Uncle Milt Speaks To Us One Last Time

The Wall Street Journal conducted an email interview with Milton Friedman in July, 2006. The interview was never published, presumably because Friedman was ailing, although they don’t actually say why. It’s available on Opinion Journal, no subscription needed: Milton Friedman @ Rest.

I pulled out a few quotes I found interesting. Friedman was a critical thinker well worth listening to, even when he didn’t have all of the answers. He trusted people and the marketplace to come up with the answers, and he proved right so many times that most modern economics now focuses on improving his answers in the area of monetary policy and deregulation.

What is the biggest risk to the world economy: America’s deficits? Energy insecurity? Environment? Terrorism? None of the above?

Friedman: Islamofascism, with terrorism as its weapon.

If we are truly free market advocates, we need to look at how to deal with this issue. Simply wishing it away while playing the isolationist is not going to do the trick.

What are your thoughts on the low U.S. savings rate?

Friedman: The right saving rate is whatever satisfies the tastes and preferences of the public in a free and unbiased capital market. Market can adjust to any rate. This is a very complicated question. Present estimates probably understate actual savings because of treatment of capital gains. In any event, the present situation does not raise any problems for the economy.

Great answer. I highlighted the portion in bold that matters. Big government meddlers, go away.

India — how do you assess its prospects?

Friedman: Fifty years ago, as a consultant to the Indian minister of finance, I wrote a memo in which I said that India had a great potential but was stagnating because of collectivist economic policies. India has finally started to disband those collectivist policies and is reaping its reward. If they can continue dismantling the collectivist policies, their prospects are very bright.

India is yet another example of the gains to be had from liberalizing and adopting free market and personal liberty as the modus operandi.

Any thoughts on a China versus India comparison?

Friedman: Yes. Note the contrast. China has maintained political and human collectivism while gradually freeing the economic market. This has so far been very successful but is heading for a clash, since economic freedom and political collectivism are not compatible. India maintained political democracy while running a collectivist economy. It is now unwinding the latter, which will strengthen freedom of all kinds, so in that respect it is in a better position than China.

Every once in a while I feel compelled to pipe up and say China is not the threat everyone claims it is. The clash between political and economic systems is going to make China ineffectual for years. And it’s coming soon. Either that, or they liberalize politically, become a true powerhouse, but without the collectivist system that is so threatening to Rule of Law in their own countries and others.

Thanks for this last taste of you!