In honor of Milton Friedman’s 100th birthday, AEI offers a brief history of the late Dr. Friedman’s relationship with the Institute.
In 1954, the American Enterprise Association hired William J. Baroody, Sr. as executive vice president of the association. In short order, Baroody started to build the intellectual infrastructure for an organization whose mission was to develop a deeper public understanding of America’s system of free competitive enterprise. To that end, he assembled an academic advisory board that provided advice on the Association’s various programs. Baroody became AEA’s president in 1962 and renamed the association the American Enterprise Institute.
The first description of Milton Friedman’s involvement with Bill Baroody and AEA appears in the Association’s minutes from 1956, when Friedman was listed as a member of AEA’s academic advisory board. The AEA brain trust was a stellar group, and in addition to Friedman it included Roscoe Pound, emeritus professor and former dean of the Harvard Law School, and Felix Morley, a Brookings PhD, who as the editor of the Washington Post won the paper its first Pulitzer Prize for editorial writing. Payment for service on the advisory board was $200 a year.
AEA’s sparse archive provides little information on the counsel the academic advisers offered Baroody, but the group clearly helped to move AEI into the first rank of U.S. think tanks. Friedman’s first public appearance at AEI came in 1967, when he participated in the Institute’s Rational Debate series. The subject was fixed versus free exchange rates, and his sparring partner was Robert Rossa, the Undersecretary of the Treasury in the Kennedy and Johnson administration and a strong advocate for fixed rates. There is no record of who won the contest at AEI, but the major currencies began to float in March 1973. That year AEI reprinted an essay of Friedman’s about how well fluctuating exchange rates were working.
In 1972, Friedman was back at AEI, this time for a debate over the proper role of Social Security. His adversary, Wilbur J. Cohen, was one of the most important figures in the development of the program, having begun his career in Washington as a research assistant for the committee which drafted the Social Security legislation. Cohen was later Director of the Social Security Board, which became the Social Security Administration. Friedman’s concerns about the program were prescient, and he would return to them in many of his later writings.
Milton Friedman returned in 1981 to deliver a lecture in AEI’s Warren Nutter Lecture series. A distinguished economist, Nutter had studied with Friedman at Chicago and made his mark at the University of Virginia. Here he and future Nobel laureate James Buchanan founded the so-called Virginia School of political economy. He died in 1979, and the lecture series was a tribute to his many contributions. Friedman’s subject in the series was a lifelong preoccupation of Friedman’s: Market Mechanisms and Central Economic Planning.