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Every passage

502 passages from 106 sources, oldest first, 483 checked against the source. Each one names where it came from and whether the wording has been checked.

This is the complete list, which is the wrong place to start. If you want to know what he argued rather than what the archive holds, begin with his key principles.

The Methodology of Positive Economics (1953)

  1. The construction of hypotheses is a creative act of inspiration, intuition, invention; its essence is the vision of something new in familiar material. The process must be discussed in psychological, not logical, categories; studied in autobiographies and biographies, not treatises on scientific method; and promoted by maxim and example, not syllogism or theorem.
    The Methodology of Positive Economics
    Journal article, 1953, Essays in Positive Economics (University of Chicago Press, 1953), p. 43
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  2. Consider the problem of predicting the shots made by an expert billiard player. It seems not at all unreasonable that excellent predictions would be yielded by the hypothesis that the billiard player made his shots as if he knew the complicated mathematical formulas that would give the optimum directions of travel … Our confidence in this hypothesis is not based on the belief that billiard players, even expert ones, can or do go through the process described; it derives rather from the belief that, unless in some way or other they were capable of reaching essentially the same result, they would not in fact be expert billiard players.

    Context. From his essay on economic method, arguing that a hypothesis should be judged by how well it predicts, not by whether its assumptions describe what people actually do. He goes on to apply the same reasoning to business firms that behave as if they were seeking to maximize their returns.

    The Methodology of Positive Economics
    Journal article, 1953, Essays in Positive Economics (University of Chicago Press, 1953), p. 21
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  3. But, if we are to use effectively these abstract models and this descriptive material, we must have a comparable exploration of the criteria for determining what abstract model it is best to use for particular kinds of problems, what entities in the abstract model are to be identified with what observable entities, and what features of the problem or of the circumstances have the greatest effect on the accuracy of the predictions yielded by a particular model or theory.
    The Methodology of Positive Economics
    Journal article, 1953, Essays in Positive Economics (University of Chicago Press, 1953), p. 42
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A Theory of the Consumption Function (1957)

  1. Over the period covered by these data, a drastic change has occurred in the responsibilities undertaken by the state to provide assistance to the aged, unemployed and otherwise dependent. … The conclusion is that, without much more detailed analysis, it is not possible to say whether the net effect of governmental social security and other programs has been to increase or to decrease recorded savings as a fraction of income, let alone by how much.

    Context. Discussing what lies behind the long-run trend in the fraction of income Americans save. The omitted sentences weigh two opposing effects: state assistance reduces the need for private reserves and so private saving, while the data count growth in government pension and retirement funds as personal saving, and those funds have grown by less than the benefits promised.

    A Theory of the Consumption Function
    Book, 1957, Princeton University Press for the National Bureau of Economic Research, Chapter V, “Consistency of the Permanent Income Hypothesis with Existing Evidence on the Relation between Consumption and Income: Time Series Data,” p. 123
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Capitalism and Freedom (1962)

  1. Concentrated power is not rendered harmless by the good intentions of those who create it.
    Capitalism and Freedom
    Book, 1962, Ch. 13 Conclusion, p. 201
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  2. To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served.
    Capitalism and Freedom
    Book, 1962, Introduction, pp. 1–2
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  3. A government which maintained law and order, defined property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented private charity and the private family in protecting the irresponsible, whether madman or child—such a government would clearly have important functions to perform. The consistent liberal is not an anarchist.
    Capitalism and Freedom
    Book, 1962, Ch. 2 The Role of Government in a Free Society, p. 34
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  4. The heart of the liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights, subject only to the proviso that he not interfere with the freedom of other individuals to do the same. This implies a belief in the equality of men in one sense; in their inequality in another. Each man has an equal right to freedom. This is an important and fundamental right precisely because men are different, because one man will want to do different things with his freedom than another, and in the process can contribute more than another to the general culture of the society in which many men live. The liberal will therefore distinguish sharply between equality of rights and equality of opportunity, on the one hand, and material equality or equality of outcome on the other.
    Capitalism and Freedom
    Book, 1962, Ch. 12 “The Alleviation of Poverty”, p. 195
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  5. A liberal is fundamentally fearful of concentrated power. His objective is to preserve the maximum degree of freedom for each individual separately that is compatible with one man's freedom not interfering with other men's freedom. He believes that this objective requires that power be dispersed. He is suspicious of assigning to government any functions that can be performed through the market, both because this substitutes coercion for voluntary co-operation in the area in question and because, by giving government an increased role, it threatens freedom in other areas.
    Capitalism and Freedom
    Book, 1962, Ch. 3 The Control of Money, p. 39
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  6. Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated — a system of checks and balances.
    Capitalism and Freedom
    Book, 1962, Ch. 1 The Relation Between Economic Freedom and Political Freedom, p. 15
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  7. In a much quoted passage in his inaugural address, President Kennedy said, “Ask not what your country can do for you—ask what you can do for your country.” It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. The paternalistic “what your country can do for you” implies that government is the patron, the citizen the ward, a view that is at odds with the free man’s belief in his own responsibility for his own destiny. The organismic, “what you can do for your country” implies that government is the master or the deity, the citizen, the servant or the votary.
    Capitalism and Freedom
    Book, 1962, Introduction, p. 1
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Should There Be an Independent Monetary Authority? (1962)

  1. My conclusion is that an automatic commodity standard is neither a feasible nor a desirable solution to the problem of establishing monetary arrangements for a free society. It is not desirable because it would involve a large cost in the form of resources used to produce the monetary commodity. It is not feasible because the mythology and beliefs required to make it effective do not exist.

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 206 of the 1968 House reprint
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  2. It is immediately clear that if we were to take up each case separately, a majority would almost surely vote to deny free speech in most cases and perhaps even in every case. ( … ) Exactly the same considerations apply in the monetary area. If each case is considered on its merits, the wrong decision is likely to be made in a large fraction of cases because the decisionmakers are examining only a limited area and are not taking into account the cumulative consequences of the policy as a whole.

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 213 of the 1968 House reprint
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  3. Another defect of the conduct of monetary policy through an independent central bank that has a good deal of leeway and power is the extent to which the policy is thereby made highly dependent on personalities. In studying the history of American monetary policy, I have been struck by the extraordinary importance of accidents of personality.

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 211 of the 1968 House reprint
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  4. The text for this paper, to paraphrase the famous remark attributed to Poincaré, is, “Money is too important to be left to the central bankers.”

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 205 of the 1968 House reprint
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  5. Another occasion in U.S. history which strikingly illustrates this point is our experience from 1929 to 1933. Without doubt, the most serious mistake in the history of the Reserve System was its mismanagement of monetary matters during those years.

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 211 of the 1968 House reprint
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  6. I should like to emphasize that I do not regard this proposal as a be-all and end-all of monetary management, as a rule which is somehow to be written in tablets of gold and enshrined for all future time. ( … ) Such a rule seems to me the only feasible device currently available for converting monetary policy into a pillar of a free society rather than a threat to its foundation.

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 214 of the 1968 House reprint
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  7. The political objections are perhaps more obvious than the economic ones. Is it really tolerable in a democracy to have so much power concentrated in a body free from any kind of direct, effective political control?

    Context. From his essay on how a free society should control money, which weighs a commodity standard, an independent central bank, and legislated rules. He enclosed it with his 1968 statement to the House subcommittee, which reprinted it.

    Should There Be an Independent Monetary Authority?
    Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962) (the reprint’s heading gives no page range for the original and it remains unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 205 to 214., p. 208 of the 1968 House reprint
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A Monetary History of the United States (1963)

  1. The contraction from 1929 to 1933 was by far the most severe business-cycle contraction during the near-century of U.S. history we cover and it may well have been the most severe in the whole of U.S. history.
    A Monetary History of the United States
    Book, 1963, Princeton University Press for the National Bureau of Economic Research, Ch. 7 “The Great Contraction, 1929–33”, p. 299 (with Anna J. Schwartz)
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Statement to the Subcommittee on Fiscal Policy (1965)

  1. The issues that will arise will be a continuation of those that have bothered us these past decades. The main ones seem to me to be as follows: 1. The appropriate relation between the level of taxes and the level of expenditures on the average of good and bad years. 2. Criteria for determining the fraction of national income that is appropriately spent through the Federal Government. …

    Context. A short written statement he submitted when the Joint Economic Committee’s fiscal policy subcommittee asked economists which fiscal policy issues the coming decade would raise. He closes by saying he kept to fiscal policy broadly conceived and avoided questions of the equity of the tax and expenditure structure.

    Statement to the Subcommittee on Fiscal Policy
    Testimony, 1965, Fiscal Policy Issues of the Coming Decade: Statements by Individual Economists and Representatives of Interested Organizations, Subcommittee on Fiscal Policy, Joint Economic Committee, 89th Congress, 1st Session (1965), p. 55
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A Volunteer Army (1966)

  1. One of the greatest advances in human freedom was the commutation of taxes in kind to taxes in money. We have reverted to a barbarous custom. It is past time that we regain our heritage.

    Context. The closing lines of the column. The “barbarous custom” is conscription, which he has described as a tax in kind.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  2. Whatever the extra amount, we are now paying a larger sum in concealed form. Conscription is a tax in kind—forced labor exacted from the men who serve involuntarily. The amount of the tax is the difference between the sum for which they would voluntarily serve and the sum we now pay them—if Joe Namath were drafted, his tax might well run into hundreds of thousands of dollars.

    Context. From his answer to the objection that a volunteer army would cost too much. The “extra amount” is the added military pay needed to attract volunteers, which he notes was estimated at $4 billion to $20 billion a year.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  3. The draft is inequitable because irrelevant considerations play so large a role in determining who serves. It is wasteful because deferment of students, fathers and married men jams colleges, raises the birth rate and fuels divorce courts. It is inconsistent with a free society because it exacts compulsory service from some and limits the freedom of others to travel abroad, emigrate or even to talk and act freely. So long as compulsion is retained, these defects are inevitable.

    Context. From a Newsweek column of December 1966 arguing that the United States should end conscription and man its armed forces with volunteers.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  4. A lottery would only make the arbitrary element overt. Universal national service would compound the evil—regimenting all youth to camouflage the regimentation of some.

    Context. Follows directly on his case that the draft is inequitable, wasteful and inconsistent with a free society. Three years later the draft lottery was adopted.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  5. A military draft is undesirable and unnecessary. We can and should man our armed forces with volunteers—as the United States has traditionally done except in major wars.

    Context. The opening of the column. He quoted these two sentences himself in a later Newsweek column on the draft, giving the date as December 19, 1966.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  6. There is a real danger, but it arises from a strong armed force not from the method of recruiting enlisted men. Napoleon and Franco both rose to power at the head of a conscript army. However we recruit, the essential need is to maintain close links between the officer corps and the body politic.

    Context. His answer to the first of two objections to a volunteer force: that a “professional” army endangers political freedom.

    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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Conference on the Draft, University of Chicago (1966)

  1. Now, when anybody starts talking about this he immediately shifts language. My army is “volunteer,” your army is “professional,” and the enemy’s army is “mercenary.” All these three words mean exactly the same thing. … It’s always a puzzle to me why people should think that the term “mercenary” somehow has a negative connotation. I remind you of that wonderful quotation of Adam Smith when he said, “You do not owe your daily bread to the benevolence of the baker, but to his proper regard for his own interest.” And this is much more broadly based. In fact, I think mercenary motives are among the least unattractive that we have.

    Context. From his remarks at a conference on the draft held at the University of Chicago in December 1966; “this” is a volunteer army.

    Conference on the Draft, University of Chicago
    Speech, 1966, The Draft: A Handbook of Facts and Alternatives, ed. Sol Tax (University of Chicago Press, 1967), Discussions: Fourth Session, p. 366
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Newsweek column of September 26, 1966 (1966)

  1. I am convinced that the minimum-wage law is the most anti-Negro law on our statute books—in its effect, not its intent.

    Context. From his first Newsweek column, on the minimum-wage increase Congress had just passed. He quoted it again six years later, adding: “This remains the unpalatable truth.”

    Newsweek column of September 26, 1966
    Column, 1966, Newsweek (September 26, 1966), his first Newsweek column; quoted by Friedman himself in “Legislating Unemployment” (Newsweek, 1972), reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100. Later collected in An Economist’s Protest (1972)., Congressional Record, June 28, 1972, p. 23100
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  2. It is a tragic but undoubted legacy of the past—and one we must try to correct—that, on the average, Negroes have lower skills than whites. Similarly, teen-agers are less skilled than older workers. Both Negroes and teen-agers are only made worse off by discouraging employers from hiring them. On-the-job training—the main route whereby the unskilled have become skilled—is thus denied them.

    Context. From his first Newsweek column, on the minimum-wage increase Congress had just passed. He quoted it again six years later, adding: “This remains the unpalatable truth.”

    Newsweek column of September 26, 1966
    Column, 1966, Newsweek (September 26, 1966), his first Newsweek column; quoted by Friedman himself in “Legislating Unemployment” (Newsweek, 1972), reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100. Later collected in An Economist’s Protest (1972)., Congressional Record, June 28, 1972, p. 23100
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Why Not a Voluntary Army? (1966)

  1. On a more mundane budgetary level, the argument that a voluntary army would cost more simply involves a confusion of apparent with real cost. By this argument, the construction of the Great Pyramid with slave labor was a cheap project. The real cost of conscripting a soldier who would not voluntarily serve on present terms is not his pay and the cost of his keep. It is the amount for which he would be willing to serve. He is paying the difference. … When he is forced to serve, we are in effect imposing on him a tax in kind equal in value to the difference between what it would take to attract him and the military pay he actually receives.

    Context. From a paper he gave at a conference on the draft at the University of Chicago in December 1966, arguing that the United States should move to an all-volunteer armed force. His case is for peacetime: in the same paper he grants that “for a major war, a strong case can be made for compulsory service.” Here he answers the objection that a volunteer army would cost more. The ellipsis omits his example of a star professional football player and an unemployed worker, who would need very different pay to be attracted into the army.

    Why Not a Voluntary Army?
    Journal article, 1966, Paper for the conference on the draft held at the University of Chicago in December 1966, sponsored by the Ford Foundation and chaired by Sol Tax; reprinted in full in the Congressional Record, House, March 9, 1967, pp. 6098 to 6100, inserted by Representative Donald Rumsfeld among four conference papers on a voluntary army., Congressional Record, March 9, 1967, p. 6099
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  2. So long as compulsion is retained, inequity, waste, and interference with freedom are inevitable. A lottery would only make the arbitrary element in the present system overt. Universal national service would only compound the evil—regimenting all young men, and perhaps women, to camouflage the regimentation of some.

    Context. From a paper he gave at a conference on the draft at the University of Chicago in December 1966, arguing that the United States should move to an all-volunteer armed force. His case is for peacetime: in the same paper he grants that “for a major war, a strong case can be made for compulsory service.”

    Why Not a Voluntary Army?
    Journal article, 1966, Paper for the conference on the draft held at the University of Chicago in December 1966, sponsored by the Ford Foundation and chaired by Sol Tax; reprinted in full in the Congressional Record, House, March 9, 1967, pp. 6098 to 6100, inserted by Representative Donald Rumsfeld among four conference papers on a voluntary army., Congressional Record, March 9, 1967, p. 6099
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  3. A voluntary army would preserve the freedom of individuals to serve or not to serve. Or, put the other way, it would avoid the arbitrary power that now resides in draft boards to decide how a young man shall spend several of the most important years of his life—let alone whether his life shall be risked in warfare.

    Context. From a paper he gave at a conference on the draft at the University of Chicago in December 1966, arguing that the United States should move to an all-volunteer armed force. His case is for peacetime: in the same paper he grants that “for a major war, a strong case can be made for compulsory service.” This is the second of the advantages he lists, under the heading “Individual freedom”.

    Why Not a Voluntary Army?
    Journal article, 1966, Paper for the conference on the draft held at the University of Chicago in December 1966, sponsored by the Ford Foundation and chaired by Sol Tax; reprinted in full in the Congressional Record, House, March 9, 1967, pp. 6098 to 6100, inserted by Representative Donald Rumsfeld among four conference papers on a voluntary army., Congressional Record, March 9, 1967, p. 6098
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The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army (1967)

  1. The military coup just engineered in Greece was by an army manned by conscripts. So was the recent military takeover in Argentina. Napoleon and Franco rose to power at the head of conscripts. Britain and the U.S. have maintained freedom while relying primarily on volunteers; Switzerland and Sweden, while using conscription. It is hard to find any relation historically between the method of recruiting enlisted men and the political threat from the armed forces.

    Context. From a May 1967 New York Times Magazine article, written as Congress weighed renewing the draft, arguing that the United States should end conscription and man its armed forces with volunteers. He is answering the objection that a volunteer army would endanger political freedom. The danger is real, he says, but it comes from large armed forces and the industry that supports them, not from how enlisted men are recruited; free institutions are not made safer by filling the ranks by compulsion. “The military coup just engineered in Greece” is the colonels’ coup of April 1967.

    The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army
    Column, 1967, The New York Times Magazine, May 14, 1967; reprinted in full in the Congressional Record, Senate, May 15, 1967, pp. 12546 to 12548, inserted by Senator Gaylord Nelson., Congressional Record, May 15, 1967, p. 12548
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  2. Clearly, it is a good thing not a bad thing to offer better alternatives to the currently disadvantaged. The argument to the contrary rests on a political judgment: that a high ratio of Negroes in the armed services would exacerbate racial tensions at home and provide in the form of ex-soldiers a militarily trained group to foment violence. Perhaps there is something to this. My own inclination is to regard it as the reddest of red herrings. Our Government should discriminate neither in the civil nor in the military services. We must handle our domestic problems as best we can and not use them as an excuse for denying Negroes opportunities in the military service.

    Context. From a May 1967 New York Times Magazine article, written as Congress weighed renewing the draft, arguing that the United States should end conscription and man its armed forces with volunteers. He is answering the objection that a volunteer force would be manned predominantly by Black Americans, because military pay and careers would be more attractive than the other jobs open to them. Just before, he notes that Black soldiers were a larger share of the men in combat in Vietnam than of the population, and that most of them were there by choice, having enlisted or re-enlisted.

    The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army
    Column, 1967, The New York Times Magazine, May 14, 1967; reprinted in full in the Congressional Record, Senate, May 15, 1967, pp. 12546 to 12548, inserted by Senator Gaylord Nelson., Congressional Record, May 15, 1967, p. 12547
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  3. The implicit tax in kind is not a light one. If it were proposed that we impose a special income tax of 50 per cent on enlisted men in the armed services, there would be cries of outrage. Yet that is what we are now doing in concealed form. Abolishing conscription would have the great merit of imposing those taxes on the rest of us, where they belong, not on the young men in uniform.

