion per year in state and federal expenditures on prohibition enforcement and produce tax revenues of at least $2.4 billion annually if marijuana were taxed like most consumer goods. If, however, marijuana were taxed similarly to alcohol or tobacco, it might generate as much as $6.2 billion annually.

The fact that marijuana prohibition has these budgetary impacts does not by itself mean prohibition is bad policy. Existing evidence, however, suggests prohibition has minimal benefits and may itself cause substantial harm.

We therefore urge the country to commence an open and honest debate about marijuana prohibition. We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods. At a minimum, this debate will force advocates of current policy to show that prohibition has benefits sufficient to justify the cost to taxpayers, foregone tax revenues, and numerous ancillary consequences that result from marijuana prohibition.

The economists signing the letter include, in addition to Friedman (author of Capitalism and Freedom and Free to Choose [with his wife, Rose]), syndicated columnist Walter Williams, who teaches at George Mason University; Howard Baetjer of Towson University; Emily Blanchard of the University of Virginia; John Cuddington and Mark Huggett of Georgetown University; Robin Hanson, Daniel Klein, Joseph Reid, Alex Tabarrok, and Gordon Tullock of George Mason University; Oliver Hart and David Hemenway of Harvard University; John Mullen of SUNY-Potsdam; Ivan Pongracic of Hillsdale College; Ken Schoolland of Hawaii Pacific University; Mohammed Shaaf of the University of Central Oklahoma; Xuejuan Su of the University of Alabama; and Joseph Zoric of the Franciscan University of Steubenville.

"There is no logical basis for the prohibition of marijuana," Friedman told Forbes.com correspondent Quentin Hardy, adding:

"$7.7 billion is a lot of money, but that is one of the lesser evils. Our failure to successfully enforce these laws is responsible for the deaths of thousands of people in Colombia. I haven't even included the harm to young people. It's absolutely disgraceful to think of picking up a 22-year-old for smoking pot. More disgraceful is the denial of marijuana for medical purposes."

Hardy goes on to report that

Friedman's advocacy on the issue is limited--the nonagenarian prefers to write these days on the need for school choice, calling U.S. literacy levels "absolutely criminal...only sustained because of the power of the teachers' unions." Yet his thinking on legalizing drugs extends well past any MPP debate or the kind of liberalization favored by most advocates.

"I've long been in favor of legalizing all drugs," he says, but not because of the standard libertarian arguments for unrestricted personal freedom. "Look at the factual consequences: The harm done and the corruption created by these laws...the costs are one of the lesser evils."

Not that a man of his years expects reason to triumph. Any added revenues from taxing legal marijuana would almost certainly be more than spent, by this or any other Congress.

"Deficits are the only thing that keeps this Congress from spending more" says Friedman. "Republicans are no different from Democrats. Spending is the easiest way to buy votes."

The "MPP" referred to by Hardy is the Marijuana Policy Project, which sponsored the Miron report and gathered the signatures of hundreds of economists to support its findings.

It was probably not so hard for MPP to gather those signatures. Economists, who understand how government interference with the free market in any good or service will create unintended consequences, have also long understood the economics of prohibition.

In fact, there is a book by that title -- The Economics of Prohibition -- by Mark Thornton. In its introduction, he writes:

At the core of this book ... is an economic theory of prohibition, which defines prohibition as a government decree against the exchange of a good or service. Recent studies of decrees against cocaine, heroin, and marijuana suggest that these prohibitions impose heavy costs and are extremely difficult to enforce. Beyond such costs and enforcement difficulties, however, I argue that effective prohibition is impossible to achieve, because the unintended consequences of prohibition itself preclude any benefits.

The only long-term solution to the problems engendered by the "misuse" of a product, I maintain, is legalization of that product. With legalization, as opposed to decriminalization and other forms of government interventionism, the government treats the misused product or service as if it were soybeans, computer chips, or pencils. The market is controlled by self-interest and normal legal constraints, such as product liability law.

