Milton Friedman Institute Spurs Chicago Faculty Clash (Update3)

Oct. 15 (Bloomberg) -- Professors at the University of Chicago say a proposed $200 million research center named for Milton Friedman, the late economist championed by conservatives, would enshrine the free-market philosophies they say have brought the global economy to the brink of ruin.

More than 100 faculty members signed a letter in June protesting plans for the Milton Friedman Institute as a misuse of university funds and an endorsement of the so-called Chicago School of economics, which favors limiting the role of government in the economy. The faculty held a senate meeting, the first in more than a decade, today to discuss the institute and adjourned without taking any action.

``There was a robust debate on all sides of the issue,'' university spokeswoman Julie Peterson said in an interview. ``I expect the administration and the dean and the faculty that proposed the institute to take time to consider the issues raised in the meeting.''

Friedman, who died in 2006 at age 94, won the Nobel Memorial Prize in Economic Sciences in 1976. The proposed institute is intended to bring together Chicago faculty in economics, business and law, the university said. The academic focus would ``reflect the traditions of the Chicago School and typify some of Milton Friedman's most interesting academic work,'' according to the proposal circulated by the committee to establish the institute. Critics say the institute won't be receptive to diverse points of view and will celebrate a failed ideology.

`Shrink the State'

``Friedman wanted to shrink the state to the point where it doesn't do much more than maintain roads and enforce contracts,'' said Bruce Lincoln, a professor of the history of religion, in an interview yesterday. ``There are clear failures in the policy of deregulation involved in the current financial meltdown.''

Lincoln, a spokesman for opponents of the institute, also criticized the meeting's format, which he said prevented an advisory vote of the faculty.

The senate, made up of about 1,200 professors and administrators, isn't a legislative body and votes only to elect a 51-member council, university spokesman Steve Kloehn said in an interview yesterday.

As faculty members entered their meeting, they had to walk through a gantlet of about 100 student protesters. Some of them had baby pacifiers in their mouths to show they felt excluded from university deliberations about the institute. Nearby, half a dozen counter-protesters carried signs reading ``Friedman was for Freedom,'' among other slogans.

$6.2 Billion Endowment

James Heckman, an economics professor who was one of the original faculty members to propose the institute, said at a debate on campus yesterday that he would support changing the name if Friedman's was too inflammatory.

The Friedman Institute will be funded with an initial $200 million from the university and supported with additional donations, according to the university.

The University of Chicago, founded in 1892, had an endowment of $6.2 billion as of June 30, 2007, according to the National Association of College and University Business Officers, a Washington-based trade group.

Friedman joined the University of Chicago in 1946. In his 1962 book ``Capitalism and Freedom,'' he argued that political liberty stems from economic freedom.

Friedman helped train Chilean economists who worked for the dictator Augusto Pinochet and brought down inflation in that country in the 1970s and 1980s.

Friedman tarnished his academic credentials by trying to legitimize Pinochet after the 1973 coup in which thousands died, Yali Amit, a statistics and computer science professor, said at a debate on campus yesterday.

Spurning Money

``If there are donors who want to give to the University of Chicago because the symbol of Milton Friedman induces them to do so, I'd like to not take their money,'' Amit said.

Heckman, who won the economics Nobel in 2000, replied that Amit, like other critics, overstated Friedman's link to Pinochet. The misconception was so prevalent that an entire generation of Latin American students refused to attend the University of Chicago after the 1973 Chilean coup, he said in an interview.

Friedman's research into how consumers save money, and how inflation and unemployment can rise in tandem, made him one of the 20th Century's leading economists, Heckman said.

To contact the reporters on this story: Oliver Staley in New York at ostaley@bloomberg.net; John Lippert in Chicago at jlippert@bloomberg.net.

To contact the editor responsible for this story: Reg Gale rgale5@bloomberg.net.