Milton Friedman Was No Conservative

Milton Friedman: The Last Conservative, by Jennifer Burns, Farrar, Straus and Giroux, 592 pages, $35

As Jennifer Burns writes in her excellent new biography of the libertarian economist Milton Friedman, “Many aspects of our contemporary world that today seem commonplace have their origins in one of Friedman’s seemingly crazy ideas. If you’ve had taxes withheld from a paycheck, planned or postponed a foreign holiday due to the exchange rate, considered the military as a career, wondered if the Federal Reserve really knows what it’s doing, worked at or enrolled your child in a charter school, or gotten into an argument about the pros and cons of universal basic income, you’ve had a brush with Friedman.”

Burns, a Stanford University–based historian who also wrote a good biography of Ayn Rand, emphasizes the intellectual over the personal—rarely does her book seem interested in understanding Friedman the man as opposed to Friedman the mind. But Milton Friedman: The Last Conservative shines as an exploration of Friedman’s ideas and accomplishments.

Sharply intelligent, a great arguer, and inclined toward math, this son of Jewish immigrant New Jersey shopkeepers got his master’s degree in economics at the University of Chicago, where his destiny was shaped by his professors and fellow students (including his eventual wife and writing partner, Rose Director) and by the Chicago school of economics’ yen for applying price theory to as many aspects of life as possible. Burns detects a thread of Chicago price theory spun through Friedman’s lifework, which led him to craft “a dizzying array of policies with a consistent theme: setting prices free. This idea underlies everything, from Friedman’s support of school vouchers and his calls to abolish the draft to his insistence that governments stop controlling the price of their currencies.”

Burns guides the reader handily through Friedman’s New Deal and wartime years. She details some of his innovations in statistical analysis, and she relates one of the first times he raised fellow economists’ hackles by coming to overly libertarian conclusions (a paper that fingered the American Medical Association as a price-raising cartel). She also covers his role in helping the Treasury Department develop income tax withholding as an emergency measure for war financing—a temporary policy that, to Friedman’s regret, became permanent.

Burns is impressively effective for a noneconomist at explaining how “monetarism,” Friedman’s philosophy of how a central bank should behave, clashed with the Federal Reserve’s real-world practice and with economic orthodoxy over the last half of the 20th century. The core of monetarism was the belief that the supply of money, mediated by how often it changed hands, is the key factor in price levels—or, in slogan form, that “inflation is everywhere and always a monetary phenomenon.”

This led Friedman to believe it would be better if the Fed did not practice discretionary monetary policy at all, with the money supply simply growing a bit every year based on preset rules. While the Federal Reserve never embraced all of Friedman’s recommendations, Burns skillfully explains how his ideas did importantly shape the inflation-busting efforts of Fed Chair Paul Volcker in the early 1980s.

The tight connection between money supply