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“He was the darling of the Reaganite revolution and the American right,” said Bruce Lincoln, a professor of the history of religions who is leading the charge against the institute. “He was a scathing critic of the state playing a role of any importance.” If the institute goes ahead, Prof. Lincoln said it will attract “a certain kind of donor who is a great cheerleader for Friedman's politics,” and that donor will try to “steer research in a direction that's going to advance the cause.”
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I think your answer to the question of why there's so much opposition to Friedman is right there. It's not like it's the economists from the University of Chicago that are ones opposed to this, it's falculty from others diciplines who know jack s&*t about eocnomics (Ie the Naomi Klien Crowd) that are against this.
http://www.friedmanfacts.com/
http://www.cato.org/pubs/bp/bp102.pdf