Their Friendship Dissolved Over Monetarism

“Betrayal” is the hyperbolic term we often use when we find out that other people have different priorities from what we expected. The best book I’ve read on this topic is Betrayals: The Unpredictability of Human Relations by Gabriella Turnaturi:

With betrayal, we are faced with the greatest tragedy of human relations: the fact that the other is unknowable… Every interactions arises and grows around sharing something…with an other… The birth of a We brings with the possibility of betrayal, separation, or rupture. …betrayal, dramatic or banal, always lies in wait for us. …not only in every relationship, but in every interaction, parts of ourselves that we were unaware of come to light… Betrayal is always relational and always possible.

In the first biography of economist Milton Friedman, the 2023 book The Last Conservative, Jennifer Burns writes about Friedman’s relationship with his mentor, Arthur F. Burns, who became head of the Federal Reserve:

But then came a shock. Opening the newspaper one May evening, Friedman saw unbelievable headlines: “Wage Guide Urged by Burns in Break with Nixon Policy,” announced The New York Times, while The Wall Street Journal had “Burns Backs Use of Wage-Price Program of Some Sort to Bolster Inflation Fight.” All the major newspapers carried the story…

Far more than a policy disagreement, for Friedman the speech was a profound rupture in his emotional universe. Later that evening, after hours of tossing and turning, Friedman arose from his bed and poured out his anguish. The “incomes policy speech” had left him sleepless, “saddened, dismayed, + depressed,” he wrote to Burns in a passionate letter. “Though I know this is not fair or right or generous—the word that keeps coming to mind is ‘betrayed.’” How could Burns—who had repeated again and again
his stance against wage and price controls—make such a reversal? The letter tacked between incredulity and loss. “Never in my wildest dreams did I believe that the central bank virus was so potent that it could corrupt even you in so short a time,” Friedman mourned. Maybe there was a case to be made for incomes policy, but he simply could not imagine what it was. “Incomes policy, in any shape + form, is bad economics + the entering wedge for still worse economics,” he wrote. It would obscure the real
progress recently made in slowing inflation. Incomes policy would get the credit that belonged to monetary restraint. And, Friedman continued, the proposal “verges, in my mind, on the dishonest in spreading lies to the public.” It was simply not true that inflation was “produced by unions”— rather it was produced “only in Washington,” by misguided policy.33 Even Burns himself had said as much, in the past. Although Friedman called only the policy dishonest, the implications extended to Burns’s character.

Stepping back, for a moment Friedman grasped that his letter was “melodramatic rather than cold and logical.” But his missives to Burns had always resembled diary entries; never before had he dissembled or masked his feelings. It was obvious to all who knew him that Friedman loved being the smartest guy in the room. It was also clear he loved to smash idols. Pigou, Keynes, Samuelson—his whole life, names others worshipped were
his targets. But underneath all this, imperceptibly running through the years, was a contrapuntal desire for a wise man, a counselor, a superior, someone to admire and esteem. Burns, arriving in the fatherless Friedman’s life just as he considered his professional future, had played this role for decades.

“Arthur, there remains no one whom I so admire + feel so close to—Rose only excepted—and so hate to hurt,” Friedman told him in his closing lines…

As a fellow Jewish man with immigrant roots who had risen fast and far, Burns was in some ways a natural father figure, but in other ways he never quite fit the role. Friedman’s closest relationships were always with those who shared his fundamental orientation to economics and politics.

True, he retained cordial relationships with his opponents. But friendship,
as it developed in his life, was rarely about the simple joy of companionship. From his student days in Chicago to his marriage with Rose, Friedman had always blended ideological, professional, and personal ties. Burns’s speech, with its reference to cost-push inflation, revealed a truth that was perhaps the most painful of all: Burns did not accept Friedman’s theory of inflation…

Friedman had somehow managed to evade the obvious. Burns was an institutional economist and a moderate Republican, but he was not a Friedmanite or even Friedmanesque. The two men were poles apart on the most important economic issue of the time.