    Context. From a May 1967 New York Times Magazine article, written as Congress weighed renewing the draft, arguing that the United States should end conscription and man its armed forces with volunteers. Just before, he explains the “tax in kind”: the real cost of conscripting a man who would not serve on present terms is what it would take to attract him, and the gap between that and his military pay is a tax he pays in service.

    The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army
    Column, 1967, The New York Times Magazine, May 14, 1967; reprinted in full in the Congressional Record, Senate, May 15, 1967, pp. 12546 to 12548, inserted by Senator Gaylord Nelson., Congressional Record, May 15, 1967, p. 12547
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  4. Military service is now demeaned, treated as a necessary but degrading duty that men have to be dragooned into performing. A voluntary army would restore a proper sense of pride, of respect for the important, dangerous and difficult task that the armed forces perform.

    Context. From a May 1967 New York Times Magazine article, written as Congress weighed renewing the draft, arguing that the United States should end conscription and man its armed forces with volunteers. Here he names, among the military advantages of a volunteer force, its effect on morale.

    The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army
    Column, 1967, The New York Times Magazine, May 14, 1967; reprinted in full in the Congressional Record, Senate, May 15, 1967, pp. 12546 to 12548, inserted by Senator Gaylord Nelson., Congressional Record, May 15, 1967, p. 12546
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  5. The voluntary method provides a continuing referendum of the public at large. The popularity or unpopularity of the activities for which the armed forces are used will clearly affect the ease of recruiting men. This is a consideration that will be regarded by some, including myself, as an advantage of the voluntary method, by others as a disadvantage.

    Context. From a May 1967 New York Times Magazine article, written as Congress weighed renewing the draft, arguing that the United States should end conscription and man its armed forces with volunteers. He is answering the objection that volunteer forces lack the flexibility of the draft. The flexibility conscription provides, he says, has another side: it lets the Administration and the military, at least for a time, commit U.S. forces fairly arbitrarily.

    The Case for Abolishing the Draft—and Substituting for It an All-Volunteer Army
    Column, 1967, The New York Times Magazine, May 14, 1967; reprinted in full in the Congressional Record, Senate, May 15, 1967, pp. 12546 to 12548, inserted by Senator Gaylord Nelson., Congressional Record, May 15, 1967, p. 12547
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Monetary Policy (1968)

  1. In two earlier columns on monetary policy, I was highly critical of the Federal Reserve System for acting too late and then, when it did act, for overreacting. This time, I come to praise, not to criticize. Since November 1967, the Fed has moved not only in the right direction but also by about the right amount.

    Context. From a Newsweek column reviewing the Federal Reserve’s record since 1965. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    Monetary Policy
    Column, 1968, Newsweek (June 3, 1968); reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 225–226, p. 225 of the 1968 House reprint
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  2. The sharper response of production than of prices is typical. An inflationary process, once underway, develops an inertia of its own. It takes an economic slowdown to stop the acceleration of prices and, even then, it takes a long time to restore price stability. That is why it is so important to prevent inflation from gaining momentum.

    Context. From a Newsweek column reviewing the Federal Reserve’s record since 1965. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it. “The sharper response” is the fall in industrial production after the Fed’s 1966 tightening, against a smaller cut in inflation, from 3.7 to 2.3 percent a year.

    Monetary Policy
    Column, 1968, Newsweek (June 3, 1968); reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 225–226, p. 226 of the 1968 House reprint
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No Draftees to Vietnam (1968)

  1. The first question hardly needs discussion. Men who agree on little else about Vietnam would agree on the desirability of not using conscripts to fight the war.

    Context. The first of the two questions he poses about his proposal: is it desirable, and is it feasible.

    No Draftees to Vietnam
    Column, 1968, Newsweek (December 30, 1968); reprinted in full in the Congressional Record, Extensions of Remarks, January 16, 1969, pp. 1161 to 1162, introduced by Representative Henry B. Gonzalez as “Mr. Friedman’s column, from the December 30, 1968, issue of Newsweek”, Congressional Record, January 16, 1969, p. 1161
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  2. The key question is, therefore, whether it is feasible to man the Vietnam war with volunteers. I believe the answer is, Yes. Will it be easy to do so? The answer is clearly, No. But that is hardly decisive. The aim of national policy should not be to make life easy for government officials, whether civilian or military.

    Context. From a Newsweek column written after the November 1968 election, proposing that the incoming Nixon administration stop sending draftees to Vietnam as a first step toward an all-volunteer army.

    No Draftees to Vietnam
    Column, 1968, Newsweek (December 30, 1968); reprinted in full in the Congressional Record, Extensions of Remarks, January 16, 1969, pp. 1161 to 1162, introduced by Representative Henry B. Gonzalez as “Mr. Friedman’s column, from the December 30, 1968, issue of Newsweek”, Congressional Record, January 16, 1969, p. 1161
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  3. The difficulties are real. But they are far from insuperable. They offer a challenge to the men who run the armed forces, not a reason for rejecting a policy that offers so many advantages.

    Context. The conclusion, after he works through three difficulties: fewer “reluctant volunteers” (to be offset by higher combat pay), the twelve-month limit on Vietnam tours, and the Army’s need for units rather than individual men. The same paragraph goes on to his recommendation: that President Nixon and Secretary of Defense Laird set a near date after which no more draftees would be sent to Vietnam, “unless they volunteer for that duty.”

    No Draftees to Vietnam
    Column, 1968, Newsweek (December 30, 1968); reprinted in full in the Congressional Record, Extensions of Remarks, January 16, 1969, pp. 1161 to 1162, introduced by Representative Henry B. Gonzalez as “Mr. Friedman’s column, from the December 30, 1968, issue of Newsweek”, Congressional Record, January 16, 1969, p. 1162
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  4. But, in the interim, the new Administration could reduce enormously the bitterness, … and division arising from the Vietnam conflict by taking a major first step toward an all-volunteer army: sending no more draftees to Vietnam.

    Context. The opening sentence just before notes that President-elect Nixon was committed to ending conscription once manpower needs in Vietnam declined substantially.

    No Draftees to Vietnam
    Column, 1968, Newsweek (December 30, 1968); reprinted in full in the Congressional Record, Extensions of Remarks, January 16, 1969, pp. 1161 to 1162, introduced by Representative Henry B. Gonzalez as “Mr. Friedman’s column, from the December 30, 1968, issue of Newsweek”, Congressional Record, January 16, 1969, p. 1161
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Statement to the House Subcommittee on Domestic Finance (1968)

  1. In the present state of our knowledge, I believe that the best—or least bad—guideline for monetary policy is steady growth of the quantity of money at a rate that on the average will mean stable prices of final products.

    Context. A written statement he sent in reply to the subcommittee’s questionnaire to economists on monetary policy guidelines, printed in the committee’s December 1968 compendium with reprints he enclosed.

    Statement to the House Subcommittee on Domestic Finance
    Testimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), p. 203
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  2. In my opinion, it would be desirable for Congress to instruct the Federal Reserve to adopt this policy. That would assure that the Federal Reserve System would provide a steady and stable background for private and public economic policy, instead of being itself a source of instability as it so often has been in the past and as it is currently being at this very moment.

    Context. A written statement he sent in reply to the subcommittee’s questionnaire to economists on monetary policy guidelines, printed in the committee’s December 1968 compendium with reprints he enclosed. “This policy” is steady growth in the quantity of money at a rate that would mean stable prices on average. His next sentence names a fallback if Congress does not legislate it: requiring the Federal Reserve to report whenever money growth falls outside a range such as 2 to 6 percent a year.

    Statement to the House Subcommittee on Domestic Finance
    Testimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), pp. 203–204
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  3. On interest rates, the desirable policy is to permit interest rates to be determined completely by free markets. ( … ) A free competitive market in loanable funds is no less desirable than a free and competitive market in other goods and services.

    Context. A written statement he sent in reply to the subcommittee’s questionnaire to economists on monetary policy guidelines, printed in the committee’s December 1968 compendium with reprints he enclosed. The omitted sentences list his specific steps: let banks pay interest on demand deposits, end ceilings on time-deposit rates, abolish discounting or make the discount rate a penalty rate above market rates, and remove limits on the interest the Government may pay on its debt.

    Statement to the House Subcommittee on Domestic Finance
    Testimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), p. 204
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  4. As a matter of principle, I am opposed to independence for the Federal Reserve System. Monetary policy should be administered by a governmental agency in the regular administrative hierarchy ultimately responsible to Congress.

    Context. A written statement he sent in reply to the subcommittee’s questionnaire to economists on monetary policy guidelines, printed in the committee’s December 1968 compendium with reprints he enclosed.

    Statement to the House Subcommittee on Domestic Finance
    Testimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), p. 204
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The Role of Monetary Policy (1968)

  1. The great contraction is tragic testimony to the power of monetary policy—not, as Keynes and so many of his contemporaries believed, evidence of its impotence.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 216 of the 1968 House reprint
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  2. As an empirical matter, low-interest rates are a sign that monetary policy has been tight—in the sense that the quantity of money has grown slowly; high-interest rates are a sign that monetary policy has been easy—in the sense that the quantity of money has grown rapidly. The broadest facts of experience run in precisely the opposite direction from that which the financial community and academic economists have all generally taken for granted.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 218 of the 1968 House reprint
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  3. The first and most important lesson that history teaches about what monetary policy can do—and it is a lesson of the most profound importance—is that monetary policy can prevent money itself from being a major source of economic disturbance.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 221 of the 1968 House reprint
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  4. True, money is only a machine, but it is an extraordinarily efficient machine. ( … ) But money has one feature that these other machines do not share. Because it is so pervasive, when it gets out of order, it throws a monkey wrench into the operation of all the other machines.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 221 of the 1968 House reprint
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  5. To avoid misunderstanding, let me emphasize that by using the term “natural” rate of unemployment, I do not mean to suggest that it is immutable and unchangeable. On the contrary, many of the market characteristics that determine its level are man-made and policy-made. In the United States, for example, legal minimum wage rates ( … ) and the strength of labor unions all make the natural rate of unemployment higher than it would otherwise be.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 219 of the 1968 House reprint
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  6. My own prescription is still that the monetary authority go all the way in avoiding such swings by adopting publicly the policy of achieving a steady rate of growth in a specified monetary total. The precise rate of growth, like the precise monetary total, is less important than the adoption of some stated and known rate.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 223 of the 1968 House reprint
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  7. To state this conclusion differently, there is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. ( … ) The widespread belief that there is a permanent trade-off is a sophisticated version of the confusion between “high” and “rising” that we all recognize in simpler forms. A rising rate of inflation may reduce unemployment, a high rate will not.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 220 of the 1968 House reprint
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  8. More frequently, they have moved in the right direction, albeit often too late, but have erred by moving too far. Too late and too much has been the general practice.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 223 of the 1968 House reprint
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An Economist's Protest: Columns in Political Economy (1969)

  1. In a free society, a government has no business using the power of the law or the taxpayers’ money to propagandize for some views and to prevent the transmission of others.
    An Economist's Protest: Columns in Political Economy
    Book, 1969, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Book Burning, FCC Style,” column of June 16, 1969, p. 153
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A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits (1970)

  1. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means.

    Context. On the doctrine of “social responsibility” taken seriously.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  2. But in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are “social responsibilities,” they are the social responsibilities of individuals, not of business.

    Context. On the executive's own charity, conscience and civic duties, which the article grants he may have “as a person in his own right.”

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  3. In a free society, it is hard for “good” people to do “good,” but that is a small price to pay for making it hard for “evil” people to do “evil,” especially since one man's good is anther's evil.

    Context. Answering readers who say social problems are too urgent to wait for the political process.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  4. The difficulty of exercising “social responsibility” illustrates, of course, the great virtue of private competitive enterprise—it forces people to be responsible for their own actions and makes it difficult for them to “exploit” other people for either selfish or unselfish purposes. They can do good—but only at their own expense.

    Context. After describing how union leaders asked to practice wage restraint face wildcat strikes and rank-and-file revolts.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  5. There are no “social” values, no “social” responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.

    Context. On unanimity, the political principle he says underlies the market mechanism.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  6. There is nothing that could do more in a brief period to destroy a market system and replace it by a centrally controlled system than effective governmental control of prices and wages.

    Context. On businessmen who call for wage and price guidelines, controls, or incomes policies.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  7. That is why, in my book “Capitalism and Freedom,” I have called it a “fundamentally subversive doctrine” in a free society, and have said that in such a society, “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

    Context. The article's closing sentence. “It” is the doctrine of “social responsibility,” which the preceding sentences say would extend the political mechanism to every human activity. The inner quotation is his own, from Capitalism and Freedom (1962).

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  8. In fact they are—or would be if they or any one else took them seriously—preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.

    Context. On businessmen who say business is concerned not merely with profit but with promoting desirable social ends.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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  9. What does it mean to say that “business” has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities, even in this vague sense.

    Context. Opening his examination of the doctrine of the social responsibility of business.

    A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
    Column, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17
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An Economist's Protest: Columns in Political Economy (1970)

  1. We have heard much these past few years about using the government to protect the consumer. A far more urgent problem is to protect the consumer from the government.
    An Economist's Protest: Columns in Political Economy
    Book, 1970, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Free Trade,” column of August 17, 1970, p. 107
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  2. The old saw is that the Quakers went to the New World to do good and ended up doing well. Today, well-meaning reformers go to Washington to do good and end up doing harm.
    An Economist's Protest: Columns in Political Economy
    Book, 1970, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Migrant Workers,” column of July 27, 1970, p. 155
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The Counter-Revolution in Monetary Theory (1970)

  1. It follows from the propositions I have so far stated that inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.
    The Counter-Revolution in Monetary Theory
    Lecture, 1970, Institute of Economic Affairs, Occasional Paper 33 (the first Wincott Memorial Lecture), Reprinted in Monetarist Economics (Basil Blackwell for the IEA, 1991), pp. 16, 19
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The End of the Draft? (1970)

  1. The often hysterical claims that an all-volunteer force is undesirable because it would be all black or all this or all that or because it would strengthen militarism or because … all these claims are contradicted by one simple yet overwhelmingly important fact: our armed forces today consist predominantly of true volunteers.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies. The next paragraph puts true volunteers at “at least 60 per cent” of the armed forces.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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  2. As a member of the President’s commission, I was much impressed by the emergence of unanimity out of initial disagreement. As our deliberations proceeded, and especially as our knowledgeable staff developed a growing body of factual evidence, it became ever clearer to all of us how superficial are most arguments in favor of conscription and how inefficient conscription is both as a method of taxation and as a method of recruiting manpower.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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  3. Compel 190,000 men per year to serve. Or improve pay and conditions of service to attract an additional 75,000 volunteers out of the 1.5 million who each year turn 19. These are the real alternatives.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies. He compares a mixed force of 2.5 million men, which needs about 440,000 recruits a year, at least 250,000 of them true volunteers even at the low first-term pay of the time, leaving 190,000 to be conscripted or induced to volunteer by the threat of the draft.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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  4. Enforced service by a conscript is a tax imposed on him no less than the check you send to Internal Revenue is a tax imposed on you. The size of his tax is the difference between the sum of money for which he would have served voluntarily and the pay he actually receives. Currently, this tax amounts to about 50 per cent of the potential civilian income of draftees. So unfair a tax imposed on so small a minority would never be passed explicitly by Congress. It persists only because it is hidden.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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  5. The tax is not only unfair, it is also inefficient. Every tax involves costs in addition to the amount of the tax itself. For conscription, these indirect costs are the heavy burdens imposed on actual and potential draftees, their families, universities, employers—and most important, on all of us through the weakening of the political fabric of society.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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  6. An all-volunteer force of equal effectiveness has less turnover and uses manpower more efficiently. As a result, it requires recruiting each year about 325,000 enlisted men, or only 75,000 in addition to the present number of true volunteers.

    Context. Friedman served on the President’s Commission on an All-Volunteer Armed Force (the Gates Commission), which unanimously recommended a plan to let conscription end on June 30, 1971, when the existing draft authority expired, keeping only a standby draft for emergencies. He compares a mixed force of 2.5 million men, which needs about 440,000 recruits a year, at least 250,000 of them true volunteers even at the low first-term pay of the time, leaving 190,000 to be conscripted or induced to volunteer by the threat of the draft.

    The End of the Draft?
    Column, 1970, Newsweek (1970); reprinted in full in the Congressional Record, Extensions of Remarks, March 20, 1970, p. 8443, introduced by Representative William A. Steiger as one of “two recent articles on the volunteer army which were published in Newsweek.” The bracketed header “[From Newsweek, Mar. 23, 1970]” stands above the Stewart Alsop column printed first; this column carries no date of its own in the reprint, Congressional Record, March 20, 1970, p. 8443
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An Economist's Protest: Columns in Political Economy (1971)

  1. The elementary fact is that “business” does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers or stockholders.
    An Economist's Protest: Columns in Political Economy
    Book, 1971, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Can Business Pay Taxes?,” column of November 29, 1971, p. 86
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Morality and Controls: I (1971)

  1. There has been essentially no discussion of a much more fundamental issue. The controls are deeply and inherently immoral. By substituting the rule of men for the rule of law and for voluntary cooperation in the marketplace, the controls threaten the very foundations of a free society. By encouraging men to spy and report on one another, by making it in the private interest of large numbers of citizens to evade the controls, and by making actions illegal that are in the public interest, the controls undermine individual morality.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over.

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  2. It was, after all, the development of the private market that made possible the original movement from a world of status to a world of voluntary contract. As government has tried to replace the market in one area after another, it has inevitably been driven to restore a world of status.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over.

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  3. But nonetheless, it is disheartening to see us take this further long step on the road to tyranny so lightheartedly, so utterly unaware that we are doing something fundamentally in conflict with the basic principles on which this country is founded. The first time, we may venture only a small way. But the next time, and the next time?

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over. The sentence before predicts that the controls will collapse rather than harden “into a full-fledged straitjacket.”

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  4. The rule of law does not guarantee freedom, since general laws as well as personal edicts can be tyrannical. But increasing reliance on the rule of law clearly played a major role in transforming Western society from a world in which the ordinary citizen was literally subject to the arbitrary will of his master to a world in which the ordinary citizen could regard himself as his own master.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over.

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  5. One of the proudest achievements of Western civilization was the substitution of the rule of law for the rule of men. The ideal is that government restrictions on our behavior shall take the form of impersonal rules, applicable to all alike, and interpreted and adjudicated by an independent judiciary rather than of specific orders by a government official to named individuals.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over.

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  6. True, the rule of men will be under law but that is a far cry from the rule of law—Stalin, Hitler, Mussolini, and now Kosygin, Mao and Franco all rule under law.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over. He has just called the freeze and the Phase II boards “another massive step away from the rule of law and back to the rule of men.”

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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  7. How do patriotism and judgment determine that the price of a widget may rise 2.8 per cent but the price of a wadget, only 0.3 per cent; the wage of a widgeteer by 2 per cent but of a wadgeteer, by 10 per cent? Clearly they do not. Arbitrary judgment, political power, visibility—these are what will matter.

    Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over. The appeal, he has just written, is to “the patriotism, civic responsibility, and judgment of political appointees, most of whom represent vested interests.”

    Morality and Controls: I
    Column, 1971, The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, Congressional Record, October 29, 1971, pp. 38201–38202
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Morality and Controls: II (1971)

  1. Am I not entitled to sell my goods or my labor for what I consider them worth as long as I do not coerce anyone to buy? Is it morally wrong for Chile to expropriate the property of Anaconda Copper—i.e., to force it to sell its copper mines for a price less than its value; but morally right for the U.S. Government to force the worker to sell his labor for less than its value to him and to his employer?

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people.

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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  2. Because these controls distort the use of resources, the evader benefits not only himself but society. The more rigorously the controls are enforced, the more harm they do. They render behavior which is immoral from one point of view socially beneficial. They thus introduce the kind of fundamental moral conflict that is utterly destructive of social cohesion.

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people.

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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  3. In general, I have little sympathy with trade unions. They have done immense harm by restricting access to jobs, denying excluded workers the opportunity to make the most of their abilities, and forcing them to take less satisfactory jobs. Yet surely in the present instance they are right that it is inequitable for the Government retroactively to void contracts freely arrived at. The way to reduce the monopoly power of unions is to remove the special legal immunities they are now granted, not to replace one concentrated power by another.

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people.

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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  4. When men do not regard governmental measures as just and right they will find a way around them. The effects extend beyond the original source, generate widespread disrespect for the law, and promote corruption and violence. We found this out to our cost in the 1920’s with Prohibition; in World War II with price control and rationing; today with drug laws.

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people.

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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  5. The excuse for the destruction of liberty is always the plea of necessity—that there is no alternative.

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people. He goes on to argue that 4 percent inflation and 6 percent unemployment were “very far indeed from crisis levels.”

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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  6. When you and I make a private deal, both of us benefit—otherwise we do not have to make it. We are partners, cooperating voluntarily with one another. The terms, so long as they are mutually agreeable, should be our business. But not any longer. Big Brother is looking over our shoulders.

    Context. From the second of two New York Times op-ed essays on the wage and price controls, October 1971, on what enforcing the Phase II pay board and price board would do to ordinary people.

    Morality and Controls: II
    Column, 1971, The New York Times, October 29, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, p. 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”. The reprint heads it only “Morality and Controls”; the date is the senator’s., Congressional Record, October 29, 1971, p. 38202
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The Draft Uncompromise (1971)

  1. Because of the draft, first-termers have consistently been shortchanged. From 1952 to 1965 there were no pay raises at all for enlisted men in the first two years of service. As a result, first-term enlisted men now receive not much more than half the amount that they could earn as civilians. In sharp contrast, enlisted men with more service and officers above the first two grades receive as much as or more than they could earn. This was and is a glaring and completely unjustifiable inequity. It was and is a major obstacle to recruiting volunteers.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. The conference had cut the pay raises for first-term enlisted men and officers below both the House and Senate bills.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  2. This delay is fortunate because the conference report contains a “compromise” on armed-force pay scales that is a far greater threat to achievement of the bill’s objectives than the much-publicized Mansfield amendment. Yet it might have been overlooked in the rush to adjourn.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. “This delay” is the Senate’s not yet having voted on the conference report. The “compromise” cut the pay raises for first-term enlisted men and officers below both the House and Senate bills; he argues that their underpayment, a result of the draft, is a major obstacle to recruiting volunteers.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  3. These are the grades for which the draft has provided recruits—either conscripts or “reluctant volunteers,” i.e., men induced to enlist by the threat of being drafted.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. “These” are the lowest enlisted and officer grades in the column’s table of proposed pay, the ones that first-termers serve in. He goes on to say that because of the draft first-termers have been consistently shortchanged, earning not much more than half what they could as civilians, and that this is a major obstacle to recruiting volunteers.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  4. Few matters are more important for the political, social and moral health of this country than ending compulsory military service and returning to this nation’s long tradition of relying on the voluntary services of patriotic Americans to maintain a loyal and effective armed force. It will be a tragedy if legislative legerdemain is permitted to frustrate the achievement of this objective.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. The column’s closing paragraph.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  5. Because of the draft, first-termers have consistently been shortchanged. From 1952 to 1965 there were no pay raises at all for enlisted men in the first two years of service. As a result, first-term enlisted men now receive not much more than half the amount that they could earn as civilians. In sharp contrast, enlisted men with more service and officers above the first two grades receive as much as or more than they could earn. This was and is a glaring and completely unjustifiable inequity. It was and is a major obstacle to recruiting volunteers.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  6. How can $2.4 billion be a compromise between $2.7 billion and $2.8 billion? The answer is easy—if you are an expert at parliamentary maneuvering.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. He goes on to show, figure by figure, how the conference arrived at $2.4 billion. The cut falls on the pay of first-term enlisted men and officers, whose underpayment he calls a major obstacle to recruiting volunteers.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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  7. This seemingly minor reduction is critical because, compared with the Senate bill, the reduction is entirely at the expense of first-term enlisted men and officers.

    Context. From a September 1971 Newsweek column on the House-Senate conference report on the bill to extend the draft and pave the way for an all-volunteer armed force, written while the Senate had yet to vote on it. “This seemingly minor reduction” is the conference’s $2.4 billion a year in pay raises, against $2.7 billion in the House bill and $2.8 billion in the Senate bill. He argues that first-termers have been underpaid because of the draft, a major obstacle to recruiting volunteers, so that this cut would seriously hamper an all-volunteer force.

    The Draft Uncompromise
    Column, 1971, Newsweek, September 6, 1971; reprinted in the Congressional Record, Extensions of Remarks, September 8, 1971, p. 31094, introduced by Representative William A. Steiger of Wisconsin under the header “[From Newsweek Magazine, Sept. 6, 1971]”, Congressional Record, September 8, 1971, p. 31094
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An Economist's Protest: Columns in Political Economy (1972)

  1. The key need in policy-setting is to reverse the growth of government; to leave more of our incomes for us to spend in accordance with our own values; to reduce the extent to which our Big Brother in Washington runs our lives for us.

    Context. The closing sentence of his introduction to this 1972 collection of his columns. It follows a list of changes he favoured, among them the elimination of price and wage controls, both those President Nixon had set up and older ones such as farm price supports and regulated air fares.

    An Economist's Protest: Columns in Political Economy
    Book, 1972, Thomas Horton and Company, 1972, Introduction, p. xvi
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  2. Legalizing drugs would simultaneously reduce the amount of crime and raise the quality of law enforcement.
    An Economist's Protest: Columns in Political Economy
    Book, 1972, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Prohibition and Drugs,” column of May 1, 1972, p. 161
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  3. There is an invisible hand in politics that operates in the opposite direction to the invisible hand in the market. In politics, individuals who seek to promote only the public good are led by an invisible hand to promote special interests that it was no part of their intention to promote.
    An Economist's Protest: Columns in Political Economy
    Book, 1972, Thomas Horton and Company, 1972, Introduction to Ch. 8 “Government vs. the People”, p. 143
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Comments on the Critics (1972)

  1. There was nothing in these views to repel a student; or to make Keynes attractive. On the contrary, so far as policy was concerned, Keynes had nothing to offer those of us who had sat at the feet of Simons, Mints, Knight, and Viner.

    Context. “These views” are those of a manifesto he has just quoted, issued at the Harris Foundation lectures at the University of Chicago in January 1932 and signed by twelve University of Chicago economists and twelve others, which recommended open-market operations to facilitate necessary government financing and increase the liquidity of the banking structure.

    Comments on the Critics
    Journal article, 1972, Journal of Political Economy, Reprinted in Milton Friedman’s Monetary Framework, ed. Robert J. Gordon (University of Chicago Press, 1974), p. 163
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Legislating Unemployment (1972)

  1. Congress is at it again. Once more it is in the process of legislating an increase in unemployment. Of course, the legislation is not labeled “A Bill to Create Unemployment.” After all, Congress can teach big business a thing or two about deceptive labeling. No, the bill is labeled “A Bill to Increase the Minimum-Wage Rate.”

    Context. From a Newsweek column opposing the 1972 bill to raise the federal minimum wage. A congressman had it reprinted in the Congressional Record the week it appeared.

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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  2. The situation today is different. Scattered studies have been brought together, additional studies made and some earlier studies re-evaluated. The evidence is now overwhelming that the unemployment predicted by economic analysis is confirmed by economic experience.

    Context. From a Newsweek column on the 1972 minimum-wage bill. The preceding paragraph says that in 1938, and even in 1966, the empirical studies of the minimum wage’s effect on employment “were scattered and appeared inconclusive.” In the Record the last sentence carries the article’s only footnote, citing Peterson and Stewart, “Employment Effects of Minimum-Wage Rates” (American Enterprise Institute, 1969), which he calls “excellent, though not fully up-to-date”.

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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  3. It is a mystery why anyone would suppose that a person is better off unemployed at $2 an hour than voluntarily employed at $1.60.

    Context. From a Newsweek column opposing the 1972 bill to raise the federal minimum wage. A congressman had it reprinted in the Congressional Record the week it appeared.

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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  4. The two-step rate is better than a one-step rate. At least, it would reduce the harm done by raising the minimum. But a no-step rate would be better than either.

    Context. From a Newsweek column on the 1972 minimum-wage bill. The House version kept $1.60 an hour for youths under 18 and students under 21 and raised the rate for most other workers; that two-tier design is the “two-step rate.”

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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  5. The true minimum-wage rate is zero—the amount that an unemployed person receives from his nonexistent employer. This minimum-wage rate will not be affected by the new law. Rather, the law will increase the number of persons who receive a wage rate of zero.

    Context. From a Newsweek column opposing the 1972 bill to raise the federal minimum wage. A congressman had it reprinted in the Congressional Record the week it appeared.

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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  6. Why would Congress do such a thing? Because the adverse effect on the poor is diffuse and its source misunderstood and hence produces little political pressure. Effective pressure is exerted by organized groups that welcome the effect of a high minimum-wage rate in strengthening unionized and skilled workers vis-a-vis nonunionized and unskilled workers and in protecting employers in high-wage areas (the North) from the competition of employers in low-wage areas (the South). These organized groups find ready allies in the liberal reformers whose lack of understanding of economics misdirects their sincere concern for the disadvantaged.

    Context. From a Newsweek column opposing the 1972 bill to raise the federal minimum wage. A congressman had it reprinted in the Congressional Record the week it appeared.

    Legislating Unemployment
    Column, 1972, Newsweek (1972; the Record gives no issue date, only “the current issue”); reprinted in the Congressional Record, Extensions of Remarks, June 28, 1972, p. 23100, introduced by Representative Sherman P. Lloyd of Utah under the heading “Observations on the Compulsory Minimum Wage”, Congressional Record, June 28, 1972, p. 23100
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Prohibition and Drugs (1972)

  1. On ethical grounds, do we have the right to use the machinery of government to prevent an individual from becoming an alcoholic or a drug addict? For children, almost everyone would answer at least a qualified yes. But for responsible adults, I, for one, would answer no. Reason with the potential addict, yes. Tell him the consequences, yes. Pray for and with him, yes. But I believe that we have no right to use force, directly or indirectly, to prevent a fellow man from committing suicide, let alone from drinking alcohol or taking drugs.

    Context. From his Newsweek column of May 1, 1972, on President Nixon’s “war on drugs.” He quoted this passage himself in 1998, saying he had criticized that policy “on both moral and expediential grounds.”

    Prohibition and Drugs
    Column, 1972, Newsweek, May 1, 1972; quoted by Friedman himself in “It’s Time to End the War on Drugs,” Hoover Digest, 1998, no. 2 (first published in The New York Times, January 11, 1998).
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Statement on the SST (1972)

  1. That is simply mercantilist confusion. Our benefits from international trade come from imports not exports and there is always a rate of exchange at which these will balance. If at that rate of exchange it is profitable to produce an SST for export, fine; if not, there is no case for subsidizing it.

    Context. From a statement he sent to Senator William Proxmire’s Joint Economic Committee in December 1972 for its hearings on the supersonic transport (SST). The Senate had voted in March 1971 to halt federal funding of an American SST, and the hearings considered whether to revive it. “That” is the claim that subsidizing the SST would help the U.S. balance of payments, which he has just called logically fallacious.

    Statement on the SST
    Letter, 1972, Letter to Senator William Proxmire, chairman of the Joint Economic Committee, dated December 11, 1972, submitting a statement for the record of the committee’s hearings on the supersonic transport; printed in full in the Congressional Record, Senate, January 11, 1973, p. 796, inserted by Senator Proxmire., Congressional Record, January 11, 1973, p. 796
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  2. The SST issue is often presented as if the question were: Should or should not an SST be built in the United States? That seems to me the wrong question. I favor the building of an SST in the United States, if private enterprise finds it profitable to do so, after paying all costs, including any environmental costs imposed on third parties. On the other hand, I oppose the building of an SST in the United States if that requires governmental subsidies. I oppose governmental subsidization of the SST for exactly the same reasons that I oppose governmental subsidization of the production of food, or of automobiles, or of furniture, or of electric power. I believe in a free enterprise system. A governmental decision to produce an SST largely at its own expense is a step toward socialism and away from free enterprise.

    Context. From a statement he sent to Senator William Proxmire’s Joint Economic Committee in December 1972 for its hearings on the supersonic transport (SST). The Senate had voted in March 1971 to halt federal funding of an American SST, and the hearings considered whether to revive it.

    Statement on the SST
    Letter, 1972, Letter to Senator William Proxmire, chairman of the Joint Economic Committee, dated December 11, 1972, submitting a statement for the record of the committee’s hearings on the supersonic transport; printed in full in the Congressional Record, Senate, January 11, 1973, p. 796, inserted by Senator Proxmire., Congressional Record, January 11, 1973, p. 796
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  3. The basic justification for a free enterprise system is that the possibility of profit will lead private individuals seeking their own interests to promote the social interest by producing only those products for which people are willing to pay and producing them at lowest cost. But a profit system can work only if it is also a profit and loss system, only if projects that do not pay are not carried out, and when enterprises make a mistake about a project, they must bear the consequences. If government bails enterprises out, either in advance on the expectation of a loss, or after the event when a loss has been realized, the fundamental justification of a free enterprise system is destroyed.

    Context. From a statement he sent to Senator William Proxmire’s Joint Economic Committee in December 1972 for its hearings on the supersonic transport (SST). The Senate had voted in March 1971 to halt federal funding of an American SST, and the hearings considered whether to revive it. He is explaining why he opposes subsidizing the SST.

    Statement on the SST
    Letter, 1972, Letter to Senator William Proxmire, chairman of the Joint Economic Committee, dated December 11, 1972, submitting a statement for the record of the committee’s hearings on the supersonic transport; printed in full in the Congressional Record, Senate, January 11, 1973, p. 796, inserted by Senator Proxmire., Congressional Record, January 11, 1973, p. 796
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  4. The only effect would be to employ people here instead of on more productive activities, since the addition to employment from the SST subsidy would be offset by the subtraction from employment as a result of the extra taxes that would have to be paid to finance the subsidy or the loan funds that would not be available for other uses if they were absorbed to pay the subsidy.

    Context. From a statement he sent to Senator William Proxmire’s Joint Economic Committee in December 1972 for its hearings on the supersonic transport (SST). The Senate had voted in March 1971 to halt federal funding of an American SST, and the hearings considered whether to revive it. He is answering the claim that subsidizing the SST would add to employment, an assertion he calls logically fallacious.

    Statement on the SST
    Letter, 1972, Letter to Senator William Proxmire, chairman of the Joint Economic Committee, dated December 11, 1972, submitting a statement for the record of the committee’s hearings on the supersonic transport; printed in full in the Congressional Record, Senate, January 11, 1973, p. 796, inserted by Senator Proxmire., Congressional Record, January 11, 1973, p. 796
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Interview with Milton Friedman (1973)

  1. Although I wish the anarchists luck, since that’s the way we ought to be moving now. But I believe we need government to enforce the rules of the game. By prosecuting antitrust violations, for instance. We need a government to maintain a system of courts that will uphold contracts and rule on compensation for damages. We need a government to ensure the safety of its citizens—to provide police protection. But government is failing at a lot of these things that it ought to be doing because it’s involved in so many things it shouldn’t be doing.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 37
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  2. The average income of blacks here is far higher than the average income of all the people in the Soviet Union. The official government definition of the poverty line in the U.S. is higher than the average income in the Soviet Union; it’s higher than the income received by 90 percent of the people on the world’s surface. Now, that doesn’t mean blacks aren’t subject to injustice; of course they are.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 34
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  3. The essence of the problem is that once we begin to allow exceptions for special interests, we move from a system of private arrangements to a political system where everyone’s freedom is limited and government becomes a matter of trying to balance those interests. Nobody really wins under these terms.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), pp. 15–16
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  4. Even the most ardent environmentalist doesn’t really want to stop pollution. If he thinks about it and doesn’t just talk about it, he wants to have the right amount of pollution. We can’t really afford to eliminate it—not without abandoning all the benefits of technology that we not only enjoy but on which we depend. So the answer is to allow only pollution that’s worth what it costs, and not any pollution that isn’t worth what it costs.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 16
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  5. Generally. Because I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.

    Context. His answer when the interviewer said, “But you prefer the laissez-faire—free-enterprise—approach.”

    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 6
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  6. It’s our disagreements that receive attention. For example, how much attention is paid to agreement between Galbraith and myself in opposing a draft and favoring an all-volunteer armed force, or in opposing tariffs and favoring free trade, or on a host of other issues? What is newsworthy is that Galbraith endorses wage and price controls, while I oppose them.

    Context. From a 1973 interview with Playboy. John Kenneth Galbraith, the Harvard economist, was one of the best-known liberal economists of the day and was often presented as Friedman’s opposite.

    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 1
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  7. Just as banks all around the country were closing, the Fed raised the discount rate; that's the rate they charge for loans to banks. Bank failures consequently increased spectacularly. We might have had an economic downturn in the thirties anyway, but in the absence of the Federal Reserve System—with its enormous power to make a bad situation worse—it wouldn't have been on anything like the scale we experienced.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 5
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  8. Perfect competition is a theoretical concept like the Euclidean line, which has no width and no depth. Just as we’ve never seen that line, there has never been truly free enterprise.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 15
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  9. We want the kind of world in which greedy people can do the least harm to their fellow men. That’s the kind of world in which power is widely dispersed and each of us has as many alternatives as possible.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 32
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  10. What country in the world today engages in the most extreme anti-Semitic persecution? The Soviet Union. It’s not an accident, because if you have a society with concentrated power, if you have a collectivist society, it’s going to be in a position to exercise the preferences and prejudices of its rulers. Moreover, it’s going to have an incentive to do so, because it’s going to need a scapegoat and it will choose some group like the Jews or the blacks to be the scapegoat.

