Milton Friedman, the Mathematical Statistician and Economist

Friedman was both an economist and a mathematical statistician.

Before he graduated from high school at 15, he had developed the Friedman statistical rank test, and as a bright summer high school student, when brought to Los Alamos for the Manhattan Project with other super bright kids, came up with the idea for the statistical model of the trigger for the first two atomic bombs.

Later, while working as a mathematical statistician for the Division of War Research at Columbia University, while engaged with problems of weapons design, military tactics, and metallurgical experiments, Friedman invented the statistical technique of sequential sampling, which became the standard model or analysis for quality control inspection around the world.

But Friedman was also an economist who taught at the University of Chicago for more than three decades. He was the sole recipient of the 1976 Nobel Memorial Prize in the Economic Sciences, and is best known in academic circles for his work on the following matters:

1) human consumption behavior and analysis, which was brilliant,

2) his massive book on The Monetary History of the United States (with Anna Schwartz) , which by consensus has had its conclusions hold up well.

3) his work on monetary theory within the framework of the quantity theory of money which, at a micro and policy level only, ultimately failed as myriad new forms and definitions of money and near money came into being (e.g., credit cards),

4) the complexity of monetary stabilization policy and the need for longer term policy guidelines instead of short term interventionist efforts that failed and were badly timed,

5) the deficiencies of pure Keynesianism, as it first came to America,

6 ) perhaps most importantly and almost single handedly, his work in the latter regard that led to the creation of the neo-Keynesianism and the neo-classical syntheses in economics, which is now the mainstream. (As Friedman explained it, 'In one sense, we are all Keynesians now, but in another sense, none of us are Keynesians any longer.') Most simply understood, at a sophisticated level the neo-classical synthesis is the merger of Friedman's corrected Keynesianism with neo-classical economics. It is primarily corrected Keynesianism at the macro level and orthodox neo-classical economics at the micro level.

7) Further, after attacking the new Keynesian notions originally, Friedman then saved Keynesianism from failure in the face of stagflation by showing that the Philips curve on the trade-off between full employment and inflation was not stable but depended on and varied with proximity to the natural rate of unemployment which he explained was determined by structural factors in the markets for labor.

8) Friedman also argued successfully for the cessation of government intervention in currency markets to fix exchange rates, explaining why in detail. This resulted in an enormous body of literature in economics on the subject, as well as leading to freely floating exchange rates in United States and many countries around the world.

9) Friedman argued that the draft was coercive and economically inequitable for multiple reasons and should be abandoned in favor of a better paid volunteer army. That is now the law of the land.

Finally, 10) Friedman proposed the replacement of the existing U.S. welfare system with a negative income tax, that is, a progressive marginal negative tax system in which the poor receive a basic living income from the government. Two reasons led him to this view. One, the federal bureaucracy consumes to much of each dollar earmarked for public assistance and, two, while "market forces . . . accomplish wonderful things", they "cannot ensure a distribution of income that enables all citizens to meet basic economic needs"

In the aggregate, and here in a nutshell, this was quite a tour de force.

A survey of economists ranked Friedman as the second most influential economist of the twentieth century after John Maynard Keynes. The Economist magazine affirmed that by describing him as "the most influential economist of the second half of the 20th century...[and] possibly of all of it."