Chapter 1: Milton Friedman and His Calculations
Milton Friedman was an American economist, statistician, and social theorist who was awarded the Nobel Prize in 1976. In this book, author Robert Samuelson tells the story of Friedman and his influential economic theories. The first chapter of the book begins with a look at Friedman’s life. Born in 1912 to a working-class Jewish family in Brooklyn, New York, Friedman was instead an intellectual with an interest in mathematics and economics. The chapter explores Friedman's early education and his later career, during which he spent time teaching at the University of Chicago and advising on economic policy to governments around the world.
It then looks at one of Friedman's most well-known economic theories. This is the Permanent Income Hypothesis, which Friedman developed in the 1950s. This hypothesis suggests that individuals will save more if they know their future income is secure. As Samuelson explains, this could explain why people with greater job security or better pensions tend to save more. With a practical example, the chapter details how this theory has influenced economic thinking and how it could be used to shape government policies.
Chapter 2: The School Friedman Came From
In this chapter, Samuelson takes a deep dive into what school of economics Friedman came from. He examines Keynesian economics, Friedman's response to it, and the subsequent so-called “Chicago school.” The chapter explains Friedman's criticism of Keynesianism and his development of a more free-market-oriented approach to economics. It also looks at the major economic controversies in the 1950s and 1960s that have shaped the economic debates of today.
As a practical example, Samuelson lays out the implications of Friedman's economic philosophy on economic policy. For example, the chapter explains how Friedman's ideas were used to shape US tax policy in the 1980s, helping to bring the nation's economy out of its post-war malaise. It also explores how Friedman's approach to economic policy has been adopted by numerous countries throughout the world.
Chapter 3: The Real Economy
In this chapter, Samuelson takes a critical look at Friedman’s theories in the contemporary world and analyses how they apply to the real economy. He explores the effects of Friedman's policies and the implications for economic equality. For example, he explains how Friedman's focus on free markets could lead to inequality, as well as how Friedman’s opposition to government intervention could leave those most in need without help.
The chapter also takes a look at two of Friedman’s major works: “Capitalism and Freedom” and “Monetarism in an Open Economy.” Samuelson examines how these works impacted economics and political thought, and discusses contemporary debates on topics such as economic inequality, markets, and government intervention.
This chapter ends with a practical example: Samuelson looks at how Milton Friedman's economic ideas have been applied in the real world. He speaks about how his ideas have been used to inform policy decisions in the United States, Europe, and other parts of the world. He also looks at how Friedman's ideas have been implemented empirically, detailing the successes and failures in certain countries. This chapter provides readers with a comprehensive overview of the tangible effects Friedman has had on the global economy.
