Free to Choose: A Personal Statement

35+ years old and still up-to-date. It is interesting to read older Economics books like "Free to Choose" to see how accurate they have been in predicting outcomes of policy. It is easy to write a book with hindsight as we often see today by "experts" blaming this or that well after the fact. Milton Freeman had incredible foresight. Not because he could predict the future but because he understood Economics so well that he could simply predict outcomes of policy based on an asymmetry of economic knowledge that very few other Economists, let alone policy-makers, have. I have read this book a couple of times over the years and enjoyed his PBS series by the same name, that first aired in 1980. Also a more up-to-date version by Swedish Historian Johan Norberg's "Free or Equal" - Free to Choose 30 years after.

Anyone who thinks they can define economic isms in accordance to what is wrongly mentioned in the useless media rhetoric about Democratic socialism needs to read this book. When I was working towards my economics degree, we did not define democratic socialism as communism as stated by politicians and a certain demographic target group. I was under the impression, that socialism is when the government participates, not own or command the economy which is what communism is. As stated in this book socialism is when the government decides to participate in the market place assuming it is making it more efficient with wage and price controls. Usually found in utilities, cable, industries in the form of a govt regulatory body that works with industry to arrive at a perceived effient price point so as to allow all members of society to participate in the market place. When you complain about your cable bill, be thankful for the regulation already there, as your bill would be $1000 a month. Read the book and a enlighten yourself.

This book should be required reading in order to graduate from high school. Friedman cogently and clearly articulates why free-market capitalism has and will continue to do more for all humans than any other substitute economic program. While socialism has always led to a reduction in liberty and a squelching of innovation, free-markets allow individuals to produce and consume according to their own wants and needs. Besides providing competition that always drives down costs and improves quality, free-markets mean individuals, not the nanny state decide how they will live their lives.

People who criticize him miss one of his major points: free market is not perfect, but it is just a lot better than the alternative. In my ten years of teaching economics so far, I notice that without proper training, a lot people do not have a scientific framework in their analysis: they do not have a correct benchmark in their heads. A common mistake is to think that we should compare free market to the ideal world (utopia?). This book can save those from a life long of fallacies.

Below are key excerpts from the book that I found particularly insightful:1- "Economic freedom is an essential requisite for political freedom. By enabling people to cooperate with one another without coercion or central direction, it reduces the area over which political power is exercised. In addition, by dispersing power, the free market provides an offset to whatever concentration of political power may arise. The combination of economic and political power in the same hands is a sure recipe for tyranny."2- "The experience of recent years--slowing growth and declining productivity--raises a doubt whether private ingenuity can continue to overcome the deadening effects of government control if we continue to grant ever more power to government, to authorize a "new class" of civil servants to spend ever larger fractions of our income supposedly on our behalf. Sooner or later--and perhaps sooner than many of us expect--an ever bigger government would destroy both the prosperity that we owe to the free market and the human freedom proclaimed so eloquently in the Declaration of Independence."3- "Prices perform three functions in organizing economic activity: first, they transmit information; second, they provide an incentive to adopt those methods of production that are least costly and thereby use available resources for the most highly valued purposes; third, they determine who gets how much of the product - the distribution of income. These three functions are closely interrelated."4- "Our society is what we make it. We can shape our institutions. Physical and human characteristics limit the alternatives available to us. But none prevents us, if we will, from building a society that relies primarily on voluntary cooperation to organize both economic and other activity, a society that preserves and expands human freedom, that keeps government in its place, keeping it our servant and not letting it become our master."5- "The ballot box produces conformity without unanimity; the marketplace, unanimity without conformity. That is why it is desirable to use the ballot box, so far as possible, only for those decisions where conformity is essential."6- "Freedom cannot be absolute. We do live in an interdependent society. Some restrictions on our freedom are necessary to avoid other, still worse, restrictions. However, we have gone far beyond that point. The urgent need today is to eliminate restrictions, not add to them."7- "In one respect the System has remained completely consistent throughout. It blames all problems on external influences beyond its control and takes credit for any and all favorable occurrences. It thereby continues to promote the myth that the private economy is unstable, while its behavior continues to document the reality that government is today the major source of economic instability."8- "The waste is distressing, but it is the least of the evils of the paternalistic programs that have grown to such massive size. Their major evil is their effect on the fabric of our society. They weaken the family; reduce the incentive to work, save, and innovate; reduce the accumulation of capital; and limit our freedom. . These are the fundamental standards by which they should be judged."9- "A society that puts equality--in the sense of equality of outcome--ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests...Freedom means diversity but also mobility. It preserves the opportunity for today's disadvantaged to become tomorrow's privileged and, in the process. enables almost everyone, from top to bottom, to enjoy a fuller and richer life."10- "We believe that the growing role that government has played in financing and administering schooling has led not only to enormous waste of taxpayers' money but also to a far poorer educational system than would have developed had voluntary cooperation continued to play a larger role...We have tried in this chapter to outline a number of constructive suggestions...These proposals are visionary but they are not impracticable...We shall not achieve them at once. But insofar as we make progress toward them--or alternative programs directed at the same objective--we can strengthen the foundations of our freedom and give fuller meaning to equality of educational opportunity."11- "Insofar as the government has information not generally available about the merits or demerits of the items we ingest or the activities we engage in, let it give us the information. But let it leave us free to choose what chances we want to take with our own lives."12- "When unions get higher wages for their members by restricting entry into an occupation, those higher wages are at the expense of other workers who find their opportunities reduced. When government pays its employees higher wages, those higher wages are at the expense of the taxpayer. But when workers get higher wages and better working conditions through the free market, when they get raises by firms competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody's expense. They can only come from higher productivity, greater capital investment, more widely diffused skills."13- "Five simple truths embody most of what we know about inflation: 1. Inflation is a monetary phenomenon arising from a more rapid increase in the quantity of money than in output (though, of course, the reasons for the increase in money may be various) 2. In today's world government determines--or can determine -the quantity of money. 3. There is only one cure for inflation: a slower rate of increase in the quantity of money. 4. It takes time--measured in years, not months--for inflation to develop; it takes time for inflation to be cured. 5. Unpleasant side effects of the cure are unavoidable."14- "We have been misled by a false dichotomy: inflation or unemployment. That option is an illusion. The real option is only whether we have higher unemployment as a result of higher inflation or as a temporary side effect of curing inflation."15- "The two ideas of human freedom and economic freedom working together came to their greatest fruition in the United States. Those ideas are still very much with us. We are all of us imbued with them. They are part of the very fabric of our being. But we have been straying from them. We have been forgetting the basic h that the greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else. We have persuaded ourselves that it is safe to grant power, provided it is for good purposes."