    Context. From a 1973 interview published in Playboy, on why he held that concentrated, collectivist power breeds persecution of minorities.

    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 34
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  11. What kind of society isn’t structured on greed? … So the problem of social organization is how to set up an arrangement under which greed will do the least harm. It seems to me that the great virtue of capitalism is that it’s that kind of system. Because under capitalism, the power of any one individual over his fellow man is relatively small.
    Interview with Milton Friedman
    Interview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 31
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Speculation and Speculation (1973)

  1. During the recent international monetary crisis, governments in all lands blamed currency speculators for their troubles. At the same time, the governments themselves engaged in currency speculation—though of course they called it by a different and more dignified name. They engaged in “intervention.”

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  2. Official speculation was very different. Its aim was to preserve artificial exchange rates, to postpone the recognition of reality. Had it succeeded, it would have permitted economic distortions to cumulate to still more harmful proportions.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates. “Very different” contrasts official speculation with the private speculation described just before.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  3. Private speculators are far from omniscient. This time, they happened to be right and so made handsome profits. Next time, they may be wrong and suffer grievous losses. But in either case, they speculate at their own risk with their own money. Official speculators, too, are far from omniscient. This time, they were wrong; next time, they may be right. But there is an important reason why they are more likely to be wrong than right. They speculate not with their own money but with the taxpayers’ money. As a result, there is little pressure on them to control their natural impulse to resist change.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates. “This time” is that early-1973 crisis.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  4. Private speculation forced governments to face up to reality, to recognize that the exchange rates they were seeking to peg were artificial. It forced Japan and Germany in particular to recognize that their currencies were undervalued.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  5. The private speculation that the governments deplored was socially useful and had desirable effects. The official speculation in which the governments engaged was socially harmful and had undesirable effects.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  6. As U.S. citizens, we cannot and should not prevent German and Japanese governmental officials from speculating with their taxpayers’ money. That is a task for German and Japanese citizens. But we can and should restrain our own officials.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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  7. The swap agreements serve no useful function and Congress should terminate the Fed’s authority to enter into them. Their only role is to enable the U.S. Government to “intervene” in order to affect exchange rates. We and the world would be better off if exchange rates were determined in a free market. And whatever other countries do, the U.S., as the source of the key international money, has no business engaging in currency manipulation to affect exchange rates.

    Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates. The swap agreements are the Federal Reserve’s arrangements with other central banks to lend each other their currencies on demand, which the column has just described.

    Speculation and Speculation
    Column, 1973, A column of April 23, 1973, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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The Inflationary Fed (1973)

  1. The rates of monetary growth specified by chairman Burns are too high. Yet, even so, actual monetary growth has been substantially higher.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  2. That explanation is not valid today. In January 1970, the Fed gave primacy in its policy directive to “monetary aggregates” rather than interest rates.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates. “That explanation” is his 1969 diagnosis that the Fed had taken interest rates rather than the quantity of money as its guide.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  3. I then attributed the divergence of promise from performance to misunderstanding. The men who run the Fed, I wrote, have “taken the behavior of interest rates rather than the quantity of money as their guide—and this mistake has led them far astray from their intended path.”

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates. “Then” is 1969: he is recalling his own 1969 Newsweek column, and the quoted words are from it. The next sentence of this column says “That explanation is not valid today.”

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  4. The plain fact is that inflation is made in Washington, in that stately and impressive Grecian temple … that houses the Board of Governors of the Federal Reserve System.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates. He quotes this sentence from his own 1969 Newsweek column at the opening of this one, saying the words are “no less relevant today than when they first appeared in this space in 1969”; the ellipsis is in his re-quotation.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  5. Our hopes have been shattered. Monetary growth has been both higher and more variable in the past three and a half years than in any other postwar period of equal length.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  6. Over short periods, many factors other than monetary growth affect the rate of inflation. But, as chairman Burns implied, over long periods, monetary growth is dominant.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  7. It takes several years for monetary growth to exert its full influence on prices. As a result, we have so far experienced only the early effects of the nearly 8 percent rate of growth of the past year and a half.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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  8. What now explains the divergence between the Fed’s promises and its performance? Why does the Fed remain an engine of inflation? I confess that I am baffled.

    Context. From a 1973 Newsweek column comparing the Federal Reserve’s stated commitment to restrain inflation, under chairman Arthur Burns, with the actual growth of the money supply after the Fed said in January 1970 that it would give priority to the monetary aggregates.

    The Inflationary Fed
    Column, 1973, Newsweek, August 27, 1973; reprinted in the Congressional Record, Extensions of Remarks, November 7, 1973, p. 36327, introduced by Representative Robert Huber of Michigan as “Mr. Milton Friedman’s article that appeared in Newsweek of August 27, 1973”, Congressional Record, November 7, 1973, p. 36327
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Why Now? (1973)

  1. Of the many attempts to explain this state of affairs that I have seen in the media, not one faces up to the crucial question: Why now? Why did shortages not emerge in 1968 at the height of the Vietnam war, or in 1958, or for that matter in 1938 or 1928? What is different about 1973?

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  2. The greedy, selfish oil interests? If, as is frequently charged, they have conspired to create a shortage profitable to themselves, why have they been so slow? They are no more powerful now than they have been for many years. Why did they wait so long before squeezing the hapless consumer? And how do they make profits by having no oil to sell? By full-page advertisements urging consumers to economize on fuel? This is simply the irrational search for a devil.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  3. The answer to “Why now?” is straightforward—yet I know from bitter experience how hard it is to persuade anyone other than an economist that so simple an answer can be correct. Nineteen seventy-three is different from other peacetime years because, for the first time since World War II, the U.S. has had extensive price and wage controls. The key to today’s shortages is the price freeze ordered by President Nixon on Aug. 15, 1971.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  4. I know that it is hard for you to believe that so seemingly simple a matter as price fixing can produce so complex a phenomenon as widespread shortages. But then, I find it hard to believe that an automobile engine is a complex matter until I start probing around in its innards when it stops functioning on a dark road in the early hours of the morning.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  5. I am not enough of an expert—no one is—to know the million and one places where prices fixed by bureaucrats on the basis of arbitrary rules and accidental starting points have created distortions and shortages. … They are hidden in the interstices of an incredibly complex production system that cannot operate without the enormous efficiency of a market-price system to adapt changing demands to changing supplies. And many have been overcome by millions of citizens who found ways to avoid or evade the price controls.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  6. In the 1920s, scare stories were being written about the danger that we would run out of oil because the then proven reserves would last for only ten or fifteen years. In the interim, consumption of crude oil has multiplied manyfold—and so have proven oil reserves. The fact is that it does not pay to find and prove more than about fifteen years’ oil reserves at any time.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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Why Some Prices Should Rise (1973)

  1. Time and again, I have castigated the oil companies for their hypocrisy, for loudly proclaiming their allegiance to free enterprise yet simultaneously undermining free enterprise by seeking and getting special governmental privilege (percentage depletion, prorationing of oil, import quotas, etc.). Yet we shall only hurt ourselves if we let resentment at their past misdeeds interfere with our adopting the most effective way to meet the present problem.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971.

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  2. The most effective way to cut consumption and encourage production is simply to let the prices of oil products rise to whatever level it takes to clear the market. The higher prices would give each of the 210 million residents of the U.S. a direct incentive to economize on oil, to find substitutes for oil, to increase the supply of oil.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. Later in the column he adds that what is called for is higher prices for oil products “relative to other products—not general inflation.”

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  3. The current oil crisis has not been produced by the oil companies. It is a result of governmental mismanagement exacerbated by the Mideast war. The price of natural gas at the wellhead has been held down for years by government edict. Since Aug. 15, 1971, the price of retail gasoline and of fuel oil has been held down by the successive phases. The result has been to encourage consumption and discourage both current production and the expansion of capacity. It took the Mideast war to bring these evil effects of price-fixing to a boil.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. “The successive phases” are the phases of the Nixon price controls that followed the 1971 freeze.

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  4. The oil problem offers a particularly clear illustration of how the price system promotes both freedom and efficiency, how it enables millions of us to cooperate voluntarily with one another in our common interest. It brings out equally why the only alternative to the price system is compulsion and the use of force.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971.

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  5. But, you will say, rationing by price hurts the poor relative to the rich. What of the poor man with his old jalopy as the only way to get to work. The answer is straightforward. If high oil prices impose special problems on some, let us provide funds to mitigate their problem. Let us not impose compulsion and waste on 95 per cent to avoid special measures for 5 per cent.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. Later in the column he adds that what is called for is higher prices for oil products “relative to other products—not general inflation.”

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  6. It is a mark of how far we have gone on the road to serfdom that governmental allocation and rationing of oil is the automatic response to the oil crisis. This will not prevent higher prices, which will in fact do the job—but you may be sure that the rationing authorities will take the credit.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. The column’s closing paragraph.

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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FEO and the Gas Lines (1974)

  1. The way to end long lines at gas stations is to abolish FEO and end all controls on the prices and allocation of petroleum products. Within a few weeks, your friendly dealer would again be cleaning your windshield with a smile.

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4560
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  2. The Arab cut in output can be blamed for higher prices, but it cannot be blamed for the long lines. Their creation required the cooperation of shortsighted governments.

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4559
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  3. As I write this in Chicago, lines are forming at those gas stations that are open. The exasperated motorists are cursing; the service station attendants are fuming; the politicians are promising. The one thing few people seem to be doing is thinking.

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, April 30, 1974, p. 12454
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  4. After the Arabs cut output, Germany imposed no price controls on petroleum products. It did initially restrict Sunday driving but soon removed that restraint. The price of petroleum products jumped some 20 or 30 per cent, but there were no long lines, no disorganization. The greedy consumers found it in their own interest to conserve oil in the most painless way. The greedy oil tycoons found it in their own interest to see to it that petroleum products were available for those able and willing to pay the price.

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon. Earlier in the column he mocks the rhetoric that blamed the lines on greedy consumers and oil tycoons; “greedy” here echoes it.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4559
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  5. How can thinking people believe that a government that cannot deliver the mail can deliver gas better than Exxon, Mobil, Texaco, Gulf and the rest?

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4560
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  6. The lines date from the creation of a real Federal Energy Office run by a very visible, able and articulate William Simon. Which is the cause and which the effect? Did the lines produce the FEO or the FEO the lines?

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon. “The lines” are the lines at gas stations.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4559
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  7. Is rationing the solution? Far from it. It is the problem. We already have rationing of producers and distributors. Coupon rationing of final consumers would simply be the hair of the dog that bit you.

    Context. From a Newsweek column of March 4, 1974, written in Chicago during the gasoline lines of early 1974, after the Arab oil embargo and under the price and allocation controls administered by the Federal Energy Office, headed by William E. Simon.

    FEO and the Gas Lines
    Column, 1974, Newsweek, March 4, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, pp. 4559 to 4560, introduced by Representative John H. Rousselot of California, who gives it as the column of “Newsweek columnist, Dr. Milton Friedman, in the March 4, 1974, issue”; reprinted again in Extensions of Remarks, April 30, 1974, p. 12454, by Representative Steven D. Symms, from The Freeman (Foundation for Economic Education), Congressional Record, February 27, 1974, p. 4560
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Indexing and Inflation: An AEI Round Table (1974)

  1. If citizens have bought bonds on firm promises by government officials that inflation is going to be held down and if subsequently inflation is increased, in effect a tax has been imposed on those people who have bought the securities. Indeed, that’s what’s so devilish about inflation under present circumstances. It is the one form of taxation that can be imposed without legislation.

    Context. His remarks at a round table on indexing and inflation held at the American Enterprise Institute in Washington on July 17, 1974.

    Indexing and Inflation: An AEI Round Table
    Debate, 1974, American Enterprise Institute for Public Policy Research, Round table held July 17, 1974, Washington, D.C.; pp. 10–11
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Milton Friedman Responds (1974)

  1. So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not.
    Milton Friedman Responds
    Interview, 1974, Chemtech, p. 72
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Perspective on Inflation (1974)

  1. The basic source of inflation is the faster growth in the quantity of money than in output.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  2. True, computed price-index numbers record double-digit inflation in early 1974. But these computed price-index numbers overstate the “real” inflation.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  3. The future well-being of this country depends critically on whether, this time, intentions are translated promptly into performance.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. The intentions are the Federal Reserve’s announced intention to reduce the rate of monetary growth, which he welcomes just before while noting “little sign of any change in performance.”

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  4. If the relation that has prevailed between money and prices for the past dozen years continues, and if the Federal Reserve continues to permit the quantity of money to grow by 10 per cent a year, inflation will proceed at a rate of about 6 per cent. Judged not by pronouncements, not by intentions, but by performance, that is the rate that monetary policy for the past four years has been directed at producing.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. A footnote to the first clause says the relation has “prevailed for as far back as the data go”, but that in the United States over the past dozen years it is “closer than the average relation.”

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  5. The widespread impression that the Fed has tightened is based on the mistake of judging monetary policy by interest rates, which the Fed cannot control, rather than by the quantity of money, which it can. The quantity of money is still growing as rapidly as it has for the past four years.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  6. The catch-up will no doubt carry too far, but we should shortly be back to the basic underlying inflation of about 6 per cent per year. That should be an occasion for concern, not for congratulation.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. “The catch-up” is the rise of prices that the 1971 to 1973 controls had held down.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  7. Prices have clearly danced to the tune of money.

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. His summary of a chart, not reproduced in the Record, plotting consumer prices against the ratio of money to output over twelve years. The next sentence adds that the price index fell below that ratio in 1972 and overshot it in 1973.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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  8. It is essential to distinguish changes in relative prices from changes in absolute prices. The special conditions that drove up the prices of oil and food required purchasers to spend more on them, leaving less to spend on other items. Did that not force other prices to go down or to rise less rapidly than otherwise? Why should the average level of all prices be affected significantly by changes in the prices of some things relative to others?

    Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. He goes on to concede that the rises in oil and food prices “may have temporarily raised the rate of inflation somewhat”, but calls them, in the main, “convenient excuses” rather than reasons for the price explosion.

    Perspective on Inflation
    Column, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787
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Schools at Chicago (1974)

  1. The homogeneity and provincialism of the New York intellectual community made them pushovers in discussions about Goldwater’s views. They had cliche answers but only to their self-created straw men. To exaggerate only slightly, they had never talked to anyone who really believed, and had thought deeply about, views drastically different from their own. As a result, when they heard real arguments instead of caricatures, they had no answers, only amazement that such views could be expressed by someone who had the external characteristics of being a member of the intellectual community, and that such views could be defended with apparent cogency.

    Context. From a 1974 talk to University of Chicago faculty, recalling the meetings in New York in the fall of 1964 at which he argued Barry Goldwater’s case, during Goldwater’s presidential campaign, before groups from academia, the media, finance and the foundations.

    Schools at Chicago
    Speech, 1974, Remarks at the 54th annual Board of Trustees Dinner for Faculty, University of Chicago, January 9, 1974; The University of Chicago Record, As quoted in Milton and Rose D. Friedman, Two Lucky People: Memoirs (University of Chicago Press, 1998), p. 370
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Volunteer Armed Force: Failure or Victim? (1974)

  1. The Air Force, Navy and, to a lesser extent, the Marines have had no significant problems. On the contrary, they not only have met their quotas but also have raised the average quality of the enlisted force.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing. The passage is about recruiting since conscription ended.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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  2. The alleged failures have all been in the Army. They have been significant, though fairly small. At the end of 1973 the Army conceded that it had met 89 percent of its 1973 recruiting goal. Far more important, the failures have been the result of either gross incompetence or deliberate sabotage by some retired officers in civilian position.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing. The column backs this with four numbered points on Army recruiting (recruiter numbers, shifting standards, promotions for recruiting officers, and how shortfalls were reported), which are not quoted here.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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  3. I have limited myself to points that are objective and readily checked. They are nevertheless adequate to demonstrate that the Army has chiefly itself to blame for its failure. They suggest also that the Army cannot be counted on to reform itself. Civilian leadership is essential to make all-volunteer armed force work.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing. “Points” are the column’s four numbered points on Army recruiting (recruiter numbers, shifting standards, promotions for recruiting officers, and how shortfalls were reported), which are not quoted here.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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  4. The draft was ended despite the opposition of the military. I have wondered whether the military, encouraged by Watergate and Laird’s departure from Defense, may not have been feeding the stories to the media in an attempt to reverse the decision.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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  5. The end of the draft has not ended controversy about the draft. In recent months the news media have carried story after story alleging that the volunteer armed force is a failure. Volunteers, it is said, are too few and of poor quality, despite substantial pay raises for first-termers.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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  6. As a longtime proponent of an all-volunteer armed force, I regard the end of the draft as one of President Nixon’s and then-Secretary of Defense Melvin Laird’s finest hours. No other measure has done so much to end the divisions that were threatening to tear this nation apart. No other measure has done so much to reduce the real cost of defending the nation.

    Context. From a 1974 Newsweek column answering press reports, a year after conscription ended, that the all-volunteer armed force was failing.

    Volunteer Armed Force: Failure or Victim?
    Column, 1974, Newsweek, February 11, 1974; reprinted in the Congressional Record, Extensions of Remarks, February 27, 1974, p. 4572, introduced by Representative William A. Steiger of Wisconsin, who cites it as appearing “in the February 11 Newsweek”, Congressional Record, February 27, 1974, p. 4572
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Bureaucracy Scorned (1975)

  1. The affirmative-action program is one of those bureaucratic monstrosities that have become all too familiar: noble objectives, ignoble results.

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  2. Just as intellectuals bear major responsibility for instilling the view that big government is Santa Claus, so they can do more than any others to drive home the lesson that big government is really Frankenstein.

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  3. By this line of reasoning, the corner grocer and the A&P are “recipient institutions” because some of their customers receive social-security checks. The New York Times and The Chicago Tribune are Federal contractors because welfare recipients buy papers. How silly can you get?

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  4. In this day and age, we need to revise the old saying to read, “Hell hath no fury like a bureaucrat scorned.”

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  5. Most colleges and universities have accepted—and lobbied extensively for—Federal funds, and their receipt of Federal funds is the legal justification for HEW jurisdiction over their hiring and other practices. They are hoist on their own petard when they now complain that he who pays the piper is calling the tune.

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  6. In one sense, it is poetic justice that my colleagues and I at colleges and universities should now be suffering under the bureaucratic lash. For we have done more than any other group to produce a climate of opinion favorable to big government. So long as affirmative-action programs were directed at greedy businesses and grasping trade unions, academia for the most part cheered. And even now that its own ox is being gored, the typical reaction is that the academic world is “different.”

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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The Open Mind (1975)

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

    Context. Opening answer, after Heffner asks whether it is fair to call him a conservative economist and how he squares his views with providing for the poor and the aged.

