Friedman's fanfare for the common man

Australian Financial Review

23rd November 2006

Former Treasury deputy secretary Des Moore on Milton Friedman's influence,

Radio National's Perspective program, yesterday.

Friedman's demonstration in the late 1960s that there is no stable trade-off between inflation and unemployment also overcame the Keynesian notion that budgetary policies can readily be twiddled to stimulate a higher rate of economic growth without risking higher inflation. It took some time for this to be accepted in Australia, particularly among academic economists, but it is now reflected in the bipartisan acceptance of a fiscal strategy aimed at maintaining budget balance over the medium term.

The discrediting of fine-tuning in both monetary and fiscal policies is a major Friedmanite achievement.

Why was Friedman so influential? It was not due to esoteric analyses of economic theory accepted in academia. He did very little of this and many academics resented his rebuttals of the merits of government intervention.

His influence came, importantly, from his ability to explain and defend his beliefs in terms that were comprehensible and persuasive to the layman.

His constant theme that adoption of free-market policies was in the interests of the common man helped enormously.