Friedman the Adviser

"Friedman had a long-lasting and controversial avocation as an adviser to politicians and governments across the globe. This began in 1950, when some former students invited him to work with a Marshall Plan agency. While there he proposed that Germany float its exchange rate. The idea went nowhere at the time, but it was an international reality as of 1973.

Friedman went on over the course of his career to give advice to officials in nations from Israel to China, from England to Yugoslavia. This practice caused him great trouble in the 1970s because of his “links” to Augusto Pinochet’s repressive regime in Chile. Pinochet’s government was infamous for the brutal suppression of political opponents, including one grim episode in which a football stadium was used as a mass detention center where political prisoners were tortured and killed.

For years, the University of Chicago had a partnership with the Catholic University of Chile in which Chileans received scholarships to study at Chicago. Pinochet thus had Chicago-trained economic advisers, who were known as “the Chicago boys” and often assumed to be mindless transmitters of Friedman’s commands. New York Times columnist Anthony Lewis declared in 1975 that “the Chilean junta’s economic policy is based on the ideas of Milton Friedman…and his Chicago School,” adding that “if the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?” The Spartacus Youth League, a Trotskyist sect, began ginning up protests against Friedman for his alleged complicity with the Chilean government. Such demonstrators followed him wherever he went for years.

In fact, Friedman’s only direct connection with Chile came when fellow Chicago economist Arnold Harberger, who was closely involved with the Chilean program, invited him to give a week of lectures and public talks in Chile in 1975. While there, Friedman did have one brief meeting with Pinochet. The dictator asked the professor to write him a letter laying out what he thought Chile’s economic policies should be. Friedman did this, calling for quick and severe cuts in government spending and inflation as well as a more open trade policy. He did not take the opportunity to upbraid Pinochet for any of his repressive policies.

That was the extent of Friedman’s involvement with the regime. Defending himself against accusations of complicity with or approval of Pinochet in a 1975 letter to the University of Chicago student newspaper, Friedman noted that when he spoke to communist leaders he “never heard complaints” that he was giving aid and comfort to their governments. “I approve of none of these authoritarian regimes—neither the Communist regimes of Russia and Yugoslavia nor the military juntas of Chile and Brazil,” he wrote. “But I believe I can learn from observing them and that, insofar as my personal analysis of their economic situation enables them to improve their economic performance, that is likely to promote not retard a movement toward greater liberalism and freedom.”

- The Life and Times of Milton Friedman by Brian Doherty