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Thursday, 16 October 2008
Financial Crisis Haunts Milton Friedman’s Legacy
U.S. economist Milton Friedman, the champion of unfettered markets, is under siege for theories that some blame for unleashing the global financial crisis. PDF
CHICAGO (Reuters) - U.S. economist Milton Friedman, the champion of unfettered markets, is under siege for theories that some blame for unleashing the global financial crisis.
His legacy is even being questioned on the leafy University of Chicago campus that he once called home.
Some faculty and students are up in arms over the recent opening of the Milton Friedman Institute, a multidisciplinary research outpost attracting million-dollar donations from corporations and the wealthy.
They argue the institute, which will occupy a former divinity school building, is a totem to the late Friedman who they call a dinosaur of economic thought. Friedman won the Nobel Prize for economics in 1976 and died in 2006.
“The university is massively reinvesting in a reputation and a paradigm at precisely the moment its bankruptcy is becoming clear to everyone else,” Bruce Lincoln, a religion professor and leader of the opposition to the institute, said in an interview.
Lincoln is joining other faculty at a rare closed-door meeting on Wednesday to hear the university’s president, Robert Zimmer, extol the virtues of the institute.
Zimmer is expected to pledge that it is named in honor of Friedman’s pursuit of empirical data, not his conservative views, and will follow scholarship wherever it leads.
Philip Reny, chairman of the university’s economics department that is home to numerous other Nobel winners, said the controversy over the institute is much ado about nothing.
“It’s a purely scientific, scholarly endeavor,” he said.
“Does the criticism shock us? We know Milton comes with history. He had a political life and he had a scholarly life,” Reny said.
“I mean, can (critics) imagine somehow that the economics department has been prostituted by corporate America? This department is very well respected and I think we’ve earned that respect. It’s a bit insulting.”
Reny also speculated about Friedman’s likely response to government efforts to stem the financial crisis by intervening directly, investing hundreds of billions of dollars in teetering banks and guaranteeing inter-bank loans.
“I can’t imagine he’d say ‘do nothing. Let markets work’ ... He was not an ideologue,” Reny said. “I don’t think he’d say any regulation here is wrong.”
Reny said his colleagues are seeking answers to the causes of the crisis and willing to adapt their thinking. They are also holding seminars for students to look for lessons from current events.
“There’s no shortage of opinions right now. And with every opinion about what might be the cause, there’s an opinion about what new regulation might help. What we need is time, we need data,” Reny said.
$1 MILLION TO GET IN
The Milton Friedman Institute was conceived by faculty from the university’s economics department, the law school and the graduate school of business. It appeals for donations of $1 million, minimum, for a lifetime membership.
Where the two sides differ is what those donors might be seeking in exchange.
“I suspect there’s a naive faith that the investors won’t want much for their money. That they’ll do it out of generosity and admiration and charitable spirit. If it’s so, it’s not all that threatening. But if there’s anything Milton Friedman taught me it’s that there’s no free lunch,” Lincoln said.
“I think what’s at stake here is academic integrity, political impartiality and nonpartisanship, creeping corporatization of the university and the academy in general.”
The university insists that the sole benefit to donors will likely be occasional access to the scholars and their research.
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Financial Crisis Haunts Milton Friedman’s Legacy
By Andrew Stern
14 October 2008
CHICAGO (Reuters) - U.S. economist Milton Friedman, the champion of unfettered markets, is under siege for theories that some blame for unleashing the global financial crisis.
His legacy is even being questioned on the leafy University of Chicago campus that he once called home.
Some faculty and students are up in arms over the recent opening of the Milton Friedman Institute, a multidisciplinary research outpost attracting million-dollar donations from corporations and the wealthy.
They argue the institute, which will occupy a former divinity school building, is a totem to the late Friedman who they call a dinosaur of economic thought. Friedman won the Nobel Prize for economics in 1976 and died in 2006.
“The university is massively reinvesting in a reputation and a paradigm at precisely the moment its bankruptcy is becoming clear to everyone else,” Bruce Lincoln, a religion professor and leader of the opposition to the institute, said in an interview.
Lincoln is joining other faculty at a rare closed-door meeting on Wednesday to hear the university’s president, Robert Zimmer, extol the virtues of the institute.
Zimmer is expected to pledge that it is named in honor of Friedman’s pursuit of empirical data, not his conservative views, and will follow scholarship wherever it leads.
Philip Reny, chairman of the university’s economics department that is home to numerous other Nobel winners, said the controversy over the institute is much ado about nothing.
“It’s a purely scientific, scholarly endeavor,” he said.
“Does the criticism shock us? We know Milton comes with history. He had a political life and he had a scholarly life,” Reny said.
“I mean, can (critics) imagine somehow that the economics department has been prostituted by corporate America? This department is very well respected and I think we’ve earned that respect. It’s a bit insulting.”
Reny also speculated about Friedman’s likely response to government efforts to stem the financial crisis by intervening directly, investing hundreds of billions of dollars in teetering banks and guaranteeing inter-bank loans.
“I can’t imagine he’d say ‘do nothing. Let markets work’ ... He was not an ideologue,” Reny said. “I don’t think he’d say any regulation here is wrong.”
Reny said his colleagues are seeking answers to the causes of the crisis and willing to adapt their thinking. They are also holding seminars for students to look for lessons from current events.
“There’s no shortage of opinions right now. And with every opinion about what might be the cause, there’s an opinion about what new regulation might help. What we need is time, we need data,” Reny said.
$1 MILLION TO GET IN
The Milton Friedman Institute was conceived by faculty from the university’s economics department, the law school and the graduate school of business. It appeals for donations of $1 million, minimum, for a lifetime membership.
Where the two sides differ is what those donors might be seeking in exchange.
“I suspect there’s a naive faith that the investors won’t want much for their money. That they’ll do it out of generosity and admiration and charitable spirit. If it’s so, it’s not all that threatening. But if there’s anything Milton Friedman taught me it’s that there’s no free lunch,” Lincoln said.
“I think what’s at stake here is academic integrity, political impartiality and nonpartisanship, creeping corporatization of the university and the academy in general.”
The university insists that the sole benefit to donors will likely be occasional access to the scholars and their research.
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