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An Interview with Milton Friedman

The Nobel laureate will forever be associated with the "Chicago Boys."

By JANE AMMESON

Though based on the West Coast at Stanford's Hoover Institution for nearly three decades, Milton Friedman will forever be associated with the "Chicago boys." Forefather of the Chicago School of Economics, the Nobel Prize-winner taught at University of Chicago from '46 to '76. Controversy has always swirled around the acclaimed economist -- protesters flocked at his Nobel Prize ceremony, objecting to his '75 meeting with Chilean dictator Augusto Pinochet. Friedman is also known for having argued against the trade and diplomatic embargoes imposed on the white governments in South Africa and Rhodesia in the '70s.

Economic advisor for presidential candidates Barry Goldwater and Richard Nixon, Friedman was a member of President Ronald Reagan's economic advisory board. In 1978, he co-produced and narrated a 10-part series on school vouchers called Free To Choose, which aired on PBS. Now 93-years-old, Friedman discusses why he thinks it's a good idea to legalize drugs and prostitution and why school vouchers would provide competition in the education. Needless to say, his theories aim to drastically alter the urban landscape.

You have long been a proponent of legalizing drugs. Why? We tried that course with alcohol (Prohibition), and it produced widespread corruption. We finally gave it up by repealing the prohibition amendment. Drugs are having the same effect. The fundamental problem is that you're trying to make illegal an act between two willing people. They want to engage in a transaction [that] they believe will benefit both of them. How do you enforce a law like that? You can only do it by using an informant, and that in turn leads to corruption and criminalization because the people who service informally are people who are trying to get a lower punishment on themselves. What was found in the course of this business is that police cannot resist being corruptive and cannot resist doing things that they ought not to be doing.

What are some other adverse effects of drug laws? We can't enforce those laws internally, so we try to enforce them by inhibiting the inflow of drugs from abroad, and we end up making it illegal in those countries, leading to gang fights that cause the deaths of thousands of people. It's utterly immoral, and it has very negative effects on our foreign policies. It costs us -- I think the last estimate was something like 50 or 60 billion dollars -- and it's money that is spent on doing harm. It's very hard to see any good that has ever come from the attempt to enforce prohibition of drugs.

We seem to be going in the opposite direction -- our punishments for drug violations are becoming more severe. Why is that? It's a very simple answer. We were able to get rid of prohibition because more than half the population were potential violators of prohibition, which only passed because it was up at an election when we were in World War I and a large fraction of the male voters were involved in war. On the other hand, with respect to drug use, maybe five or ten percent at the most of the population are potential violators. They don't have the political clout that a much larger group would have.

Is your recommendation to simply make all drugs legal? We should treat drugs the same way as we now treat alcohol. Alcohol is legally available, but it's very heavily taxed and regulated. Given the present political situation, what you can best hope for would be to have drugs treated the same way in which alcohol and cigarettes are now treated. So far as Chicago is concerned, that would mean that you would have a great deal less crime. You would reduce the enforcement costs, and on the other hand, you would impose the tax. You would raise a considerable amount of money from the tax that you would have available for other purposes.

Are there other reasons to legalize drugs? I don't believe the government has any right to control what I put in my head. I don't think it has any right to control what I put in my mouth. If I'm foolish enough to want to take heroin, well, that's my business, as long as I don't interfere with somebody else. I've been opposed to prohibition on pure moral grounds, but whatever you think about it on moral grounds, there's no way to support it on practical grounds. It's very clear that it does a great deal of more harm than good. What good is it doing to have a million people in prison who would otherwise not be there?

Are your views on prostitution similar? You put a willing buyer [with] a willing seller, and it's up to them. You can argue with them that it's foolish, you can argue with them that it's a bad thing to do, but I don't see any justification for bringing the police into it.

You're a major proponent of school vouchers. If they were in place, what effect would they have on urban schools? [School vouchers] would lead to a decline in the number and improvement in the quality of urban public schools. If you had an effective voucher system for Chicago where every child in Chicago was entitled to receive a voucher worth say, $6,000, which he or she could use only for schooling, the children who now are in schools that are doing badly would have an alternative. There would be schools that would spring up that would be available for them. They would intend to leave the public schools, and by leaving the public schools, they would force the public schools to improve.

How could public schools improve if they essentially had even less funding? What are the means by which we as consumers get improvements in the things we buy? By not buying the bad ones and buying the good ones, by competition and choice. The same thing is true in education. What the public schools are today is a monopoly. If you had a universal voucher for Chicago, [it] would introduce an element of competition and would force the public schools to improve. We know that that's the case from the one example that we have of a widespread voucher -- that's in Milwaukee, Wis. It has been very successful, and it definitely led to an improvement in the quality of the public schools.

Wouldn't vouchers hurt the students who are left behind? You have the equivalent of it now because the schools are residential, and what happens is that people who can afford it move into the areas that have good schools.

How would students get to schools of choice if they were far from their homes? That question cannot be answered in the abstract because it depends on the circumstances in the individual area. In most places, there are schools either within walking distance or within driving distance. Today, you have a lot of busing, and there's no reason why you couldn't provide busing to a school some distance away.

Switching to financial matters, does the U.S. deficit concern you? The deficit will continue, but it will do no harm because what matters is not what the deficit is, but what government spending is. The important thing is who controls the use of resources, you or the government. What part of your income is being spent by the government rather than by you? Like today, it's somewhere between 35 and 40 percent of every dollar you earn. The existence of a deficit tends to exert some influence on holding down spending so that when you ask about a deficit, you have to ask where the deficit came from. If the deficit came from an increase in government spending, that's bad, but it's bad because of the government spending and not because of the deficit. On the other hand, if the deficit comes because of a reduction in taxes, that's probably good because it tends to force you to cut spending to meet your taxes. By cutting taxes, it has increased the incentive of individuals to use their own money.

So you believe that tax cuts have in fact helped the economy? I think there is very little doubt that part of the boom we have been experiencing these past three years comes from the tax cut that Bush engineered in his first years in power.

Do you approve of the way the government is spending our tax dollars? It's terrible. The federal government alone is spending about a quarter of the total income of the country. We were talking about drugs. Here's money that is not producing any good, but it's producing a great deal of harm. We spend tens of billions of dollars to hire informants, to hire enforcers and drug enforcement agencies in order to do something it's not worth. We've had a war on drugs since 1972. That's 34 years -- what has been accomplished?

Can we afford to keep fighting in Iraq? The war in Iraq is a very small strain on the country compared to other things. The question is not one of whether we can, but of whether it is in our interest to do so. I think it's in our interest to sustain it. I may say that I was opposed initially going into Iraq, but once you're in there, it's very important that we have a success in Iraq.

Which accomplishment are you most proud of? The role I played in eliminating the draft, the military draft. o

Published: June 01, 2006
Issue: Summer 2006