Milton Friedman (1912-1996)

Hello Kinkaid:

I am a famous free-market economist and Nobel Laureate, but it certainly did not start this way! I had to claw my way into the Keynesian-dominated mainstream in the middle part of the last century.

My school of thought, Monetarism, challenged Keynesian economics from within. The idea that federal authorities can steer the economy via tax and spending policies was always naïve to me, and now the very idea is in real intellectual trouble. I can explain why, as can my colleague James Buchanan from a ‘Public Choice’ perspective.

I became increasingly attracted to the virtues of a free society during my seven-decade career. I advocated an all-volunteer army during the days of the military draft—and won. I advocated the legalization of (illegal) drugs many decades ago.[i] And I championed ‘school choice’ where poor parents in particular can use vouchers to have their children attend the school of their choice.

Late in life, I changed my mind about the efficacy of the Federal Reserve Bank. I once thought that monetary authorities would do the right thing; but politics always gets in the way. Maybe, just maybe, there are nonpolitical alternatives to the government’s monopoly on money.

I began my professional life as a supporter of FDR’s New Deal. Like all economists of my generation, I began as a Keynesian. I have changed my mind as a result of theory, fact, and debate. Take my quotations below as a point of departure for discussion. Don’t take my word for it. Let the best ideas win! (But do ask your teacher from time to time just for fun: ‘would Milton Friedman agree?’)

P.S. My mother, an immigrant, worked at what today would be considered a sweatshop. I hate to think of what it would have been like if ‘sweatshops’ had been banned or shamed away, given the alternatives available to her. Consider ‘sweatshops’ in the context of the developing world today—and discuss what their government is doing to keep them in a preindustrial state.

On Economic Freedom

“Our central theme in public advocacy has been the promotion of human freedom … [It] underlies our opposition to rent control and general wage and price controls, our support for educational choice, privatizing radio and television channels, an all-volunteer army, limitation of government spending, legalization of drugs, privatizing social security, free trade, and the deregulation of industry and private life to the fullest extent possible.”

On Public Policy

“I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.”

“One of the great mistakes is to judge policies and programs by their intentions rather than by their results.”

“The contrast between the ostensible objectives of government programs and their actual results—a contrast that has been a persistent theme of earlier chapters—is so pervasive, so widespread, that even many of the strongest supporters of big government have had to acknowledged government failure—though their solution almost always turns out to be still bigger government.”

“Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own.”

“In the government sphere, as in the market, there seems to be an invisible hand, but it operates in precisely the opposite direction from Adam Smith’s: an individual who intends only to serve the public interest by fostering government intervention is ‘led by an invisible hand to promote’ private interests, ‘which was no part of his intention.’

On Fiscal Policy

“You cannot reduce the deficit by raising taxes. Increasing taxes only results in more spending, leaving the deficit at the highest level conceivably accepted by the public. Political Rule Number One is government spends what government receives plus as much more as it can get away with.”

“The battle over a ceiling on federal spending has spotlighted the major economic problem facing this country in the coming decade: can we halt the growth of Leviathan—to use Hobbes’s expressive term for government? Or will Leviathan crush us?”

On Scholarship

“[These] standards of scholarship—attention to detail, concern with scrupulous accuracy, checking of sources, and above all, openness to criticism—… have affected the whole of my scholarship.”

“I have a single rule. What I say to one person, I say to everyone. I never say anything off the record.”

More Quotations to Ponder ….

“I think a major reason why intellectuals tend to move towards collectivism is that the collectivist answer is a simple one. If there’s something wrong, pass a law and do something about it.”

“When you stand before a civil servant, is there any real doubt who is the servant and who is the master?”

“The elementary fact is that ‘business’ does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the checks, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers, or stockholders. The corporation is a mere intermediary.”

“The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”

“The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.”

“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

[i] I see that the new president of Mexico, Enrique Peña Nieto, is asking for a new dialogue with the U.S. on this (politically incorrect) subject.