    The Open Mind
    Interview, 1975, The Open Mind, hosted by Richard Heffner, Episode “Living Within Our Means” (1975)
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  2. I say thank God for government waste. … If government is doing bad things, it's only the waste that prevents the harm from being greater.

    Context. Asked by Heffner to name two things working for freedom, he gives the second: the inefficiency of government.

    The Open Mind
    Interview, 1975, The Open Mind, hosted by Richard Heffner, Episode “Living Within Our Means” (1975)
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  3. I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind.

    Context. Explaining why he calls himself a liberal rather than a conservative.

    The Open Mind
    Interview, 1975, The Open Mind, hosted by Richard Heffner, Episode “Living Within Our Means” (1975)
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Economic Myths and Public Opinion (1976)

  1. The elementary truth is that the Great Depression was produced by government mismanagement. It was not produced by the failure of private enterprise, it was produced by the failure of government to perform a function which had been assigned to it.
    Economic Myths and Public Opinion
    Column, 1976, The Alternative: An American Spectator, January 1976; reprinted in Bright Promises, Dismal Performance (Harcourt Brace Jovanovich, 1983), p. 66
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  2. This leads to my next myth—the myth that government can spend money at nobody’s expense. What was really involved in that last story was that somehow the local people do not pay out the money coming down from Washington, somebody else does. Of course, the truth is that the money makes a round trip between Florida and Washington, and there is a discount taken off for cash as it passes through Washington. Some of you may remember that wonderful description of government by the French economist, Frederic Bastiat, who said that government is that fiction whereby everybody believes that he can live at the expense of everybody else.
    Economic Myths and Public Opinion
    Column, 1976, The Alternative: An American Spectator, January 1976; reprinted in Bright Promises, Dismal Performance (Harcourt Brace Jovanovich, 1983), p. 72
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  3. That is a widespread myth, that it is possible to spend money with nobody paying for it. You have everybody screaming that we ought to have new, bigger, more generous government programs. Where are we going to raise the money? Tax business. But business corporations can’t pay any taxes. A corporate executive may sign the check, but where does he get the money? From his stockholders or from his customers or from his employees. Unlike the federal government, he doesn’t have a printing press in his basement. So the only way he can pay money to the government is by imposing a burden on somebody. Government cannot spend money at nobody’s expense …
    Economic Myths and Public Opinion
    Column, 1976, The Alternative: An American Spectator, January 1976; reprinted in Bright Promises, Dismal Performance (Harcourt Brace Jovanovich, 1983), p. 72
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Rhodesia (1976)

  1. Even so, perhaps more than half of all Africans are still living in the traditional subsistence sector. Europeans have a much higher average income than Africans in the market sector—perhaps in the ratio of as much as 10 to 1. But Africans in the market sector have a much higher average income than their fellows in the traditional sector—in about the same ratio. Both Europeans and Africans have benefited from their cooperation.

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980. “Even so” follows his figures that from 1958 to 1975 the total earnings of African employees quadrupled while those of European employees a little more than tripled.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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  2. Guerrilla warfare from outside and inside the country has produced a reaction by the government that can properly be described as repressive. But the provocation has clearly been great and it is important to maintain a sense of proportion.

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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  3. Whatever the merits or demerits of “majority rule” as an abstract principle, the imposition of sanctions against Rhodesia on this ground is a striking example of a double standard. The other former African colonies of Britain that were granted independence without question and without sanctions do not have anything approximating what Americans regard as majority rule. They have minority rule by a black elite that controls the one party permitted to exist. If the elite minority in Rhodesia had happened to be black instead of white, Britain would have rushed to grant them independence and provide “development assistance.”

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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  4. Neither country is an ideal democracy—just as we are not. Both have serious racial problems—just as we have. Both can be justly criticized for not moving faster to eliminate discrimination—just as we can. But both provide a larger measure of freedom and affluence for all their residents—black and white—than most other countries of Africa.

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980. “Neither country” and “both” are South Africa and Rhodesia, the two countries he had just visited.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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  5. The relation of the whites to the blacks is complex: a large dose of paternalism, social separation, discrimination in land ownership, and little or no official discrimination in other respects. In particular, there is no evidence of that petty apartheid—separate post-office entrances, toilets, and the like—that was our shame in the South and that I find so galling in South Africa.

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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  6. The United Nations recently renewed and strengthened its sanctions against Rhodesia. The U.S. regrettably concurred. We have, however, had enough sense to continue buying chrome from Rhodesia under the Byrd amendment, rather than, as we did for a time, in effect forcing Rhodesia to sell its chrome to Russia (also technically a party to the sanctions) which promptly sold us chrome at double the price.

    Context. From a 1976 Newsweek column written after a visit to South Africa and Rhodesia. Rhodesia was then governed by its white minority, which had declared independence from Britain in 1965 without British consent; the United Nations had imposed sanctions in response. The country became Zimbabwe, under majority rule, in 1980. The Byrd amendment, a 1971 US law, let American firms keep importing Rhodesian chrome despite the sanctions.

    Rhodesia
    Column, 1976, Newsweek, May 3, 1976; reprinted in the Congressional Record, Extensions of Remarks, April 29, 1976, pp. 11979 to 11980, introduced by Representative John Ashbrook of Ohio, who gives it as “an excellent article on Rhodesia by Milton Friedman, which appeared in the May 3 edition of Newsweek”, Congressional Record, April 29, 1976, p. 11979
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About changing congress (1977)

  1. It's nice to elect the right people, but that isn't the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things.
    About changing congress
    Speech, 1977
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Gammon’s “Black Holes” (1977)

  1. Gammon’s theory is more than a smart-aleck curiosity. It is a direct consequence of the pursuit by all of us of our self-interest. In a market, we can pursue our self-interest only by persuading people to buy what we have to sell, hence we are driven to serve our customers’ interests. In a government bureaucracy that is exempt from competition, the customers have nowhere else to go. Their interests are largely irrelevant. Hence, the bureaucrat can serve his self-interest at their expense by expanding his empire and reducing his workload.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
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  2. A clearer example for the U.S. is schooling, which is predominantly governmental, as health care is in Britain, and where the law of bureaucratic displacement has been proceeding apace.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
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  3. The fault is not with the people who run the system, but with the system itself. More fundamentally, the fault is with those of us who are responsible for replacing the economic market with the political market.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling. “The system” is a government bureaucracy exempt from competition, as against the market, which he contrasts in the paragraph before.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
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  4. Dr. Max Gammon, a British physician, recently completed a five-year study of the British health system. In reporting his findings, Gammon was led to formulate a brilliant extension of one of C. Northcote Parkinson’s famous laws.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
    Checked against the sourceRead the original
  5. Is this due to bureaucratic organization? As some evidence, the number of school districts went down by 10 per cent, continuing a trend toward greater centralization and bureaucratization of education that has been going on now for decades.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling. “This” is the pattern in American public schools he has just set out: professional staff and real cost per pupil up, students and schools down.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
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  6. The U.S. is still, fortunately, some way from a national health service. However, the rising costs of medical care—as government has expanded its role and bureaucracy has multiplied—presumably reflect an early stage of the process documented by Gammon.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
    Checked against the sourceRead the original
  7. In words that are more in Parkinson’s style: in a bureaucratic system, useless work drives out useful work.

    Context. From a 1977 Newsweek column on the British physician Max Gammon, whose study of Britain’s National Health Service found staff rising while the number of hospital beds occupied fell, and who called the pattern “bureaucratic displacement.” Friedman applies it to American medical care and schooling. His own restatement of Gammon’s “theory of bureaucratic displacement”, which he has just quoted.

    Gammon’s “Black Holes”
    Column, 1977, Newsweek (1977); reprinted in the Congressional Record, Extensions of Remarks, November 30, 1977, p. 38195, introduced by Representative John Ashbrook of Ohio as “Mr. Friedman’s article on Gammon’s theory of bureaucratic displacement as it appeared in Newsweek.” The reprint gives no issue date, Congressional Record, November 30, 1977, p. 38195
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Milton Friedman Speaks - Myths That Conceal Reality (1977)

  1. Let me take the example which today is the greatest sacred cow of them all, Social Security. Was there an overwhelming demand for Social Security in the 1930s when the law was adopted? Far from it. There was no public demand for it. It had to be sold. How was it sold? By the slickest devices of Madison Avenue, by imaginative packaging and deceptive labeling. Social Security was sold as an insurance scheme. It is not an insurance scheme. There is very little relationship to the amount of money any one individual pays and the amount of money he is entitled to receive. Social Security is a combination of a bad tax system with a bad way of distributing welfare.

    Context. From his 1977 lecture “Myths That Conceal Reality.” Just before, he says that the measures that expanded government were adopted without any underlying public demand; the demand had to be created.

    Milton Friedman Speaks - Myths That Conceal Reality
    Speech, 1977, at 26:02
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  2. The reality is that if you look at every program that the government has adopted in the direction of extending its scope, it took an enormous propaganda campaign by special propaganda groups to get those measures passed. There was no underlying public demand for those measures. On the contrary, the demand had to be created, it had to be developed, it had to be produced. And it was created, it was developed, it was produced, by people … who sincerely wanted to see an expansion in the scope of government.

    Context. The third of the myths he sets out to rebut in the lecture: that government stepped in, in response to overwhelming public demand, because the private market failed to provide important services. He goes on to Social Security as his first example.

    Milton Friedman Speaks - Myths That Conceal Reality
    Speech, 1977, at 25:21
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The National Times (1977)

  1. The great enemy of human freedom is the Government. By taking money out of our pockets and spending it, it destroys our freedom.
    The National Times
    Column, 1977, The National Times
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The Open Mind (1977)

  1. Rent control is certainly one example in which I will challenge you to find from the professional economists from the left to the right, I will challenge you to find anybody who will defend rent control from a technical economic point of view.

    Context. After distinguishing what he says as an economist (the predictable consequences of rent control in New York City) from what he says as a man with values (that it is wrong to force an owner to rent below the price he would accept), and saying the public wrongly believes economists disagree on technical questions.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  2. Right or left are very ambiguous terms, but conservative is a very definite, clear term. A conservative is somebody who wants to conserve, who keeps things as they are. … I want to change them. I’m a radical.

    Context. Explaining why he objects to being called a conservative economist. The ellipsis marks Heffner’s interjection, “And you don’t like the way things are?”, and the start of Friedman’s reply, which the two transcriptions could not establish word for word.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  3. Equally important, you cannot spend somebody else's money unless you first get it. … So the concept of doing good with somebody else's money has force or coercion built into it as an essential feature.

    Context. His second objection to doing good with somebody else's money, after the first (that nobody spends somebody else's money as carefully as his own), illustrated with New York City's budget.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  4. I’ve had this experience many times. Get a dozen people in a room together, some of them economists and some non-economists, political scientists, sociologists, journalists, whatever they may be. Start any subject going. Within 15 minutes, all the economists will be on the same side, whatever their political persuasion is.

    Context. Answering whether economists disagree on major issues. He goes on to say their differing political views derive “very little from their technical economic discipline.”

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  5. It's very much easier to introduce restrictions and restraints than it is to remove them. It's easier to pass a law than it is to repeal a law and so over the course of time you tend to impose these chains and restraints on yourselves mostly for good reasons. The initial objectives are always good that doesn't mean the outcome is.

    Context. Explaining why, in his account, golden ages such as fifth-century Greece and nineteenth- and early twentieth-century America tend to last no more than 100 to 150 years: the slate of restraints that was wiped clean gradually fills up again.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  6. On the other hand, if I say, regardless of the consequences, it is morally wrong for a government official to force me to rent a piece of property to you for less than the price at which I would voluntarily rent it, at that point, I am now speaking as a man with values and philosophy. That is to say, you have both principle and expediency involved. The economist talks to the expediency. The philosopher, the ethicist, the human being, talks to the principle.

    Context. Asked by Heffner whether his opposition to spending other people’s money is that of the economist or of the philosopher. He has just described the deterioration and abandonment of buildings under New York City’s rent control as “a straight matter of technical economics.”

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  7. Well, the way in which many economists have implicitly reconciled it is by being in favor of the free market in general and opposed to the free market in particular. This area is a special case. It needs regulation. This area is a special case. You know, the same thing happens to businessmen. Every businessman is in favor of private enterprise. Except for himself.

    Context. “It” is the conflict he has just described: the discipline of economics predisposes economists to favor markets, while the main growth in jobs for economists has come from government regulation. He adds that he is not accusing anyone of acting in a Machiavellian way.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  8. The free market has been around for thousands and thousands of years. The theory of the free market in a systematic, organized way dates back to Adam Smith in 1776, but the free market doesn’t.

    Context. Asked “where is it written” that the free market is the right concept, which Heffner took to be comparatively modern.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  9. Our problems have arisen from good people who are trying to do good, but trying to do good in a fundamentally flawed way. The welfare state is in many ways a noble construct, a noble concept. It's the concept that we ought to help our fellow men. … What flaws it is that it's one thing for you to help me out of your pocket. It's another thing for you to help me out of his pocket. And the fundamental flaw of the welfare state, in my opinion, is the idea that you should do good with somebody else's money.

    Context. Right after saying that the strategic necessity is a change in the climate of opinion that substitutes a belief in individual responsibility for what he calls the false belief in social responsibility, and that the problems have not come from evil people or a conspiracy.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  10. Why do we have inflation? Because we, the citizens, have demanded it. We have sent a message to Washington. We said, we want you to spend more on roads. We want you to spend more on health. We want you to spend more on education. But don't tax us for it. … And so the difference is paid for by the hidden tax of inflation, which is the only tax that can be imposed on the American people without anybody having to vote for it.

    Context. Arguing that the government is responsive to the public, and that what happens in Washington follows the instructions the public sends it. The ellipsis omits his account of Congress voting more spending than it raises in taxes.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  11. But as a matter of practical experience, no complicated society can be run solely on the command principle. It’s just impossible. And therefore, in one sense, the market is essential. There’s no way of avoiding it.

    Context. Contrasting two ideal types: a command economy run like an army, and a pure market economy of voluntary exchange.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  12. No man becomes President who has not developed the capacity to rise above principle.

    Context. Explaining that a President has very little power though much influence, and sets his policies by what he believes the public wants; he has just said that a President may have values and beliefs of his own. He goes on to say that he is not saying this in criticism, and does not want a dictator.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  13. The normal condition of mankind is tyranny and misery. We've escaped. We've been extraordinarily fortunate to escape into an island of freedom and prosperity. If we do not maintain that island of freedom and prosperity, if we do not maintain the essential features of the society which made that freedom and prosperity possible, there isn't a wide range of alternatives. We go to misery and tyranny to the normal state of mankind.

    Context. Answering Heffner, who asks why he holds on to optimism and whether we might instead point ourselves in a different direction down the same road. He prefaces the passage with “It is true that”.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  14. Well, I have always argued that you will not solve problems by electing the right man to the White House. Certainly not by electing the wrong man. … The only way you will ever solve problems, in my opinion, and move in the direction we want to move is by making it in the political interest of the wrong people to do the right thing.

    Context. Asked by Heffner how he evaluates President Carter. This is a recorded statement of the idea behind the widely circulated line about making it politically profitable for the wrong people to do the right things, whose own source this archive has not verified.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  15. And the real problem is whether the changing climate of ideas can take effect soon enough before it is overwhelmed by the onrushing behemoth of the state.

    Context. Closing his opening answer, after describing a revival of individualist ideas on campuses since his 1975 appearance on the program, and asked whether he still puts the odds of avoiding “the road to serfdom” below 50 percent.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  16. Fundamentally, the Soviet Union is a market economy, but it’s a distorted market economy, because the extraordinarily great role of government forces the market into channels which are not efficient and not effective, and so much of its power is wasted in simply overcoming the bureaucratic mess of the government. That’s why the Soviet Union has such a low standard of life.

    Context. After noting that private plots on 2 to 3 percent of the Soviet Union’s arable land produce about a third of its food, and that workers are drawn to jobs by the pay offered.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  17. I summarized my impressions by saying that I thought that the best way to understand Israel was to recognize that two Jewish traditions were at war with one another in Israel. One of them was a very recent tradition, a tradition of 100 to 150 years old. That’s the tradition of socialism. … The other tradition, I said, was a tradition that was at least 2,000 years old. It was a tradition that had arisen during the diaspora and as a result of the diaspora. It was a tradition of how you get around government regulations, how you find chinks in controls, how you find those areas in which the free market operates and makes the most of them.

    Context. Describing what he concluded after a visit of about three months to the Hebrew University in Jerusalem roughly 15 years earlier. The ellipsis omits his remark that Jewish intellectuals have, on the whole, been strongly pro-socialist and contributed disproportionately to socialist literature.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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Why Inflation Persists (1977)

  1. All other alleged causes of inflation—trade union intransigence, greedy business corporations, spendthrift consumers, bad crops, harsh winters, OPEC cartels and so on—are either consequences of inflation, or excuses by Washington, or sources of temporary blips of inflation.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  2. Instead of simply requiring the Federal Reserve to report its “projections” or “targets” for monetary growth, let the Congress require the Fed to achieve specified rates of monetary growth (or specified levels of the quantity of money) within specified ranges of tolerance. That would combine responsibility and power. It would also enable the ordinary citizen to know whom to hold accountable for inflation.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  3. The Fed is supposedly independent. But, as Dooley said of the Supreme Court, “It follows the election returns.” Its behavior reminds me of nothing so much as the remark attributed to a U.S. Army officer in Vietnam, “We destroyed the village in order to save it.” Similarly, the Fed refrains from using its independence because it is afraid of losing it.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace. Dooley is Mr. Dooley, the fictional Chicago saloonkeeper of the humorist Finley Peter Dunne.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  4. It matters little whether the Federal Reserve is unable or unwilling to exercise its independence in deeds as well as words. In either case, let us be done with the fiction that “independence” is somehow or other a bastion against inflation. Let us put the responsibility for the rate of monetary growth—and therewith for the subsequent rate of inflation—squarely and openly on the Administration and Congress.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  5. Inflation will not be stopped by words, only by actions. At the moment, we have the worst of two worlds. Nominal independence of the Federal Reserve without its effective exercise permits Congress and the President to evade responsibility for the creation of money to finance large government deficits.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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  6. There is one and only one basic cause of inflation: too high a rate of growth in the quantity of money—too much money chasing the available supply of goods and services.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
    Checked against the sourceRead the original
  7. There is one and only one basic cure for inflation: slowing monetary growth. But that cure is easier to state than to put into effect: witness our repeated abandonment of the cure.

    Context. From a Newsweek column of October 1977, when inflation, having fallen below 5 percent in 1976, was rising again and money growth had returned to its 1972 pace.

    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
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A Progress Report (1978)

  1. In a reaction that has become only too familiar, the big-government coalition has been threatening dire consequences if Jarvis-Gann passes: police and fire departments “crippled,” bond issues in “default,” “bankrupt schools.” The opposition is preparing to launch a major media blitz to be financed in large part by big business, which apparently has let fear of Sacramento trigger its unerring instinct for self-destruction.