After a brief summary of the history of prohibition movements in the United States (which he enlarges later in the book), Thornton, who at the time of publication (1992) was an assistant professor in the department of economics at Auburn University, notes that:

History also supports the finding that prohibition is impossible to achieve in the economic sense. Legislatures do enact prohibitions and establish penalties and enforcement bureaus. The actions of these bureaus to enforce prohibition decrees have an effect, and when a prohibition survives long enough to be enforced it is successful in a political sense. I argue, however, that prohibitions have no socially desirable effect. [emphasis in original]

Thornton is careful to distinguish prohibitions of goods and services from prohibitions of rights-violating crimes, such as rape or murder. He goes on to explain precisely how this distinction should be addressed:

Of course prohibition should not be evaluated against a higher standard than other laws. Murder is against the law, but not all murderers are apprehended, convicted, and punished. Likewise, to expect complete or perfect prohibition is unrealistic. Rather, prohibition will be measured against its public-spirited intentions, that is, to reduce consumption of a good in order indirectly to reduce social ills (such as crime, destruction of free will, drug-related deaths) and to promote social goals (family life, democracy, health, and economic development).

To the extent that prohibitions result in increased prices, they produce increased crime and political corruption. Higher prices for a prohibited product also result in the substitution of related products and the innovation of more dangerous substitutes. Prohibited products tend to be more dangerous than legal substitutes[,] in many respects[ ] the result of prohibition, not [of] the product itself. Therefore, to assume that more severe penalties or increased enforcement will result in the substitution of legal for prohibited products is to make an invalid conclusion. Prohibitions on drugs cause potency to increase. Therefore, the assumption that higher prices achieve the goals of prohibition is unfounded. Given all such considerations, the case for prohibition remains unfounded even if the indirect connection between the consumption of certain products and social ills does exist.

At this point, Thornton puts his larger argument in the context of classical and Austrian economics, and notes how prohibition is a symptom of "rent-seeking," which is a key feature of understanding what we know as the public choice school of economics.

The attempt to understand all human action (as opposed to just commercial activity) as rational represents a revolution in thought. Applied to policy decisions, this revolution is called public-choice economics, and from this perspective it is unacceptable to present prohibition as an ignorant, irrational, or impossible social policy.

Economists now suspect that any net losses to society produced by government policies are the result of rent seeking rather than ignorance or irrationality on the part of policymakers. Rent seeking is a search for privilege and personal gain through the political process. Rent seeking is distinguished from corruption in that rent seeking is legal and corruption is not.

History reveals that prohibitions are indeed classic examples of the co-opting of public -spirited intentions by rent seekers within the political process, thereby explaining the existence of what at first to be irrational policies.

Thornton ends his introductory remarks with what he calls a warning:

The markets in which prohibition has been deployed, such as gambling, intoxicants, and prostitution, have existed for a long time and will continue long after I and my book turn to dust. Prostitution is the world's oldest profession; people have been using intoxicants for as long as history can record; and men and women are risk-taking, fun-loving creatures. Most human beings live for leisure, not for labor. Labor is merely a means to an end.

No matter how deplorable the above activities appear to some, they are "leisure" to others. The only consistently successful method for raising the standards of leisure to higher levels is to allow economic development to take place. Individuals who use certain products or activities to self-destruct have problems far worse than the visible ones. Prohibition of these goods or services will have little impact in such cases.

It is also important to recognize that the problems in these markets (disease, fraud, broken families, and so on) are not the result of a lack of government involvement. Indeed, these markets have been historically characterized by extensive government involvement prior to the enactment of prohibition.

It is a sad fact of contemporary politics that the views of these experts -- more than 500 economists, led by a Nobel prize winner and, no doubt, including future Nobel laureates in their midst -- will be mostly ignored by elected and appointed government officials. After all, Thornton's 1992 book, The Economics of Prohibition, did not result in the scales falling from their eyes and an end to drug prohibition. We still live with its ill winds 13 years later.

Unbending and unlistening officials like Drug Czar John Walters, for instance, will refuse even to read the Miron report. Walters -- the closest thing America has to Chancellor Palpatine -- recently expressed support for more invasive, intrusive measures to accustom young people to a world in which their human rights are routinely violated. In a guest column for The State (Columbia, S.C.) on May 25, Walters wrote:

Nationally, we are now providing funding for the increasing number of public schools that have chosen to implement random student drug testing to detect and deter use among students. Random student drug testing by law must not be punitive, and the results are confidential. School-based testing programs give young people a reprieve from the forces of negative peer pressure and arm them with an excuse to say “no” to drugs.

As long as wise and courageous men and women like Milton Friedman continue to speak out, and as long as organizations like the Marijuana Policy Project continue to insist on truth-seeking, and as long as individual citizens like you and I remain vigilant, Walters and his ilk will not be able to command a monopoly on information and will not be able to fit their yokes on the American people.