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Jack Kemp and Milton Friedman: The Power of Persuasion

John C. Weicher

Jack Kemp frequently reminded me of Milton Friedman—I worked for Kemp at HUD for four years, and I studied economics at the University of Chicago for five. They were certainly different—the athlete turned politician and the distinguished economist and scholar—and while they are both often regarded as architects of modern conservatism they didn’t always agree. But they both had strong views on important public policy issues, and they both took every opportunity to push their views. Any number of times over more than four decades, I saw Friedman vigorously discussing the benefits of free trade or the flaws in Federal Reserve policy with an intern or research assistant who had ventured to ask about something he had just said in a lecture, and who then found himself debating Milton Friedman about economics, to his surprise and often to his dismay. Milton Friedman thought anyone was worth talking to, and worth persuading.

Jack Kemp was also always willing to discuss his ideas with anyone who would listen. Or who had to listen: as HUD Secretary, Kemp necessarily held many meetings with housing lobbyists in his HUD office. Whatever the meeting was ostensibly about, Kemp was always ready to explain why there shouldn’t be any capital gains tax on stock sales, any more than on home sales. His interests were broad. Those were the years when the Soviet empire was breaking up, and Kemp was always a champion of freedom, anywhere in the world. Something would remind him of what was happening somewhere in eastern Europe, and suddenly he would be fervently explaining how important it was to promote freedom in, say, Lithuania, and the lobbyist, who didn’t know a thing about Lithuania including where it was and didn’t care either, had to play along and pretend to be interested, and try to carry on his half of the conversation. Those meeting were always great fun, for everyone but the lobbyist.

Neither Kemp nor Friedman ever seemed to get discouraged. Long ago, when I was an economics professor at Ohio State, the University of Chicago economist and Nobel laureate George Stigler came to campus to present a paper. At the lunch with faculty members before his talk, Stigler mentioned that he had happened to share a cab with Friedman to the airport. Stigler asked where Friedman was going, and Friedman said: to Washington, because there was a 10 percent chance to establish floating exchange rates this time. And Stigler, who had been a close friend of Friedman’s since their graduate school days, said, “Milton—the President doesn’t have a 10% chance of getting floating exchange rates!” And we all laughed about Friedman butting his head against the same wall once again.

That was the winter of 1971; the President was Richard Nixon; and by the summer of 1971 the United States had floating exchange rates. We have had floating exchange rates ever since.

When Jack Kemp came to HUD, he had two major causes: enterprise zones for distressed city neighborhoods, and tenant ownership of public housing. He had been advocating both for more than a decade. Nobody thought either one would be enacted. But it turned out that Kemp inherited a number of scandals from his predecessor, which came to light only after he came to HUD, and he devoted his first year in office to developing a far-reaching set of reforms that would prevent future scandals. Those reforms were worked out in a long series of meetings among Kemp’s senior staff in the summer and fall. They became the HUD Reform Act of 1989, which Congress passed almost exactly as Kemp proposed within a very few months. Throughout the process, Kemp kept reminding his staff, “Remember what we came to HUD for!” Not just to reform HUD, but to create enterprise zones and tenant ownership and help poor people live better lives.

The HUD Reform Act established Kemp’s authority in housing policy. In 1990 Congress approved his proposed programs for tenant ownership in public housing and other subsidized projects. The Los Angeles riots in early 1992 suddenly put enterprise zones on the front political burner, with such unlikely advocates as Los Angeles Mayor Tom Bradley and Washington Post columnist Richard Cohen. But the Democrats in control of Congress were not interested in providing a political victory to a Republican incumbent President running for re-election, and the Treasury Department was unenthusiastic. Kemp campaigned almost alone for his vision of communities “from sea to shining sea” where entrepreneurs could create businesses, and most especially create jobs for the poor residents, without punitive taxation and prohibitive regulation. He almost won in the Senate, forcing the Democrats to come at least halfway; but enterprise zones ultimately wound up in a broader bill that the president, with Kemp’s urging, felt it necessary to veto.

Kemp’s programs did not long survive his term at HUD. Although the 1992 Democratic platform paid him the tribute of supporting his tenant ownership programs, the Clinton Administration asked Congress to repeal them in 1994, and Congress obliged. In 1995, however, President Clinton launched a low-income homeownership initiative that continued through his administration. The new administration also created “empowerment zones” and “enterprise communities,” borrowing Kemp’s words but creating programs that were very different from enterprise zones: grant programs in a few large cities, with no regulatory reform or tax relief. But the HUD Reform Act is still on the books, and while housing program advocates and project developers often complain about its complications, the abuses of the 1980s have not recurred.

Milton Friedman and Jack Kemp share another distinction. Some of their causes are not faring well right now. Efforts to promote homeownership for lower-income families are being blamed for the subprime mortgage mess, and educational choice, which Friedman championed in his later years, may be reduced for poor children in the District of Columbia as Congress moves to terminate a federal program to provide a modest number of tuition vouchers, with no protest from the White House or Washington’s mayor.

But they were both optimists as well as advocates, and who is to say they were wrong?

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