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Economics


Friedman under attack
By PAUL WALDIE ,  From Wednesday's Globe and Mail

The global financial crisis has battered the image of several icons of free enterprise and now one of the biggest proponents of laissez-faire economics is under attack – Milton Friedman.

More than 100 faculty at the University of Chicago, where Mr. Friedman won the 1976 Nobel Prize in economics, are trying to stop the university from putting Mr. Friedman's name on a $200-million (U.S.) research centre. The opponents argue that the Milton Friedman Institute would compromise the academic integrity of the university and serve as a monument to Mr. Friedman's world outlook, which they say has largely been discredited.

“He was the darling of the Reaganite revolution and the American right,” said Bruce Lincoln, a professor of the history of religions who is leading the charge against the institute. “He was a scathing critic of the state playing a role of any importance.” If the institute goes ahead, Prof. Lincoln said it will attract “a certain kind of donor who is a great cheerleader for Friedman's politics,” and that donor will try to “steer research in a direction that's going to advance the cause.” He said the recent turmoil has bolstered opponents. “It's now a whole lot more obvious to everyone that [Mr. Friedman] got us into some problems and that he didn't have the final solution to everything that makes an economy work.”

Mr. Friedman, who died in 2006, championed minimal regulation and free markets. His approach, dubbed the “Chicago School,” influenced governments around the world.

The institute, which will focus on economic research, has been in the works for more than a year and was officially unveiled last May. A few weeks later, about 100 professors signed a letter calling on the university to reconsider the project. Since then, 172 faculty along with more than 1,000 students and alumni have signed a petition opposing the institute.

Supporters say it's unfair to use today's economic troubles to tarnish Mr. Friedman or scrap the project. They have organized a counterpetition and set up websites, including Friedmanfacts.com, to challenge opponents.

There is a current of thought “that thinks Milton Friedman was a terrible guy,” said John Cochrane, a finance professor who backs the institute. “And, there's another current that thinks he was in part responsible for ending inflation, giving us 20 years of growth and lifting six billion people out of poverty.”

Prof. Cochrane said it would be a “singularly bad idea” to take Mr. Friedman's name off the institute. “I don't think we have anything to be ashamed of with Milton Friedman. I think we have every right to be proud of him,” he said.

He added that the current financial turmoil has nothing to do with Mr. Friedman's theories.

“Lots of people seize on that and say, ‘Oh the [stock] market went down, capitalism is dead,' ” he said. “There were crashes in 1907 and 1929 before Milton Friedman ever started writing anything … I know it's politically convenient for a lot of people who have a lot of plans for government spending to say, ‘This proves the free market was wrong all along.' ”

Both sides voiced their views last week during a special meeting of 1,200 faculty called the Senate.

Prof. Lincoln said the administration refused to allow a vote during the meeting. He said opponents are willing to discuss changes to the institute, but they will also be pushing for another meeting, with a vote.

 

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