The Man and the Message
Wall Street Journal
October 23, 2003

I'm not a movie star. Lord knows, I'm no bodybuilder. No matter. I've discovered I have a kinship with Gov. Arnold Schwarzenegger. We're both devotees of economist Milton Friedman, champion of free enterprise and economic freedom.

Before winning the recent California recall vote, Gov. Schwarzenegger wrote in The Wall Street Journal that Mr. Friedman and Adam Smith are his economic beacons. He gives his friends Mr. Friedman's classic, "Free to Choose," for Christmas.

Mr. Friedman has been on my mind lately because the Federal Reserve Bank of Dallas will pay homage to the Nobel laureate's life and work today and tomorrow, with a conference titled "Free to Choose: Economic Liberalism at the Turn of the 21st Century." Mr. Friedman and wife Rose, his collaborator, will attend.

Gov. Schwarzenegger confirmed what we at the Dallas Fed have come to believe: Mr. Friedman's message of economic freedom is more compelling and relevant than ever in an era of high economic transition, rapid technological change, and globalization.

Shortly after becoming president of the Dallas Fed, I wrote Mr. Friedman with a monetary policy question, and he was very generous with his time, as he has been on several occasions since. There's always a lot to gain in Mr. Friedman's wealth of wisdom—not just for central bankers like myself but for all Americans.

Mr. Friedman's famous maxim about the impossibility of free lunches, for example, reminds us that there are costs and trade-offs in everything we do, and we should look at what the alternatives are and who picks up the tab. Mr. Friedman recognized the power of free enterprise to create wealth and jobs, while warning that what Gov. Schwarzenegger calls "the heavy fist of government" will bring nothing but stagnation. On the academic side, Mr. Friedman forged a consensus for a monetary policy to stabilize prices and keep inflation low.

Most important, Mr. Friedman made economics a moral matter as well as one of productivity, jobs and growth. Economic freedom, he tells us, is every bit as precious as the other freedoms we hold dear.

I don't know how Arnold Schwarzenegger will fare meeting California's challenges. But I'm convinced he's gone into the battle with the right armor—the ideas of Milton Friedman.

About the Author Mr. McTeer is president and CEO of the Federal Reserve Bank of Dallas. Reprinted with permission of The Wall Street Journal © 2003 Dow Jones & Company, Inc. All rights reserved.