The renowned economist Milton Friedman died in 2006, but his knowledge and insight continue to influence public policy debates. On the latest Friedman Legacy for Freedom Day, the John Locke Foundation and the Friedman Foundation for Educational Choice sponsored a lecture from Jennis Biser, assistant professor of economics and finance at North Carolina A&T State University, on “Milton Friedman and the Public Choice Revolution.” Biser also discussed Friedman’s legacy with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: Milton Friedman is a really big deal. There is a Friedman Legacy for Freedom Day. Just how important is Milton Friedman?
Biser: Well, Milton Friedman, unlike other economists before him who tunneled narrowly into some research niche, Milton Friedman challenged mainstream economics and the prevailing Keynesian views to challenge the interventionist policies that were being supported and promulgated by big-government interest groups and these other interested parties.
Kokai: And Friedman, from what I understand, did this in a public context. He wasn’t just sitting with a bunch of other academics. He really got the public involved.
Biser: Certainly. At the University of Chicago, he wrote, with George Stigler, a pamphlet for the real estate board on rent controls. He attacked the American Medical Association for limiting entry into [the] medical profession, and he was very public. In 1980, he gathered some of his lectures together and was able to put on PBS a TV series that gave some of these ideas in a very plain-spoken, easy-to-access manner that was widely received.
Kokai: A lot of folks were interested in that “Free to Choose” series. Now, the topic of your conversation was “Milton Friedman and the Public Choice Revolution.” So we should explain, what is public choice? What does that mean when economists talk about public choice?
Biser: Public choice is essentially the economics of politics, looking at areas that were formerly taken for granted — interest-group politics, the pressure on different politicians, the vote motive, how people vote, and how people make rational choices. So public choice is how collective decision making by rational individuals can help people come together to make decisions, and how politicians make policy.
Kokai: What was Milton Friedman’s role in galvanizing the thought about looking at public choice as a particular school of thought?
Biser: Well, Milton Friedman really opened the doors to make criticism of government bureaucracy more acceptable, more mainstream, if you will. He directly challenged mainstream economists, who were all Keynesians, … and the ideas of government spending and big programs and some of the things that we’re hearing about again today were the accepted view. And really, mainstream economists were quite taken when Milton Friedman stood up with hard empirical evidence and challenged some of those very basic ideas, some of the very foundations [of] government policy that were being put forward by the Keynesian economists. So Milton Friedman opened the door to allow more strict scrutiny of politicians, bureaucrats, and policy.
Kokai: So when Milton Friedman came out and said, hey, wait a minute, this isn’t necessarily the way things actually work — because he was obviously an intelligent man … and someone who could speak the common language with people — that these ideas coming from Milton Friedman had an awful lot of weight.
Biser: Absolutely. He was very well-spoken, and he was able to draw on his own background — and his parents had really scratched out a living and made a life here in the U.S. because of capitalism — and so he was able to take his very plain-spoken view, his stellar background, and these incredible academic credentials, and bring it all together to make the case for capitalism.
Kokai: Let’s talk a little bit more about public choice and how it might apply today. Let’s take an issue that’s top of mind, very hot these days — health care. How would someone approaching economics and political topics from the public choice view look at the issue of health care and how we’re dealing with health care?
Biser: Whereas in the late ’30s, following the Great Depression, individuals assumed that government bureaucracies were looking out for the best of the individuals and looking out for the public good, public choice economics — through Milton Friedman’s attacks on [the] mainstream — public choice was able to come in and talk about some of the interest-group politics and the political pressure on politicians and on the bureaucracies that implement the polices. The public choice approach would look at some of the interest groups that are pressuring the policy as it’s written. When you have the insurance companies and the pharmaceutical companies actually writing the bill, and it turns into 1,019 pages — I believe [that] was the latest count — and there are five different versions floating around, it’s pretty hard to figure out what’s actually going on. Some of that lack of transparency with the politicians in bed with the pharmaceutical companies and the other interest groups, the AMA, that’s where public choice starts — looking at those interactions and trying to figure out how the citizen voter can get the best outcome for his tax dollar.
Kokai: One of the things that comes out of that whole debate is something we’ve talked about on this program before — the whole “Bootlegger-Baptist” thing, too, where you have the various interest groups, and the do-gooder groups, going after the same thing — and the average voter not getting a say in this process. Is that something that public choice also looks at?
Biser: Yes, the average voter is what we call rationally ignorant. There is so much of an effort required to know what is in that 1,019-page bill that you default to what your representatives tell you. Or you look at what the AMA [says] — if you’re a doctor — OK, the AMA likes it, I like it, I must, it must be good for me. But that isn’t always the case, and so individuals who become more involved in the process can help to influence the actual process and what’s being written. … So that has been a direct impact of individual citizen voters getting involved and screaming at their politicians.
Kokai: Let’s get back to the basic issue of Milton Friedman and public choice. Because we have this public choice approach now, why are things better in public policy debates? How has public choice helped improve what we know about the process?
Biser: The public choice research permeates a lot of the discussion that we have today, things like the interest groups and influence — things like that that we just take for granted weren’t always very clear to the average citizen. You voted for your representative who believed the things that you believe — or at least you thought he did — and you sort of defaulted to him. The public choice process has brought more sunlight to the process of political decision making and has cleared some of those cobwebs and made things a little more transparent for the individual voter.