In the 1940s, Friedman had already established himself as an outstanding scholar in the area of economics.
With a Chicago School background, he understood the scientific nature of economics, insisting that any economic theory should be confirmed or refuted by empirical evidence.
Friedman’s monetary policy, which led to his winning of the Nobel Prize in 1976, may not be of the highest originality but few can deny the strong statistical support behind his model and how the model helps to deflate the myth of inflation: inflation does not favor employment and economic growth in the long run.
The Chicago professor’s positive analysis of economic phenomenon put him among the top in the field, but his larger contributions came from his active critiques of government policies and more importantly, his defiant, principled promotion of the market-oriented economy at a time when the “Big Government” philosophy was still very popular.
After the Wall Street disaster in 1929, the United States, Canada and the major European countries were pitched into the Great Depression.
British economist John Maynard Keynes, who died in 1946 at the age of 62, proposed increased government intervention and fiscal expenditure as a solution to the high unemployment rate of the time.
During such a difficult period, with restricted flow of capital and trade among countries, Keynes’ crisis management approach was understandable.
Unfortunately, Keynes made a serious mistake by generalizing his proposal as a regular economic principle. The Keynesian framework, being further developed by his followers, ended up as a “Big Government” philosophy that deviated from market-oriented principles.
Friedman helped popularize the phrase: “There’s no such thing as a free lunch,” defying the expectation generated by Keynesian ideas that inflation could be used to painlessly stimulate an economy.
In the early 1970s, countries that followed the Keynesian direction, including Britain and the United States, bore the cost of low economic growth and high unemployment from defying Friedman’s work.
Following those dark times, Friedman’s free-market philosophy emerged as a powerful alternative.
According to Friedman, individuals’ freedom of choice ought to be respected in a society.
The Keynesian “Big Government” approach was questionable: it simply reduced individual freedom.
Resources are best allocated through the pricing mechanism wherein individuals express their values through their decisions to commit their resources to their own ends.
Government officials, by contrast, are almost never efficient, for they are using other people’s money.
In the 80s, the governments of Reagan, Thatcher and Deng Xiaoping all adopted more market-oriented principles as the roadmap to economic reform.
The growth that followed this reform stood up to Friedman’s own standard of predictive success which he set as the test of his ideas.
Later in Friedman’s life, he committed much of his time and resources to promoting school choice, a concept he single-handedly launched in his 1955 masterpiece, The Role of Government in Education.
In 1996, frustrated at the slow rate of progress, he and his partner in life, love, activism and research, Rose Friedman, launched The Milton and Rose D Friedman Foundation to promote school choice.
The idea is taking off in his native America and has also proved relevant in places such as Canada and Sweden, 50 years after being proposed.
He was tireless to the end, even lending his still razor-sharp thoughts to the debate in Hong Kong.
His interview with a local newspaper, perhaps the last of his prolific life, influenced the proposed kindergarten voucher policy emanating from the education department.
He was concerned that government subsidies would kill off private sector players, normally the source of innovation in the marketplace.
No one could accuse him of being self-interested in this case – he just cared passionately about education. If the respect of individuals’ freedom is not a top priority, it may be rather pointless for our government officials to stick with the term vouchers (adopted by Friedman).
We know that Friedman hailed Hong Kong as a model free-market economy, and he was obviously very concerned about Chief Executive Donald Tsang Yam-kuen’s recent comment on “positive non-interventionism.”
Like many here, he was concerned that the freedoms the people of Hong Kong have enjoyed could be eroded in the future as interventionist ideas took root.
We certainly hope that the situation of Hong Kong was not one of the things worrying the old man before he left.
But in regard to the heritage of ideas, we do all owe Friedman a “free lunch.”
Andrew Work is executive director and Wallace Chan is associate scholar at The Lion Rock Institute, an independent free-market think-tank