Milton Friedman Didn’t Create America’s Economic ‘Hellscape’

Yes, Friedman provided much of the intellectual backing for free-market reform. But because Washington is Washington, his ideas were filtered into politically acceptable terms and bastardized by those seeking to turn public power into private advantage. Our economy now has the unfortunate honor of being labeled “free market” while bearing little resemblance to one.

Let’s take several of the policies the author attributes to Friedman and examine them more closely. 

First, the article treats the 2008 financial crisis as the inevitable result of Friedmanite deregulation. But that story is far too simple. Fannie Mae and Freddie Mac, two institutions that played major roles in the housing bubble, were federally chartered and backed by an implicit government guarantee. At the same time, Washington promoted expanded mortgage lending to lower-income borrowers, helping create incentives for riskier lending. The crisis was not a case of government stepping aside, but of government-distorted risk, private firms expecting rescue, and regulators failing to stop a dangerous credit boom. Was that the failure of Friedman’s free market, or of a government-managed housing-finance system?

Second, the author takes issue with one of Friedman’s most misunderstood claims: that a company’s primary goal is to pursue profit for itself and its shareholders. To those who misunderstand free markets, this sounds like a recipe for greed. But profit is inseparable from a company’s ability to serve other people. Firms make money by delivering goods and services consumers value more cheaply, more reliably, or at better quality than their competitors. 

And in a real free market, companies that chase short-term profit at the expense of long-term value eventually lose customers, fail, and make way for better firms. Friedman did not endorse profit by any means necessary; he expressly conditioned it on obeying the rules of society and avoiding deception or fraud. The problem today is that government too often interrupts that process, using bailouts, subsidies, and regulatory protections to keep bad companies alive at everyone else’s expense.

Third, the author treats tax cuts and privatization as little more than a scheme to enrich corporations and the wealthy while dismantling the public safety net. On the left, that is usually dismissed as “trickle-down economics.” But conservatives do not support lower taxes because we believe money magically trickles down from the rich. We support them because every new tax, program, and bureaucracy gives Washington more power to decide who keeps their money, who receives it, and on what terms. That constitutes way too much government control over individual lives, all while failing to actually provide people with the benefits they need. In other words, the tradeoff is not a good one.

When government tries to help through sprawling programs, too much money disappears into bureaucracy before it ever reaches the people it was meant to serve. Struggling Americans deserve help, but Friedman questioned whether Washington’s so-called solutions are the best way to provide it.

The author also says Friedman provided cover for anti-labor policy and tolerance of unemployment. Friedman’s “natural rate” of unemployment is portrayed as though he believed free markets require a permanent underclass. That is an unwarranted moral accusation. His point was that even a healthy labor market includes people moving between jobs, industries, and locations which would be represented by those Americans experiencing unemployment. 

The author goes on to cast Friedman’s skepticism of unions as anti-worker. But that confuses unions with workers themselves. Unions monopolize labor, restrict entry into jobs or trades, and protect their own interests at the expense of people trying to enter the workforce. Friedman’s point was that workers are best served not by handing monopoly power to unions, but by keeping both the labor market and the broader economy competitive, so businesses must compete for employees and employees remain free to choose where they work.

We are not living in the hellscape Milton Friedman envisioned. We are living in the hellscape created by those who presumed they knew better, on both the right and the left. Few politicians genuinely champion free markets, whether they align with the Democratic Socialists of America or claim the conservative label. For nearly every problem, the reflex is the same: a new regulation, another distortion, an executive order, or a bill through Congress. 

Almost no one asks the more basic question: what government restriction created the problem in the first place, and what would happen if it were removed? America would be better served by returning to Friedman’s central insight: free people, free to compete under clear and equal rules, are more capable of solving their own problems than politicians and bureaucracies empowered to manage every corner of economic life.