Soon after, Friedman realized to his horror that their differences would
be the subject of wide public discussion…

When the two finally connected over the phone, more than a week after Friedman’s first midnight letter, Burns was cold. In fact, he didn’t want to talk to anyone over the holiday, he told Friedman. “You were clearly politely saying that you did not want to talk to me,” Friedman reflected in a second late-night scrawl. “I was so taken aback + so slow in comprehending what you were really saying that I fear I lapsed into incoherence.” Their awkward conversation showed Friedman that “my earlier letter was a major blunder.”38 No less than Friedman, Burns must have felt betrayal, too. Here he was at the pinnacle of his career, under the white-hot lights of national fame—and his most trusted admirer and friend had only criticism to offer…

In midsummer [1973], Friedman received a pointed letter from a reader he did not know. “You used to flagellate the Federal Reserve for its misdeeds. And you had good reason,” remembered the reader. “But the reasons you have had since 1969 have been far more compelling. And yet for the most part you seem to have remained silent and diplomatic.”94 The letter prompted a reckoning of sorts. “Mea culpa,” Friedman pleaded in response, explaining, “Arthur Burns is a revered former teacher of mine, one of my closest personal friends for forty years, and also a man for whose character and
ability I have tremendous admiration.”

…Friedman had always venerated Burns, continuing to treat him with deference even as his career transformed them into equals. In turn, Burns perpetually regarded Friedman as some sort of overgrown undergraduate; a welcome contributor to research, but certainly not someone with meaningful ideas that might alter his own. He may even have perversely resisted his former student’s advice, just to keep the hierarchy intact.

During the Ford administration, Friedman’s letters to Burns trickled to a halt. Inflation remained stubbornly high, hovering at almost 9 percent in 1975 before surging again to 11 percent and then, in 1980, reaching an unprecedented 13.5 percent. Burns would go down in history as the man on the watch during the Great Inflation, with prices during his tenure climbing an average of 7 percent annually. What was there left to say, except “I told you so”?

In his 2015 paper, Shifting identification: A theory of apologies and pseudo-apologies, professor Joshua Bentley wrote:

People identify with each other and act collectively because they have common beliefs, goals, concerns, or enemies. For instance, people who vote for a political party or cheer for a particular sports team do so because they identify somehow with that party or team. Although people naturally strive for identification, Burke (1969) also wrote, “one need not scrutinize the concept of ‘identification’ very sharply to see, implied in it at every turn, its ironic counterpart: division” (p. 23). Identification implies division because if people were not separated from one another they would have no reason to seek identification. At the same time, when people do identify with certain groups or ideas, they inevitably reject or dissociate themselves from other groups or ideas. In the United States, for example, identifying with the Republican Party means separating oneself from the Democratic Party…

…attitudes toward people and objects influence each other. Heider proposed a model in which a person (P) and some other person (O) both hold opinions about an object, idea, or event (X). In Heider’s P–O–X model, the opinions of P and O toward X and toward each other can be either positive or negative. People feel a mental imbalance when they disagree with others whom they like or respect. Thus, people feel cognitive pressure to agree with their friends’ opinions.

…people use rhetoric to overcome their divisions. Relationships between people lead them to care about one another’s opinions and attitudes. People tend to prefer agreement over disagreement, and if a disagreement does arise, people may try to achieve symmetry (i.e., cognitive balance) either by coming to agreement on that issue or by changing the way they feel about each other. In some cases, people also agree to disagree, but Newcomb was skeptical of such resolutions, calling them “relatively stressful states of equilibrium” (1953, p. 401). To understand balance theory and the co-orientation process, imagine two friends who like the same song. They experience cognitive balance (at least in this respect) because their orientation toward a common object is the same. However, if one friend likes the song and the other dislikes it, each friend will experience a degree of cognitive imbalance and feel pressure to resolve the disagreement. They may attempt to change one another’s mind. If either friend is successful at this attempt, balance will be restored. If not, the friends may change their opinion of each other (e.g., they may have less respect for the other’s musical taste). The more serious a disagreement is, the more strain it puts on a relationship…

When two people identify with each other they can achieve cognitive balance by either identifying with or dissociating from a common object (another person, an idea, an action, etc.). By contrast, when one person seeks to identify with an object and the other person seeks to dissociate from that object, those two people cannot identify with each other without creating an imbalance. The tension they feel will exert pressure on them to change their identification with the object or with each other.

About Luke Ford

I've written five books (see Amazon.com). My work has been covered in the New York Times, the Los Angeles Times, and on 60 Minutes. I teach Alexander Technique in Beverly Hills (Alexander90210.com).
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