    Context. From an April 1978 Newsweek column on the state tax-limitation movement, written after Tennessee adopted a spending limit and two months before California voted on Proposition 13. Jarvis-Gann is Proposition 13, the property-tax amendment then on the June 1978 California ballot.

    A Progress Report
    Column, 1978, Newsweek (April 10, 1978); reprinted in the Congressional Record, Extensions of Remarks, April 4, 1978, pp. 8709 to 8710, introduced by Representative John H. Rousselot of California, who describes it as “his byline article which appeared in the April 10, 1978 issue of Newsweek”, Congressional Record, April 4, 1978, pp. 8709 to 8710
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  2. The first victory came in Tennessee on March 7, 1978, when a 2-to-1 majority approved an amendment to limit the “rate of growth” of state spending to the “estimated rate of growth of the state’s economy.”

    Context. From an April 1978 Newsweek column on the state tax-limitation movement, written after Tennessee adopted a spending limit and two months before California voted on Proposition 13.

    A Progress Report
    Column, 1978, Newsweek (April 10, 1978); reprinted in the Congressional Record, Extensions of Remarks, April 4, 1978, pp. 8709 to 8710, introduced by Representative John H. Rousselot of California, who describes it as “his byline article which appeared in the April 10, 1978 issue of Newsweek”, Congressional Record, April 4, 1978, pp. 8709 to 8710
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  3. Jarvis-Gann has many defects. It is loosely drawn. It cuts only the property tax, which is by no means the worst tax. It does nothing to halt the unlegislated rise in taxes produced by inflation. Proposition 1 was a far better measure, and a revised version will be needed even if Jarvis-Gann is passed. Yet I strongly support Jarvis-Gann. It does cut taxes. It does raise obstacles to further increases in government spending. And it will not have the dire consequences its opponents threaten.

    Context. From an April 1978 Newsweek column on the state tax-limitation movement, written after Tennessee adopted a spending limit and two months before California voted on Proposition 13.

    A Progress Report
    Column, 1978, Newsweek (April 10, 1978); reprinted in the Congressional Record, Extensions of Remarks, April 4, 1978, pp. 8709 to 8710, introduced by Representative John H. Rousselot of California, who describes it as “his byline article which appeared in the April 10, 1978 issue of Newsweek”, Congressional Record, April 4, 1978, pp. 8709 to 8710
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  4. One down, 49 to go. That is the present state of the grassroots movement that Ronald Reagan started in California five years ago when he sponsored Proposition 1—a constitutional amendment to limit spending by the state government to a specified, and slowly declining, fraction of the personal income of the residents of California.

    Context. From an April 1978 Newsweek column on the state tax-limitation movement, written after Tennessee adopted a spending limit and two months before California voted on Proposition 13. Proposition 1 was narrowly defeated, as he says in the next sentence; the one state “down” is Tennessee, whose amendment he reports next.

    A Progress Report
    Column, 1978, Newsweek (April 10, 1978); reprinted in the Congressional Record, Extensions of Remarks, April 4, 1978, pp. 8709 to 8710, introduced by Representative John H. Rousselot of California, who describes it as “his byline article which appeared in the April 10, 1978 issue of Newsweek”, Congressional Record, April 4, 1978, pp. 8709 to 8710
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  5. However, there is no reason for proponents of tax limitation to despair. Five years is a short time to effect a basic change in our governmental structure. The defeats are less impressive than the growing strength of taxpayer resentment at zooming governmental budgets.

    Context. From an April 1978 Newsweek column on the state tax-limitation movement, written after Tennessee adopted a spending limit and two months before California voted on Proposition 13. “The defeats” are Proposition 1 and similar amendments that failed in two other states.

    A Progress Report
    Column, 1978, Newsweek (April 10, 1978); reprinted in the Congressional Record, Extensions of Remarks, April 4, 1978, pp. 8709 to 8710, introduced by Representative John H. Rousselot of California, who describes it as “his byline article which appeared in the April 10, 1978 issue of Newsweek”, Congressional Record, April 4, 1978, pp. 8709 to 8710
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Back to the Gaming Table (1978)

  1. The Fed’s task is to provide stable money at home. The dollar has declined in value against the German mark, the Swiss franc and … because the Fed—with a strong assist from Congress and the Administration—has failed in that task. If we succeeded in curbing inflation, the exchange rates would take care of themselves. If we continue to fail, it only makes matters worse to use currency intervention to paper over the consequences of domestic inflation.

    Context. From a 1978 column written after the Federal Reserve and the Treasury announced in early January 1978 that they would intervene in the foreign-exchange markets to support the falling dollar. The ellipsis omits the third currency, which the print misprints.

    Back to the Gaming Table
    Column, 1978, A column of early 1978, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float”. The reprint names no publication and gives no issue date; the column refers to writing “in this space” in 1973, which marks it as one of his regular columns, Congressional Record, February 7, 1978, p. 2590
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  2. The Federal Reserve Board and the Treasury Department recently—though, to their credit, reluctantly—announced that they intend to gamble on a large scale with your money and mine. Of course, that is not how the official announcement phrased it. It spoke of “intervention” to support the dollar and prevent “disorderly” markets. But a spade is a spade even if it is called an unearthing implement. And gambling is gambling even if it is called “intervention.”

    Context. From a 1978 column written after the Federal Reserve and the Treasury announced in early January 1978 that they would intervene in the foreign-exchange markets to support the falling dollar.

    Back to the Gaming Table
    Column, 1978, A column of early 1978, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float”. The reprint names no publication and gives no issue date; the column refers to writing “in this space” in 1973, which marks it as one of his regular columns, Congressional Record, February 7, 1978, p. 2590
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  3. The cumulated exchange losses of the central banks of Britain, Germany and Japan over this period have never, so far as I know, been totaled, but there is little doubt that they are a multiple of U.S. losses. And is that surprising? What else would you expect from gambling with other people’s money?

    Context. From a 1978 column written after the Federal Reserve and the Treasury announced in early January 1978 that they would intervene in the foreign-exchange markets to support the falling dollar. “This period” is 1971 to 1977, for which the column has just tabulated the Federal Reserve’s own losses on currency intervention.

    Back to the Gaming Table
    Column, 1978, A column of early 1978, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float”. The reprint names no publication and gives no issue date; the column refers to writing “in this space” in 1973, which marks it as one of his regular columns, Congressional Record, February 7, 1978, p. 2590
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  4. The announced purpose of the official gambling is to keep private speculators from driving the price of the dollar below the level justified by fundamental economic factors—to offset, as the Fed and Treasury would put it, “destabilizing” speculation. How can we judge whether the gamble succeeds? In general, there is a simple test: whether it makes or loses money.

    Context. From a 1978 column written after the Federal Reserve and the Treasury announced in early January 1978 that they would intervene in the foreign-exchange markets to support the falling dollar.

    Back to the Gaming Table
    Column, 1978, A column of early 1978, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float”. The reprint names no publication and gives no issue date; the column refers to writing “in this space” in 1973, which marks it as one of his regular columns, Congressional Record, February 7, 1978, p. 2590
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Capitalism, Socialism, and Democracy: A Symposium (1978)

  1. [A] society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom.
    Capitalism, Socialism, and Democracy: A Symposium
    Column, 1978, Commentary
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Milton Friedman Speaks: Free Trade: Producer vs. Consumer (1978)

  1. What we send abroad we can’t eat, we can’t wear, we can’t use for our houses. The goods and services we send abroad are goods and services not available to us. On the other hand, the goods and services we import, they provide us with TV sets we can watch, with automobiles we can drive, with all sorts of nice things for us to use. The gain from foreign trade is what we import. What we export is the cost of getting those imports, and the proper objective for a nation, as Adam Smith put it, is to arrange things so we get as large a volume of imports as possible for as small a volume of exports as possible.

    Context. From a lecture on free trade, just after he says that public talk of trade treats exports as good and imports as bad, which he calls “just upside down.”

    Milton Friedman Speaks: Free Trade: Producer vs. Consumer
    Lecture, 1978, Lecture 8, at 21:30
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  2. The political reason is that the interests that press for protection are concentrated. The people who are harmed by protection are spread and diffused. Indeed, the very language shows the political pressure. We call a tariff a protective measure. It does protect. It protects the consumer very well against one thing. It protects the consumer against low prices. And yet we call it protection.

    Context. From a lecture asking why protection is so widespread despite the almost uniform condemnation of such measures by economists. This is his political explanation.

    Milton Friedman Speaks: Free Trade: Producer vs. Consumer
    Lecture, 1978, Lecture 8, at 10:15
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Milton Friedman Speaks: The Role of Government in a Free Society (1978)

  1. You can only aim at equality by giving some people the right to take things from others. And what ultimately happens when you aim at equality is that A and B decide what C shall do for D, except that they take a little bit of a commission off on the way.

    Context. His answer, in the question period after the lecture, to an audience member who asked whether a system could be built on equality rather than liberty.

    Milton Friedman Speaks: The Role of Government in a Free Society
    Speech, 1978, at 1:14:05
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  2. In my opinion, a society that aims for equality before liberty will end up with neither equality nor liberty. And a society that aims first for liberty will not end up with equality, but it will end up with a closer approach to equality than any other kind of system that has ever been developed.

    Context. His answer, in the question period after the lecture, to an audience member who asked whether a system could be built on equality rather than liberty.

    Milton Friedman Speaks: The Role of Government in a Free Society
    Speech, 1978, at 1:13:21
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Speech at San Diego Chamber of Commerce (1978)

  1. Keep your eye on one thing and one thing only: how much government is spending, because that is the true tax. Every budget is balanced. There is no such thing as an unbalanced federal budget. You're paying for it. If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing. The thing that you keep your eye on is what government spends. And the real problem is to hold down government spending as a fraction of our income. And if you do that, you can stop worrying about the deficit.
    Speech at San Diego Chamber of Commerce
    Speech, 1978
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The Limitations of Tax Limitation (1978)

  1. I believe along with Parkinson that government will spend whatever the tax system will raise plus a good deal more. Every step we take to strengthen the tax system, whether by getting people to accept payroll taxes they otherwise would not accept, or by cooperating in enacting higher income taxes and excise taxes or whatnot, fosters a higher level of government spending. That's why I am in favor of cutting taxes under any circumstances, for whatever excuse, for whatever reason.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument. Parkinson is C. Northcote Parkinson, the British historian known for “Parkinson’s Law”.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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  2. The true cost of government to the public is not measured by explicit taxes but by government spending. … Essentially every current piece of wealth in the United States has a hidden tax imposed on it because of the future obligation to pay those extra taxes. In effect, what you have are two kinds of taxes: the open, explicit taxes and the hidden taxes. And what's called a deficit is a hidden tax.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument. “Those extra taxes” are the higher future taxes needed to pay the interest on, or repay, the debt that finances a deficit, which he explains in the sentences the ellipsis omits.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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  3. It is my view that it is desirable for the people to limit their government's budget, to decide how much in total they are willing to pay for their government. Having done this, it is desirable for them to delegate to their elected representatives the difficult task of dividing that budget among competing good proposals.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14069
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  4. I would far rather have total federal spending at $200 billion with a deficit of $100 billion than a balanced budget at $500 billion. The thing we must keep our eye on is what government spends.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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  5. The vested interests are not some big bad people sitting on money bags; the vested interests are you and me. Each of us is strongly in favor of small measures that will benefit us and each of us is not too strongly opposed to any one small measure that will benefit someone else. We are not going to vote anybody out of office because he imposes a $3 a year burden on us. Consequently, when each measure is considered separately, there is considerable pressure to pass it.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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  6. Without the support of public opinion all the written laws or constitutions you can think of are fundamentally worthless. One has only to look at the results of trying to transplant versions of the American and British constitutions to other nations around the world.

    Context. From a 1978 Policy Review article on the tax-limitation movement, written the day after California voters approved Proposition 13 (the Jarvis-Gann amendment). Its opening reworks his April 1978 Newsweek column “A Progress Report”; the passages quoted from it here are from the later, new part of the argument.

    The Limitations of Tax Limitation
    Journal article, 1978, Policy Review (The Heritage Foundation); reprinted in the Congressional Record, Extensions of Remarks, June 7, 1979, pp. 14069 to 14071, introduced by Representative Hamilton Fish, Jr. of New York as “an article by Dr. Friedman published in Policy Review, the quarterly journal of The Heritage Foundation”, Congressional Record, June 7, 1979, p. 14070
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Blaming the Obstetrician (1979)

  1. It might even occur to someone how much better off we were before we had a Department of Energy.

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  2. The explanations of the energy crisis and gasoline shortage that gush forth from government officials, newspaper reporters and TV commentators are tantamount to blaming the obstetrician for the baby.

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14007
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  3. To the despair of every economist, it seems almost impossible for most people other than trained economists to comprehend how a price system works.

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  4. Do you want a shortage? Have the government legislate a maximum price that is below the price that would otherwise prevail. That is what New York City and, more recently, other cities have done for rental dwellings, and that is why they all suffer or will soon suffer from housing shortages. That is why there were so many shortages during World War II. That is why there is an energy crisis and a gasoline shortage.

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  5. There is an energy crisis, there are gasoline lines, for one reason and one reason only. Because government has decreed that there shall be. Of course, government has not done so openly. The President never sent a message to Congress asking it to legislate an energy crisis and long gasoline lines.

    Context. From the Newsweek column of June 4, 1979, so “the President” is Carter. Note that the next sentence on the printed page names a different president, Nixon, as the one who imposed maximum prices in 1971, so a reader going to the source can mis-resolve the referent.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  6. There is one simple way to end the energy crisis and the gasoline shortage tomorrow—and I mean tomorrow and not six months from now, not six years from now. Eliminate all controls on the price of crude oil and other petroleum products. The gasoline lines would melt faster than the snows of winter. Other misguided policies of government and the monopolistic behavior of the OPEC cartel might keep petroluem products expensive, but they would not produce the disorganization, chaos and confusion that we now confront.

    Context. “petroluem” is the Congressional Record’s own misspelling and is reproduced as printed. The same excerpt spells “petroleum” correctly two sentences earlier, exactly as the page does. The excerpt joins two adjacent paragraphs of the source with nothing omitted between them, and stops at a paragraph end just before the subhead “GAS WOULD COST LESS”.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  7. Economists may not know much. But we know one thing very well: how to produce surpluses and shortages.

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  8. The minimum wage is a legislated price above the price that would otherwise prevail for the labor of many teen-agers. Like every minimum price, it enhances the amount supplied and reduces the amount demanded, and so produces a surplus, in this case of unemployed teen-agers.

    Context. From a June 1979 Newsweek column blaming the gasoline lines on federal price controls. To show how government produces surpluses and shortages, he sets legislated minimum prices, which produce surpluses (of wheat, sugar, butter and teen-age labor), against legislated maximum prices, which produce shortages, as of rental housing and, he argues, gasoline.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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  9. The subtle and sophisticated people who fill the newspaper columns and the airwaves with such silly explanations of the gasoline shortage seem never to have asked themselves the obvious question: why is it that for a century and more before 1971, there were no energy crises, no gasoline shortages, no problems about fuel oil—except during World War II?

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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Don’t Draft GI Joe (1979)

  1. As a member of the President’s Commission on an All-Volunteer Armed Force (chaired by Thomas Gates, former Secretary of Defense), I was repeatedly impressed with this attitude on the part of the high military officers with whom we met. They finally accepted a volunteer armed force only with great reluctance and only under extreme pressure from President Richard Nixon and Secretary of Defense Melvin Laird, both strong supporters of a volunteer force.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. “This attitude” is the one he has just described: that the upper echelon of the military never fully reconciled itself to the end of conscription.

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  2. In the medical area, the problem is of the military’s own making. It results from their insistence that uniformed personnel provide medical services to both enlisted personnel and their families wherever they are stationed.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. He goes on to cite the Gates report’s recommendation that service families use civilian medical facilities, with medical insurance as a fringe benefit.

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  3. The military do not take this attitude for ignoble reasons. They are sincere patriots deeply concerned about the ability of the United States to defend itself against any threats to its security. However, they have spent their lives in a system that is based on command. That is what they have been trained for.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. “This attitude” is the one he has just described: that the upper echelon of the military never fully reconciled itself to the end of conscription. The column’s next sentence is left out because the print has a slip in it (“let alone by enthusiastic”).

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  4. The problem of reserve forces is more difficult but hardly insoluble. In any event, despite the difficulties, the reserves now in existence are in far better condition to contribute quickly and effectively to our military effort than the reserves were under the draft, when they were manned primarily by men seeking to avoid the draft.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force.

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  5. We need a strong military. We are endangered throughout the world by the decline in our military strength relative to that of Russia. But strength depends on spirit and not merely numbers. Our military will be far stronger if we recruit it by methods consistent with the basic values of a free society than if we resort to the methods of a totalitarian society.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. The column’s closing paragraph.

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  6. The answer, I believe, is simple. The upper echelon of the military has never been fully reconciled to the end of conscription, to the need to attract volunteers by offering conditions of employment competitive with private industry. How much easier to press a button and command a Selective Service Administration to round up a specified number of bodies, willing or not.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. “The answer” is to his question why knowledgeable people who had the same data as Representative Les Aspin, showing the volunteer force meeting its strength, proclaimed one quarter’s shortfall of recruits a failure of the whole concept. His next paragraph, quoted separately, begins “The military do not take this attitude for ignoble reasons.”

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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  7. The fact is that the volunteer force is working extremely well. The average score of recruits on mental-aptitude tests is far higher today than it was under the draft. Quality has risen and every service has been able to meet its over-all quotas. There are some difficult areas, particularly in the medical services and in the reserve forces.

    Context. From a 1979 Newsweek column answering a new campaign to restore the draft, six years after conscription ended, written as a former member of the Gates Commission on an all-volunteer armed force. The column goes on to take up the medical services and the reserves, in passages quoted separately.

    Don’t Draft GI Joe
    Column, 1979, Newsweek, April 16, 1979; reprinted in the Congressional Record, Extensions of Remarks, April 24, 1979, p. 8489, introduced by Representative Ron Paul of Texas under the header “[From the Newsweek magazine, Apr. 16, 1979]”, Congressional Record, April 24, 1979, p. 8489
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Has the Fed Changed Course? (1979)

  1. The increase in the discount rate was a delayed response to market forces, not a vigorous Fed initiative. The discount rate, at 11 per cent, had been falling farther and farther below the rates that banks have been charging their customers; at 12 per cent, it remains below. In any event, it is of little significance. Member banks have been borrowing about $1 billion from the Fed, a trivial sum by comparison with the $800 billion that commercial banks have been lending to their customers. The discount rate is an anachronism that should be eliminated.

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979. The one-point rise in the discount rate was the first of the three changes he discussed.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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  2. The Fed’s targets for monetary growth have become a laughingstock, as it has become clear that any relation between the targets and actual monetary growth is purely coincidental.

