FRIEDMAN: ECONOMIC FREEDOM IS KEY

Milton Friedman, arguably the best known and most influential
free-market economist in the world for the last 40 years, died in the
San Francisco area Thursday at age 94.

Friedman, who lived for years in the liberal epicenter of House
Speaker-to-be Nancy Pelosi's downtown San Francisco congressional
district, advised presidents, prime ministers and helped foreign
countries set up market economies.

But more important to the everyday American, he was a major
popularizer of the moral and practical benefits of freedom and
capitalism. A principled enemy of socialism, monopolies and big
government, a friend of competition and choice, he argued early, hard
and persuasively for such things as a voluntary army, educational
vouchers and an end to the prohibition of drugs.

He won the 1976 Nobel prize for his work in monetary economics and two
books he wrote with his wife Rose, "Capitalism and Freedom" (1962) and
"Free to Choose" (1980), are must-reads for anyone who cares to
understand the link between economic freedom and individual and
political liberty.

On March 26, 2001 -- as the dot-com crash continued, the country's
economy was slowing and President Bush was planning a major tax cut -- I
talked to Friedman by telephone from his home in San Francisco:

Q: The stock market is in a slump, the economy is slowing down. Should
we be jumping out of windows yet?

A: Not yet, not ever. There's no reason to suppose there's going to be
a depression or major recession. We may have a mild recession. The
economy is basically a strong economy and it'll rebound.

Q: If President Bush called you and asked for your advice on how to
fix the economy, and promised to do one thing you told him to do, what
would it be?

A: Sit tight. The federal government cannot do very much. There are
lots of things it does, there are lots of changes that I would like to
see in the government. But there is no single change that would have
any significant effect on the course of the current cyclical movement.

Q: So sit tight in the sense that tax cuts won't make any
difference?

A: Don't do anything special to try to stimulate the economy. Let the
economy go.

Q: And it'll right itself?

A: Right.

Q: As far as Social Security reform, Mr. Bush has been pretty brave to
raise the idea of at least a partial privatization of Social Security.
Is this a good move?

A: Yes, it seems to me it is the right direction. I am in favor of the
complete privatization of Social Security.

Q: When you talk about "complete," you mean "utterly
complete"?

A: Absolutely. I don't understand why the government should tell me
how much money I should save for the future, but not tell me how much
of my money I can spend for food. And I believe that the current
Social Security system is in certain ways fundamentally unjust.

Take the most obvious example, in the current hysteria about AIDS:
Here's a young man, a man of 35 or 40 who has AIDS and is told that he
has got five or 10 years to live at the most. And the government comes
along and says, "You've got to put aside 13 percent or something like
that of your income to save for your old age." That seems to me to be
cruel and unjust.

Q: You've been an economist all you working life, but you've also sort
of been a preacher. You're always calling for more freedom, more
choices for Americans. If you had your way, what would your perfect
American society look like?

A: (Freidman laughs.)

Q: You get to be the dictator for the moment.

A: No, I don't want to be the dictator. But the ideal society I would
have would be one in which the government would primarily be
decentralized -- state and local, rather than federal.

You'd be back, more or less, to that which prevailed before the Great
Depression, when government spending -- federal, state and local --
was about 10 percent of national income. Federal spending was about a
quarter or a third of that and state and local spending was about
two-thirds to three-quarters. That would be about the right proportion.

The federal government's main responsibility would be primarily
protecting the nation against foreign enemies and having a legal
system to preserve the basic rights of individuals. Most local
problems would be handled by state and local governments.

Q: Freedom is a pretty important concept to you.

A: Yes it is.

Q: In theory, American's have more of it than anyone.

A: They have a good deal of freedom, and certainly compared to almost
any other country, we rank very well. However, there's the tyranny of
the status quo. People don't recognize what their situation actually
is.

In the United States today, the average individual, whoever he is,
works from Jan. 1 to the middle of June or late June to provide funds
that the government controls.

That is to say, government at one level or another, federal state or
local -- directly through spending and taxes and indirectly through
rules, regulations and mandates -- controls half the national income
and can determine how that is spent.

We're 50 percent socialist. Now, is that half freedom or half slavery?
Neither of those statements would be wrong: we're partly free and
we're partly enslaved.

Q: Is it only a question of money -- of income?

A: No. Of course not. But the funds that the government controls and
spends affect what you can do or can not do. The laws and mandates
that are imposed upon you are government laws. Go to any business and
see how much of their time they have to spend with OSHA ... with all
the other alphabetical agencies, with the IRS.

It's far more than money. It's what you can do with your life. For
example, you can not become a physician unless you get the approval of
the government. You must get a license from the government -- that's a
government control. So the government decides who may or may not be in
medicine, who may or may not be a plumber, who may or may not be a
barber -- all along the line. The government decides what you can do
with your property.

To give you another example that I have been particularly interested
in: Why should government run the schools of the country? There's no
more reason for government to run the schools then there is for
government to produce the automobile. And the schools are low quality
on the average, just as automobiles would be of low quality if
government produced them.

Q: You could probably talk for the rest of the day about what is wrong
with public education. But what is most wrong about it today and how
will choice fix that?

A: Well, there's no doubt what's most wrong about public education,
and that is that it's a monopoly. The customer has no say. Schools are
financed by the government but they're actually run by the teachers
unions and education bureaucracy. And the schools pick the students,
the students don't pick the schools, in general. What you need is
competition.

Q: I'm sure you're familiar with the home-school movement, which has
arisen over the last 10 years as form of competition to schools.

A: It is. And the fact that it is a form of competition shows how bad
our schools are. Can you think of any other sophisticated product in
which the home-made product is superior to the factory-made product?

Q: You have seen many incredible changes and advancements in your
lifetime. What has been the most heartening in the last 10 or 12 years?

The fall of the Berlin Wall and the collapse of the communist system
has undoubtedly been the most heartening fact.

Q: That is a metaphor for those ideas that they represented as
well.

A: Absolutely, you've had this intellectual argument going on between
collectivism and individualism, communism or socialism on the one hand
and private enterprise and free markets on the other. The collapse of
the Soviet Union has put an end to that. There's nobody any longer who
argues effectively for collectivism.

Q: You've been a fierce advocate of legalizing drugs. Why is
that?

A: Because I think the basic prohibition of drugs is fundamentally
immoral. The strongest argument: How can we justify destroying
Colombia, causing thousands of deaths in Colombia, because we can not
enforce our own laws? If we could enforce our laws against the use of
drugs, there'd be no market for them.

In every way you look at it, it is an immoral law. It causes a loss in
our freedom. The forfeiture law, which enables the drug police to
expropriate property without due process of law, to enter a house
without an adequate search warrant.

Those have all been destroying our fundamental freedoms. The police
have been corrupted, the public has been corrupted. It's a
fundamentally immoral law. Again, if the government can tell me what I
may put in my mouth, what's to prevent it from telling me what I can
put in my head?

Q: You're on the list of anybody who draws up the list of the most
influential Americans of the 20th century. You're on it. What is it
that you have done, in your own mind, what will be your greatest legacy?

A: I really think that's for somebody else to say.