Friedman, in Israel, Clarifies Views

Prof. Milton Friedman, the Nobel Prize-winning American economist, arrived here this weekend on a visit to Israel during which he will be awarded an honorary degree by the Hebrew University. Friedman, a conservative, has been proposed by Likud as an economic advisor to the Israeli government. But in a statement at Ben Gurion Airport he said he did not have the necessary date on conditions in Israel to suggest a solution for its economic woes.

However, Friedman sought to clarify a major point of controversy over his economic theories, namely that fighting inflation requires unemployment. He said he did not favor unemployment but that a certain reduction in the rate of employment is usually a phenomena that accompanies anti-inflation measures. He said he did not know of any country in which the fight against inflation did not entail a temporary reduction of the employment rate.

In that connection, he mentioned West Germany and Japan which tackled inflationary problems in 1948. He said the measures taken in Chile after the military junta overthrew the Allende government were too extreme but the outcome was that Chile’s inflation rate was reduced from 25 to five percent per month.

Suggestions that Israel would have to endure a higher unemployment rate to combat inflation were denounced by Histadrut ofter Finance Minister Simcha Ehrlich suggested, following Likud’s election victory in May, that Friedman should be invited to advise the new government. Histadrut issues a statement yesterday challenging the economic concepts on which Friedman based his ideas.