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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  3. However, those of us who have long favored such a change have repeatedly licked our wounds when we mistakenly interpreted earlier Fed statements as portending a change in operating procedures. I hope that this time will be different—but remain skeptical until performance matches pronouncements.

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979. “Such a change” is the one he and others had pressed on the Fed for more than a decade: controlling monetary growth through the monetary base, or bank reserves, rather than the Federal funds rate.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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  4. If the Fed does change its procedures and does slow monetary growth, the recession will be resumed—or a new recession will get under way—in the first or second quarter of 1980. The bright side of that coin is that steady and gradual reduction in monetary growth would end inflation and lay the groundwork for healthy, noninflationary economic growth.

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979. A forecast made in October 1979; the NBER dates the next recession from January to July 1980.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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  5. However, there are two slips between the lip and the cup. First, so far this is all promise, not performance. Second, improved operating procedures can be used to inflate as well as to restrain inflation. Will the Fed’s excellent anti-inflation sentiments survive climbing unemployment in Election Year 1980?

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979. “This” is the Fed’s announced change of procedure and its promise of slower monetary growth.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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  6. The changes in Federal Reserve policy announced by chairman Paul Volcker on Saturday evening, Oct. 6, produced a turbulent week in the financial markets of the world. Yet it will be many months, perhaps even years, before the real meaning of those changes is fully revealed. Perhaps that very uncertainty produced the turmoil.

    Context. From a Newsweek column of October 1979 on the change in Federal Reserve operating procedures that Chairman Paul Volcker announced on Saturday, October 6, 1979.

    Has the Fed Changed Course?
    Column, 1979, Newsweek (October 1979); reprinted in the Congressional Record, House, November 2, 1979, pp. 30902 to 30903, introduced by Representative Henry S. Reuss of Wisconsin, chairman of the House Banking Committee, together with Friedman’s letter to him of October 26, 1979, which encloses “a copy of a Newsweek column which I wrote commenting on Chairman Volcker’s statement of October 6.” The reprint gives no issue date; the column describes the week after October 6, 1979, and the letter enclosing it is dated October 26, so it ran in between, Congressional Record, November 2, 1979, pp. 30902 to 30903
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Universal National Service (1979)

  1. It sounds fine. But it so happens that I read Bellamy during the 1930s. What struck me most forcibly about his “industrial army” was its uncanny resemblance to the Hitler Jugend—battalions of happy blue-eyed Aryans marching off with shovels on their shoulders singing “Deutschland über alles.”

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. “It sounds fine” follows his summary of the “industrial army” of young conscripts in Edward Bellamy’s 1887 novel Looking Backward.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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  2. The well-meaning current sponsors of universal national service will recoil at that prospect. They would insist on letting the youngsters choose for themselves how they serve. That is what happens now, via the market system, in which market wages equate supply and demand. But universal national service is meaningless unless it involves equal pay—which also means control and direction of labor.

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. “That prospect” is the power over conscripted young people he has just described.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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  3. It is tempting, at first sight, to escape the obvious inequity and arbitrariness of a system of selective military service by including all young people and assigning them to a wider range of national tasks, such as service in hospitals, schools, slum areas, national parks and so on. That would equalize the burden of compulsory service while at the same time staffing the military.

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. He sets out the case for universal national service here before rejecting it.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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  4. Universal national service is an idea of long standing. Indeed, the most persuasive case for it that I know is contained in a book published in 1887, “Looking Backward,” by Edward Bellamy, which sold in the millions and sparked a widespread national movement.

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. He goes on to reject the idea.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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  5. No. However appealing at first sight, universal national service is a monstrosity utterly inconsistent with a free society. It should be shunned like the plague it is.

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. The column’s closing words; “No.” follows his account of Bellamy’s scheme compelling service on pain of imprisonment.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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  6. The comparison is not fanciful. The young who are conscripted for “good” purposes must be given basic training. Who decides what that shall consist of? What ideas shall they be indoctrinated with? What purposes are “good”? Someone has to assign the youngsters to various activities. Someone has to enforce discipline on them. What a power to fall into the wrong hands. What a power for the wrong hands to seek.

    Context. From a 1979 Newsweek column answering renewed proposals, after the end of the draft, to require a period of military or civilian service from every young American. “The comparison” is the one he has just drawn between Bellamy’s industrial army and the Hitler Jugend.

    Universal National Service
    Column, 1979, Newsweek (1979); reprinted in the Congressional Record, Extensions of Remarks, May 15, 1979, p. 11349, introduced by Representative Ron Paul of Texas, who says Friedman “recently” made these arguments “in Newsweek.” The reprint gives no issue date and omits part of the opening paragraph, Congressional Record, May 15, 1979, p. 11349
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What Carter Should Do (1979)

  1. On energy, I recommend that the Department of Energy be abolished. Effective the earliest possible date, I am removing all controls on the prices of crude oil, natural gas and other petroleum products, confident that the market will promptly bring the energy crisis to an end.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. The second policy change the imagined talk announces.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  2. We must have compassion for the less fortunate among us. We must see to it that no resident of the United States is without assistance in time of real need. But that compassion must be joined with realism. It must be expressed in ways that take account of the experience of the past 50 years.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. Near the close of the imagined talk, after it says the recommendations return the country to “reliance on individual initiative and voluntary cooperation.”

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  3. Other costly social programs—welfare, job creation, health and so on in endless variety—were enacted for the noblest of motives. Yet, they have repeatedly failed to achieve their intended objectives.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. From the imagined talk’s review of what the expansion of federal government since the New Deal had produced, after agriculture and housing.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  4. On economic policy, I have requested the Council of Economic Advisers and the Office of Management and Budget to prepare a series of budgets for coming years that will cut government spending as a fraction of national income, eliminate deficits and reduce taxes. I shall recommend that Congress adopt such a budget policy. In addition, I am recommending to Congress that it limit the discretion of the Federal Reserve System, and instruct it to reduce the rate of monetary growth over the next few years to a level that is commensurate with the real growth of the economy.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. The first of the policy changes his imagined President announces: lower spending as a share of national income, and a legislated rule for the Federal Reserve.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  5. For many years, your government has been trying to fine-tune monetary and fiscal policy in order to avoid both unemployment and inflation. A growing number of people—inside government and outside—have concluded that such fine-tuning has not worked. It has not prevented repeated recessions. It has not prevented worse and worse inflation.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. The opening of the imagined talk: the failure of fine-tuning, which his imagined President says raises questions about everything else government does.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  6. OPEC is a convenient excuse for the energy crisis. But OPEC itself was largely created by our own foreign and economic policies—and it could never have reached its present level of influence and power without the unintended and unwitting support of our mistaken domestic policy.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. Written during the 1979 gasoline shortages, after a passage tracing energy shortages to price controls on natural gas from 1954, the 1971 wage and price freeze, and the continued controls on domestic crude oil.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  7. This talk will never be given. Yet, is it only a daydream that the policy it outlines would not only be good for the country but might also prove a political triumph for President Carter? He might ask Margaret Thatcher.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. The column’s close, in his own voice after the imagined talk ends. Margaret Thatcher had become Prime Minister of Britain the month before, in May 1979.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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  8. Has adequate housing been assured for all, and especially for the poor? Has urban blight been eliminated? Hardly. … Public-housing projects built at great expense—for example, the Pruitt-Igoe houses in St. Louis—have literally been blown up because they had become a hotbed of crime and a breeding ground of poverty.

    Context. From a 1979 Newsweek column. The column is framed as a daydream: he imagines President Carter giving a televised talk, and everything inside the talk is his own recommendation voiced through that imagined Carter, not anything Carter said. On public housing, urban renewal and the Department of Housing and Urban Development. The ellipsis omits a sentence quoting Martin Anderson’s figures on urban renewal, which are Anderson’s words, not his.

    What Carter Should Do
    Column, 1979, Newsweek, June 18, 1979; reprinted in the Congressional Record, Extensions of Remarks, June 13, 1979, p. 14740, introduced by Representative G. William Whitehurst of Virginia, who cites “the June 18, 1979, issue of Newsweek”, Congressional Record, June 13, 1979, p. 14740
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Created Equal (1980)

  1. This concept of equality of opportunity offers no conflict at all with the concept of freedom. On the contrary, they reinforce one another, and it is no doubt the concept that even today is most widely held. But in the 20th century, beginning especially abroad and at a later date in this country, a very different concept, a very different ideal, has begun to emerge. That is the ideal that everyone should be equal in income, in level of living, in what he has. The idea that the economic race should be so arranged that everybody ends at the finish line at the same time, rather than that everyone starts at the beginning line at the same time. This concept raises a very serious problem for freedom. It is clearly in conflict with it, since it requires that the freedom of some be restricted in order to provide greater benefits to others.

    Context. Narrating the episode’s close. “This concept” is equality of opportunity, which he has just described as everyone having the same opportunity to make what he could of his capacities, with careers open on the basis of talent.

    Created Equal
    Television, 1980, PBS, Free to Choose (1980), vol. 5, at 27:04
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  2. The society doesn’t have concerns. It has governments, it has laws, it has parliaments. Only people have concerns. People do certain things through government. And I’m not going to talk about society having values. Society doesn’t have values. People have values.

    Context. In the panel discussion, asked whether he holds that any concern with inequality of outcome is illegitimate. He asks, “Concerned with whom? By whom?”, and the questioner answers, “Concerned by the society.”

    Created Equal
    Television, 1980, PBS, vol. 5, at 33:42
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  3. The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.

    Context. The closing words of the documentary half of the episode, which he narrates, just after distinguishing equality of opportunity from equality of outcome.

    Created Equal
    Television, 1980, PBS, Free to Choose (1980), vol. 5, at 28:10
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Free to Choose (1980)

  1. Believers in aristocracy and socialism share a faith in centralized rule, in rule by command rather than by voluntary cooperation.
    Free to Choose
    Book, 1980, Ch. 4 “Cradle to Grave”, p. 97
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  2. The combination of economic and political power in the same hands is a sure recipe for tyranny.
    Free to Choose
    Book, 1980, “Introduction”, p. 3
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  3. The shift in opinion of both the public and the economics profession resulted from a misunderstanding of what had actually happened. We now know, as a few knew then, that the depression was not produced by a failure of private enterprise, but rather by a failure of government in an area in which the government had from the first been assigned responsibility—“To coin money, regulate the Value thereof, and of foreign Coin,” in the words of Section 8, Article 1, of the U.S. Constitution.

    Context. From Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Anatomy of Crisis” on the Great Depression. Just before, the authors write that the economic collapse “shattered the long-held belief” that monetary policy was “a potent instrument for promoting economic stability”: opinion shifted “almost to the opposite extreme” that money does not matter, and the Keynesian revolution offered a case for “extensive government intervention.”

    Free to Choose
    Book, 1980, Ch. 3 “The Anatomy of Crisis”, p. 71
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  4. Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports, or equivalently, from exporting as little as possible to pay for its imports.

    Context. From Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Tyranny of Controls”, on international trade.

    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, p. 41
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  5. Five simple truths embody most of what we know about inflation: 1. Inflation is a monetary phenomenon arising from a more rapid increase in the quantity of money than in output (though, of course, the reasons for the increase in money may be various). 2. In today’s world government determines—or can determine—the quantity of money. 3. There is only one cure for inflation: a slower rate of increase in the quantity of money. 4. It takes time—measured in years, not months—for inflation to develop; it takes time for inflation to be cured. 5. Unpleasant side effects of the cure are unavoidable.

    Context. From Free to Choose (1980), written with Rose D. Friedman: the conclusions of the chapter “The Cure for Inflation”. The book sets the five points as a numbered list.

    Free to Choose
    Book, 1980, Ch. 9 “The Cure for Inflation”, “Conclusions”, pp. 281–282
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  6. Fortunately, we are waking up. We are again recognizing the dangers of an overgoverned society, coming to understand that good objectives can be perverted by bad means, that reliance on the freedom of people to control their own lives in accordance with their own values is the surest way to achieve the full potential of a great society.

    Context. From the closing pages of Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Tide Is Turning”.

    Free to Choose
    Book, 1980, Ch. 10 “The Tide Is Turning”, pp. 309–310
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  7. The great danger to the consumer is monopoly—whether private or governmental. His most effective protection is free competition at home and free trade throughout the world. The consumer is protected from being exploited by one seller by the existence of another seller from whom he can buy and who is eager to sell to him. Alternative sources of supply protect the consumer far more effectively than all the Ralph Naders of the world.

    Context. From Free to Choose (1980), written with Rose D. Friedman: the last paragraph before the conclusion of the chapter “Who Protects the Consumer?”, on consumer-protection regulation. Ralph Nader was the best-known consumer advocate of the time.

    Free to Choose
    Book, 1980, Ch. 7 “Who Protects the Consumer?”, p. 226
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  8. Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant relatively little to the wealthy. The rich in Ancient Greece would have benefited hardly at all from modern plumbing: running servants replaced running water. … They would have welcomed the improvements in transportation and in medicine, but for the rest, the great achievements of Western capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.
    Free to Choose
    Book, 1980, Ch. 5 “Created Equal”, pp. 147–148
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  9. The key insight of Adam Smith's Wealth of Nations is misleadingly simple: if an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", p. 13
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  10. In the past century a myth has grown up that free market capitalism—equality of opportunity as we have interpreted that term—increases such inequalities, that it is a system under which the rich exploit the poor. Nothing could be further from the truth. Wherever the free market has been permitted to operate, wherever anything approaching equality of opportunity has existed, the ordinary man has been able to attain levels of living never dreamed of before. Nowhere is the gap between rich and poor wider, nowhere are the rich richer and the poor poorer, than in those societies that do not permit the free market to operate.

    Context. From Free to Choose (1980), the book he wrote with Rose Friedman to accompany their television series, in the chapter “Created Equal”, which sets equality of opportunity, which they favor, against equality of outcome. “Such inequalities” are the inequalities of income and wealth between rich and poor.

    Free to Choose
    Book, 1980, Ch. 5 “Created Equal”, p. 146
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  11. The price system transmits only the important information and only to the people who need to know.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", p. 15
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  12. The price system works so well, so efficiently, that we are not aware of it most of the time. We never realize how well it functions until it is prevented from functioning, and even then we seldom recognize the source of the trouble.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", p. 14
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  13. Prices perform three functions in organizing economic activity: first, they transmit information; second, they provide an incentive to adopt those methods of production that are least costly and thereby use available resources for the most highly valued purposes; third, they determine who gets how much of the product—the distribution of income. These three functions are closely interrelated.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", p. 14
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  14. The smaller the unit of government and the more restricted the functions assigned government, the less likely it is that its actions will reflect special interests rather than the general interest.
    Free to Choose
    Book, 1980, Ch. 10 “The Tide Is Turning”, pp. 294–295
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  15. A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests. On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.
    Free to Choose
    Book, 1980, Ch. 5 “Created Equal”, p. 148
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  16. For example, the supporters of tariffs treat it as self-evident that the creation of jobs is a desirable end, in and of itself, regardless of what the persons employed do. That is clearly wrong. If all we want are jobs, we can create any number—for example, have people dig holes and then fill them up again, or perform other useless tasks. Work is sometimes its own reward. Mostly, however, it is the price we pay to get the things we want. Our real objective is not just jobs but productive jobs—jobs that will mean more goods and services to consume.
    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, pp. 40-41
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  17. As these remarks indicate, the Social Security program involves a transfer from the young to the old. To some extent such a transfer has occurred throughout history—the young supporting their parents, or other relatives, in old age. … The difference between Social Security and earlier arrangements is that Social Security is compulsory and impersonal—earlier arrangements were voluntary and personal. Moral responsibility is an individual matter, not a social matter. Children helped their parents out of love or duty. They now contribute to the support of someone else’s parents out of compulsion and fear. The earlier transfers strengthened the bonds of the family; the compulsory transfers weaken them.
    Free to Choose
    Book, 1980, Ch. 4 “Cradle to Grave”, p. 106
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  18. The threat to public schools arises from their defects, not their accomplishments. In small, closely knit communities where public schools, particularly elementary schools, are now reasonably satisfactory, not even the most comprehensive voucher plan would have much effect. The public schools would remain dominant, perhaps somewhat improved by the threat of potential competition. But elsewhere, and particularly in the urban slums where the public schools are doing such a poor job, most parents would undoubtedly try to send their children to nonpublic schools.
    Free to Choose
    Book, 1980, Ch. 6 “What’s Wrong with Our Schools?”, p. 170
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  19. When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the Soviet Union—like public housing in the United States—look decrepit within a year or two of their construction …
    Free to Choose
    Book, 1980, Ch. 1 “The Power of the Market”, p. 24
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  20. When the law interferes with people's pursuit of their own values, they will try to find a way around. They will evade the law, they will break the law, or they will leave the country. Few of us believe in a moral code that justifies forcing people to give up much of what they produce to finance payments to persons they do not know for purposes they may not approve of. When the law contradicts what most people regard as moral and proper, they will break the law—whether the law is enacted in the name of a noble ideal such as equality or in the naked interest of one group at the expense of another. Only fear of punishment, not a sense of justice and morality, will lead people to obey the law.
    Free to Choose
    Book, 1980, Ch. 5 “Created Equal”, p. 145
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  21. A worker is protected from his employer by the existence of other employers for whom he can go to work. An employer is protected from exploitation by his employees by the existence of other workers whom he can hire. The consumer is protected from exploitation by a given seller by the existence of other sellers from whom he can buy.
    Free to Choose
    Book, 1980, Ch. 8 “Who Protects the Worker?”, p. 246
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Free to Choose: Created Equal (1980)

  1. Life is unfair. There’s nothing fair about one man being born blind and another man being born with sight. There’s nothing fair about one man being born of a wealthy parent and one of an impecunious parent. There’s nothing fair about Muhammad Ali having been born with a skill that enables him to make millions of dollars one night. There’s nothing fair about Marlene Dietrich having great legs that we all want to watch. There’s nothing fair about any of that. But on the other hand, don’t you think a lot of people who like to look at Marlene Dietrich’s legs benefited from nature’s unfairness in producing a Marlene Dietrich?

    Context. From the opening of “Created Equal,” the fifth film of his 1980 television series Free to Choose. Shortly before, he describes a favorite device of reformers: contrasting extremes of wealth and poverty, so that we conclude the rich are rich at the expense of the poor.