A wonderful book written by two brilliant economists- Milton and Rose Friedman. May favorite chapters are Ch 3 - Anatomy of a Crises, in which Milton Friedman assigns blame for the "Great" Depression to where it rightly belongs - the neophyte and inept bureaucrats at the Federal Reserve. Another of my favorite chapters is Ch 5 where Professor Friedman defines what the words "We hold these truths to be self-evident, that all men are created equal,...." really mean. "Equality" as stated in the Declaration of Independence means: equality in the eyes of God, and assured equality of opportunity. Equality of outomes is not guaranteed but is left to the personal character, thrift and industry of each individual, as they recognize and respect the common bond of humanity and the inescapable law of service.

Friedman’s book written to highlight the wonders of free markets is an utopian world. The theoretical assumptions of the existence of an equilibrium for competitive markets relay on very sensitive assumptions that are easily broken in any market economy (see Arrow and Debreu (1954), Econometrica, for all the mathematical assumptions that are needed to reach Adam Smith’s invisible hand or the First Theorem of Welfare Economics. An unrealistic assumption on how initial endowment is distributed is key but not understood by Friedman, which is key in the mathematical proof of the invisible hand).The assumption on maximisation of profits by shareholders as a key principle for the power of the market is very fragile assumption on general equilibrium in addition with the initial endowment of individuals, something that Friedman hardly understood and underestimated (see Friedman’s interview on general equilibrium youtube). Its implications on inequality and climate change (e.g. externalities) are massive.A totally better approach and reading from someone who really understood economics in an objective way is The Limits of Organizations (1974) by Kenneth J. Arrow.

This book is not difficult to read and its arguments are practical sounding and convincing. Economics and economists seem to exist either side of a political divide or, at least, between those who are wholeheartedly capitalist and those who are not. Milton Friedman is unashamedly of the former persuasion and he makes the case well, but not without including a social dimension that many could do well to examine; that is, without wealth and wealth creation, there can be no welfare that does anybody any good; you've got to make the money before you can spend it - however it is that you choose to do so, which is a political question. Friedman makes this case well, but also is quite clear that the role of Government is necessary to help keep a balance between greed and need. As he sees it, Government performs an essential role, but it should not try to act like a wealth creator, simply because it is both inefficient and inexpert in this role. His arguments are difficult to counter and one soon realises that his argument is valid and, essentially, practical. We could all benefit, as a nation, if we had a better grasp of economics and this book could well be a standard by which we receive that education: excellent book!

A great book of its time and still an important read today.

After watching a Youtube clip of Friedman on the 4 ways to spend money I was intrigued by his arguments. this takes it a step further. As someone who has always been fairly economically illiterate I thought it was high time I confronted this 'deficit' in my wisdom.Simple ideas that mostly stand the test of time

Obviously a great book, especially for an entry level into free market thinking. If this book was mandatory to read in schools democracy would work :D Though you can get free audio tapes around the internet a lot of the time you will want to reread some pages, in which case a book works better.