Only a handful of people can claim to have been as influential as the late Milton Friedman. Friedman was one of the world’s great economists; he held the ear of Presidents and Prime Ministers. Friedman accomplished much, breaking new ground in his chosen field, and becoming a strong advocate of strictly limited government, personal freedom and individual responsibility.

His lasting legacy will be the way he challenged the ideas of economists like John Maynard Keynes, who believed that governments should spend tax payers’ money to stimulate demand in the economy. Friedman showed instead that government could regulate the money supply to match growth in the economy. This formula brought about greater material prosperity in the 1980s, in the United States, the United Kingdom and New Zealand.

Milton and Rose Friedman took this message to the masses, writing and speaking about the virtues of freedom and the limitations of government control in a way that was accessible. Friedman had a deep concern for ordinary people. He cared about what would happen if decisions about people’s lives were left up to a handful of distant bureaucrats. And it was this passion that led Friedman to turn his mind to designing better ways of delivering public healthcare and education that began with the choice of the individual.

Friedman had the important insight that justice, mercy and compassion do not exist apart from people, they must become incarnate in the actions of individuals. This led Friedman to believe that the market, driven by the choices of free individuals, could create an environment that would allow these virtues to flourish.

This may be true, but economists like Friedman invariably approach problems with a simplified view of the world because they see it in terms of inputs, outputs, resources and efficiency. Friedman’s ideas can help a country grow a stable economy, a prerequisite for social prosperity, but they cannot bring about positive social outcomes on their own. To do so they rely on individual people to act with a conscience in the best interests of the common good of society, not as rational individualists as economists might think.

We, in New Zealand, should understand this well. I was only a young boy in the early days of Rogernomics. But I was not too young to witness its effects. I remember Mum and Dad talking about the end of the family benefit, I saw the farmers on TV, driven off the land they had held for generations.  I remember David Lange saying it was time to stop for a cuppa tea. I remember the craving we all had to “return to a decent society”, one which valued people, instead of isolating and destroying them.

But New Zealand went through those difficult times because the collectivist vision of life failed us. As New Zealand became a modern country, individual initiative was eclipsed by government “benevolence”. Benefits for those in genuine need—the widows, veterans and the elderly—ballooned. By the time of Muldoon, the economy was so insulated, that our competitiveness overseas was slashed, while the cost of living for ordinary New Zealanders soared.

That is why we had to change our ways in 1984. But because we did not wake up to the limits of collectivism earlier, it happened far too quickly. After years of the state looking after us, New Zealand society could not absorb the speed of the changes, meaning the well-being of decent and hard-working Kiwis suffered.

Nonetheless many New Zealanders experienced a greater sense of ownership, became more entrepreneurial and invested more. These were three positive things to come out of that painful experience. But the pendulum swung so far towards the free market, with massive restructuring of public health, education and housing, that the excesses of individualism became as harmful as the excesses of collectivism. In the present day we have seen the resurgence of collectivism; look no further than the growing culture of entitlement in New Zealand, epitomised in the Working for Families package.

The reality is that the individualist view, espoused by Friedman, and the collectivist view, which many New Zealanders find attractive, both miss the point that there is an immaterial dimension to life.

People are, at their core, relational. When personal freedom is stressed without regard for private virtue, the social fabric and the common good, the value of strong communities can be lost. The free-market economics Friedman advocated cannot create a decent and prosperous society, unless they are accompanied by a vision of ownership and investment, with the obligations we have to our families and communities firmly in mind.

Likewise the “fair society” the collectivists’ dream of cannot be delivered by government and its agencies because they are disconnected from the problems at hand in local communities. The government can only offer money, but a caring community aware of the importance of looking after others in need can offer a real helping hand.

We must always be mindful of the consequences of each view of life. Friedman’s life reminds us of the power of the moral individual. He used his intellect to promote policies that may make society wealthy and he argued that people, not government, should look after themselves. The collectivists remind us that we cannot abuse our freedom, as we must tend to the needs of the dispossessed. But we cannot do the latter without the environment created by the former. Our task is to consider the interconnectedness of community and the relational nature of human society, and what we as individuals and as members of a community can do to help each other.

Print Document