    Free to Choose: Created Equal
    Television, 1980, PBS, Vol. 5, at 1:46
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Improving Monetary Policy (1980)

  1. The Fed should operate entirely by deciding (and announcing) in advance the changes in the monetary base (currency plus deposits at Federal Reserve Banks) required to achieve its monetary targets. If it wishes to do so, the Fed can control the base almost precisely from week to week through purchases and sales of government securities.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures, written months after the Fed’s October 1979 announcement that it would aim at the quantity of money rather than interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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  2. The Fed’s repeated failure to achieve its own targets has produced an impression that it cannot do so, that it is a helpless giant buffeted by events over which it has no control. That impression is false. The Fed’s failure does not reflect a lack of means. It reflects the Fed’s tardiness in adjusting its operating procedures to the change in its announced objectives.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures, written months after the Fed’s October 1979 announcement that it would aim at the quantity of money rather than interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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  3. Those same procedures are clumsy and inefficient for achieving the objective that the Fed now professes: control of the quantity of money.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures. “Those same procedures” are the Fed’s operating procedures, which the column has just described as developed many years earlier to control credit conditions, that is, interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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  4. The Federal Reserve System has long displayed a propensity to swing erratically from one extreme to the other, from excessively rapid to excessively slow monetary growth. The propensity has seldom been more dramatically evident than in recent months, which have seen the sharpest swings in monetary growth in decades.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures, written months after the Fed’s October 1979 announcement that it would aim at the quantity of money rather than interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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  5. Targets should be expressed in terms of dollar levels of monetary aggregates rather than, or in addition to, growth rates. In 1975, Congress required the Fed for the first time to specify targets a year in advance. However, the Fed has evaded the intended discipline by stating targets in terms of growth rates applied to a shifting level of actual monetary totals. This device buried past mistakes and enabled the Fed to start fresh each quarter.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures, written months after the Fed’s October 1979 announcement that it would aim at the quantity of money rather than interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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  6. Setting a target range for the Federal Funds interest rate should be ended. That rate, and all other interest rates, should be determined entirely by the market and abandoned as instruments of policy. The Fed’s task, as it now recognizes, is to control the quantity of money, not interest rates.

    Context. From a 1980 Newsweek column arguing that the Federal Reserve could control the quantity of money if it changed its operating procedures, written months after the Fed’s October 1979 announcement that it would aim at the quantity of money rather than interest rates.

    Improving Monetary Policy
    Column, 1980, Newsweek, July 28, 1980; reprinted in the Congressional Record, Extensions of Remarks, July 28, 1980, p. 20026, introduced by Representative Robert Dornan of California, who gives the column as appearing in the Newsweek issue “dated July 28, 1980”, Congressional Record, July 28, 1980, p. 20026
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The Tyranny of Control (1980)

  1. The fallacy with that argument is that it begs the real question. Why should there be laws that in effect prevent you and me from buying in the cheapest market? When anyone complains about unfair competition, consumers beware. That is really a cry for special privilege, always at the expense of the consumer. … As consumers buying in an international market, the more unfair the competition, the better. That means lower prices and better quality for us. If foreign governments want to use their taxpayers’ money to sell people in the United States goods below cost, why should we complain? Their own taxpayers will complain soon enough, and it will not last for very long.

    Context. Narrating the episode, he answers Richard P. Simmons of the specialty steel industry, who has just argued that asking the government to bring cases against foreign producers for unfair competition, such as steelmakers subsidized by their governments, is no different from reporting a theft to the police.

    The Tyranny of Control
    Television, 1980, PBS, Free to Choose (1980), vol. 2, at 20:11
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  2. In my opinion, the strongest argument for free enterprise is that it prevents anybody from having too much power, whether that person is a government official, a trade union official, or a business executive. It forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, or willing to buy, or else they have to go into a different business.

    Context. In the panel discussion that closes the episode, after saying he is pro-free enterprise rather than pro-business. These are the last words of the discussion.

    The Tyranny of Control
    Television, 1980, PBS, vol. 2, at 55:48
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Things That Ain’t So by Milton Friedman (1980)

  1. Will we read next that government control of prices has created a shortage of sand in the Sahara?
    Things That Ain’t So by Milton Friedman
    Column, 1980, Newsweek, p. 79
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Who protects the consumer? (1980)

  1. I am saying there is no place for government to prohibit consumers from buying products, the effect of which will be to harm themselves.

    Context. In the panel discussion, asked whether he is saying there is no place for government to test consumer product safety at all. He goes on to say there is a place for government to protect third parties.

    Who protects the consumer?
    Television, 1980, PBS, vol. 7, at 36:25
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The Market and Human Freedom (1981)

  1. I have examined the story in this area in the United States, in particular with the American Medical Association during the course of the 1920’s and 1930’s. It’s an extreme example of a very powerful trade union which succeeded in keeping down the number of physicians and in the process raising costs, which succeeded in retarding the development of efficient group medical practice and in the process reduced the quality. I mention this not to attack the American Medical Association or the members of it. They are noble, able people who wanted good things, but were misled. But only to suggest again a sense in which the developments in medicine are not special to medicine.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. On the American Medical Association in the 1920s and 1930s, a history he says he had examined.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  2. Every businessman knows that he’s in favor of free trade and free markets except when it comes to himself and he’s a special case. He needs a tariff or he needs a special tax arrangement. Physicians have been no different. The medical profession, the healing professions in general, are in favor of private practice but only up to certain limits.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. On what he calls “a kind of schizophrenia among businessmen and among physician professions.”

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  3. You hear all the time the argument that medical care is so expensive that you cannot expect the ordinary person to finance it. Well, there are two things wrong with that. First of all, who finances it if government finances it? It’s the ordinary people. Government doesn’t have any money with which to finance anything. All government has is a monopoly on force. And, therefore, the power to take money out of some people’s pockets and use it for purposes that are determined by government.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. The second thing wrong with the argument, he goes on, is that it misrepresents how large medical spending is.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  4. A second function that governments have assumed and is appropriate for governments to assume is to help people who are in dire distress. We do have a situation in which individual citizens get into a situation, often through no fault of their own, in which they are in dire difficulty and one of those possible situations may be subject to very high medical expenses, but there is nothing special about that. Another reason for dire distress may be a flood that destroys a town or it may be an earthquake or it may be anything else. And in that sense there can be a role for government in assisting people and the terms ought to be the same, in my opinion, regardless of what is the cause.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Answering what the appropriate role of government in medicine is. The first function he names is enforcing laws against fraud and deception, as in every other field.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  5. In my opinion, government involvement in medicine has been the problem and not the solution.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. He goes on to say the right ultimate course is no government involvement, regulation or subsidy, and no government licensure of physicians, a position he expects most of the audience not to share; the audience applauds.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  6. What you have has been a broad movement ever since the end of the 19th century away from a society in which government serves primarily as an umpire, as a policeman, and toward a society in which government serves as the all-powerful—supposedly and hopefully—all-benevolent father.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Placing the growth of government financing of medical care within a general trend toward government control. The sentence before it, comparing that growth to “the nationalization of steel industries in the United States”, is left out because the transcript may have garbled it.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  7. Hippocrates himself gave his name to the Hippocratic oath, but he had nothing to do with it. What happened is, as most of you probably know, when he died, the island was full of physicians and of patients who had been attracted by Hippocrates’ fame. But when he died, the fame was not there any more and the attraction was not so great, so you had an oversupply of physicians. Of course, physicians didn’t like that so they organized themselves into a group and they drafted the Hippocratic oath.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Recalling a visit to Kos, Hippocrates’ island, which he had meant to use to open the Free to Choose episode on labor unions. This is his account of the oath’s origin as given in the talk.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  8. The Hippocratic oath, which all of you probably took when you entered practice but didn’t read very carefully, contains many fine and noble sentiments and statements. But if you examine it more carefully, you will see it is essentially a trade union agreement.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. He goes on to cite the oath’s clauses limiting students to physicians’ children and dividing jurisdiction between surgeons and physicians.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  9. You know, the believers in collectivism, the believers in socialism are on the defensive everywhere. Very seldom do people who have taken a very strong and firm position change their position. People pretty well are set in their ways after the age of 25, but you have new generations arising and you have a whole mess of the population that has come to the conclusion that it has been sold a bill of goods and that it has come to realize that these miracles promised by governmental control are not going to emerge.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. On why he was more optimistic in 1981 than five or ten years earlier, citing a worldwide movement of opinion away from collectivism.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  10. I do not believe there is any case whatsoever for government’s financing ordinary medical care of a private patient. The cost of financing ordinary medical care is well within the means of ordinary families in most of our countries. Certainly so far as the more expensive, unusual forms of medical care the appropriate method of financing those is insurance just as that is the appropriate mechanism for financing other large risks.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Directly after allowing a role for government in helping people in dire distress. He goes on to say that insurance is the appropriate way to finance the more expensive, unusual forms of care.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  11. Almost everywhere medical practitioners have formed themselves into organizations that have generally, with the assistance of the state, restricted entry into medicine—all, of course, for good purposes. Nobody ever does undesirable things for bad reasons; all for the good purpose of raising standards of medical practice.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Following the Hippocratic oath forward through the centuries of medical practice.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19996
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  12. People will voluntarily pay their own money to go see a particular physician, but nobody likes to pay taxes for someone else to see a physician.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. On why, once government has taken over medical care, fiscal pressure leads it to hold down spending.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  13. I have argued against the licensure of physicians before the board of directors of the American Medical Association and had one of the most vituperative, the most argumentative evenings I have ever had. But, your endorsement of that is fascinating because I think physicians everywhere and people everywhere are coming to realize the truth of that old saying that if you’re going to sup with the devil you better have a very long spoon. And licensure is not a long enough spoon. It has been a major source of the problem.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Responding to the audience’s applause for his call for no government licensure of physicians.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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The Suicidal Impulse of the Business Community (1983)

  1. The broader and more influential organisations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend.
    The Suicidal Impulse of the Business Community
    Lecture, 1983
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  2. With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves.
    The Suicidal Impulse of the Business Community
    Lecture, 1983
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Tyranny of the Status Quo (1984)

  1. The amendment is very much in the spirit of the Bill of Rights, the first Ten Amendments to the Constitution. Their purpose was to limit the government in order to free the people. Similarly, the purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people, in this instance from excessive taxation. Its passage would go a long way to remedy the defect in our budgetary process. By the same token, it would make it more difficult for supporters of ever-bigger government to attain their goals.

    Context. From Tyranny of the Status Quo (1984), written with Rose D. Friedman, discussing the proposed balanced-budget-and-tax-limitation amendment to the Constitution, a version of which the Senate passed in August 1982, and which would limit federal spending and taxes to the growth of national income.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 3 “Causes and Cure: Government Spending, Taxes, and Deficits”, p. 58 (with Rose D. Friedman)
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  2. The private enterprises selling military goods or services know that this is the case and they have every incentive—in terms of their own bottom lines—to make it in the self-interest of the government officials to buy their products and pay high prices for them. The steady stream of scandals about the procurement of military supplies amply documents this phenomenon.

    Context. From Tyranny of the Status Quo (1984), written with Rose D. Friedman, in the chapter on defense. The authors argue that contracting military production out to private firms does not bring the efficiency of private enterprise: the officials who sign the contracts are not spending their own money, the taxpayers whose money they spend have no effective way to hold them accountable, and taxpayers hear of waste and overspending only when a scandal breaks or a major study is made. “This is the case” refers to that.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 4 “Defense”, pp. 76–77 (with Rose D. Friedman)
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  3. The desperate search by many parents for alternatives to public schools is persuasive evidence of the difference that a voucher system could make. Among other results, that search has led many non-Catholic parents to enroll their children in Catholic parochial schools—the only private schools they could afford because the parochial schools are heavily subsidized by the Catholic Church. It has also led to a rise in the percentage of all students enrolled in private schools, despite rising fees.

    Context. From the book’s chapter on education, after the Friedmans have described the voucher plan, under which the government money spent on a child’s schooling would go with the child to a school the parents choose, public or private.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 8 “Education”, p. 156 (with Rose D. Friedman)
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  4. If the early successes of a new administration reflect a basic change in public opinion, the apparent lack of further progress after the first six to nine months will be deceptive. The early actions will continue to have their effects after they have disappeared from the front pages. The altered political atmosphere will lead the defeated opposition to modify its political position. Even if the opposition succeeds in returning to power, it will not pursue the same course that it pursued before.

    Context. From the opening chapter of Tyranny of the Status Quo (1984), written with Rose D. Friedman, on Ronald Reagan’s first term. It follows the authors’ statement of a political generalization: a new administration has some six to nine months in which to achieve major changes, and needs a detailed program ready before the election.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 1 “The Reagan Record: Promise and Performance”, p. 3 (with Rose D. Friedman)
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  5. The harm to us from the addiction of others arises primarily from the fact that drugs are illegal. It has been estimated that from one third to one half of all violent and property crime in the United States is committed either by drug addicts engaged in crime to finance their habit, or by conflicts among competing groups of drug pushers, or in the course of the importation and distribution of illegal drugs. Legalize drugs, and street crime would drop dramatically and immediately.

    Context. From Tyranny of the Status Quo (1984), written with Rose D. Friedman, in the chapter on crime, after arguing that government may stop drug users from harming third parties but that prohibiting adults’ own drug use does more harm than good, and that addicts themselves would be better off if drugs were legal. Here they turn to the harm that others’ addiction does to non-users.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 7 “Crime”, p. 139 (with Rose D. Friedman)
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  6. The undoubted difficulty of slowing the growth of government, let alone reducing the size of a massive government, manifests itself in what has come to be called the iron triangle. At one corner are the direct beneficiaries of a law; at a second, the legislative committees and their staffs; at a third, the bureaucracy administering a law. These three powerful tyrannies enforce the status quo. … Taken together, the three corners of the iron triangle guard against dismantling the functions of government. The tyranny of the status quo is strong and difficult to break.
    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 3 “Causes and Cure: Government Spending, Taxes, and Deficits”, pp. 42, 51 (with Rose D. Friedman)
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  7. The key difference, and it is crucial, is that parents—and not government bureaucrats—would decide what schools their children attend. In the process, they would also decide which schools got more funds and which less, and parents who chose private schools would be relieved, at least in part, from having to pay twice for schooling their children—once through taxes, once through school fees. The result would be to give teachers and administrators a strong incentive to meet the wants of their real customers—the students. “The customer is the boss” is the characteristic slogan of a competitive market. Vouchers would make that slogan apply to schooling.

    Context. From the book’s chapter on education. Just before, the Friedmans describe versions of a school voucher plan and say that none of them changes where the money for schooling comes from: all citizens, with children or without, would still pay taxes to finance it. “The key difference” is the difference from the present system.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 8 “Education”, p. 156 (with Rose D. Friedman)
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  8. Legalizing drugs would simultaneously reduce the amount of crime and improve law enforcement. It is hard to conceive of any other single measure that would accomplish so much to promote law and order.

    Context. From Tyranny of the Status Quo (1984), written with Rose D. Friedman, in the chapter on crime, after arguing that marijuana prohibition repeats the pattern of alcohol Prohibition: growers post armed guards and gun battles follow, law enforcement personnel in some areas wink at the growers, and the government sprays the poison paraquat on marijuana fields. The authors conclude that prohibiting drugs does more harm, to users and to everyone else, than the drugs themselves.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 7 “Crime”, pp. 140–141 (with Rose D. Friedman)
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  9. President Reagan’s experience conforms to a political generalization that has repeatedly proved valid: a new administration has some six to nine months in which to achieve major changes; if it does not seize the opportunity to act decisively during that period, it will not have another such opportunity. Further changes come slowly or not at all, and counterattacks develop against the initial changes. … This generalization has a corollary: a candidate for head of state who hopes to make a real difference has to do more than get elected; he or she must have a detailed program of action well worked out before the election.

    Context. From the opening chapter of Tyranny of the Status Quo (1984), written with Rose D. Friedman, on Ronald Reagan’s first term. The chapter calls the first six to nine months of his presidency his “honeymoon”, after which “the tyranny of the status quo asserted itself.”

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 1 “The Reagan Record: Promise and Performance”, p. 3 (with Rose D. Friedman)
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  10. Each recession has produced government spending programs supposedly as a temporary device to create jobs. But nothing is so permanent as a temporary government program. Those programs have typically moved into high gear only after the economy was on the road to recovery.
    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, “Jobs Bills”, p. 115 (with Rose D. Friedman)
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  11. The President and the Vice President are the only federal officials elected by all the people. They are the only ones who have a political incentive, once elected, to put the general interest above sectional interests. One route to curbing government is therefore to elect a President committed to that task.

    Context. The fourth of the numbered lessons in the book’s closing chapter. The points before it say that special-interest groups have the strongest influence on Congress, that electing the “right” people to Congress cannot correct this, and that only two routes exist for the general interest to prevail: the presidency and a constitutional amendment.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 9 “The Iron Triangle: How to Defeat It”, p. 166 (with Rose D. Friedman)
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  12. This was Reagan’s honeymoon. It lasted about six to nine months. Then the tyranny of the status quo asserted itself. Every special interest that was threatened proceeded to mount a campaign to prevent its particular governmental sinecure from being eliminated.

    Context. From the opening chapter of Tyranny of the Status Quo (1984), written with Rose D. Friedman, on Ronald Reagan’s first term. “This” is the early success the chapter has just described: oil price decontrol and Congress’s adoption in 1981 of his tax cuts, spending cuts and increase in defense funds.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 1 “The Reagan Record: Promise and Performance”, p. 2 (with Rose D. Friedman)
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  13. The strongest political influence on a legislative body is exercised by special-interest groups of citizens who favor a government program that confers substantial benefits on them, while imposing small costs on a large number of their fellow citizens. … A corollary is that we cannot correct this situation by electing the “right” people to Congress. Once elected, the “right” people will do the wrong things. And they will be pressured to do so by us, in our capacity as members of special-interest groups, even though we elect them in our capacity as members of a majority outraged by the growth in government’s spending and scope.

    Context. From the book’s closing chapter, where the Friedmans set out a numbered list of lessons on how the public will can be translated more effectively into government policy; these are the first two. The ellipsis leaves out one sentence, which calls each such group a corner of an “iron triangle” of beneficiaries, politicians and bureaucrats. The next point says that only the presidency or a constitutional amendment can let the general interest prevail.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 9 “The Iron Triangle: How to Defeat It”, pp. 165–166 (with Rose D. Friedman)
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  14. Only two routes exist whereby the general interest can express itself, whereby a package deal can be arranged in which we accept cuts in “our” programs because we recognize that we would gain more from cutting “their” programs than we would lose by the cut in “ours.” One route is via the presidency; the other is through Constitutional Amendment.

    Context. From the book’s closing chapter, where the Friedmans set out their conclusions as a numbered list; this is the third point. The points just before it say that a special-interest group is one corner of an “iron triangle” of beneficiaries, politicians and bureaucrats, and that electing the “right” people to Congress cannot correct this, because once elected they are pressured by special-interest groups to do the wrong things. The amendment they have in mind is one limiting federal spending, proposed earlier in the book.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 9 “The Iron Triangle: How to Defeat It”, p. 166 (with Rose D. Friedman)
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  15. With a typical government program, the persons who initially receive the benefits from a program are typically not the persons who would currently be harmed by its elimination: one group benefits when the program is first instituted; a different group is hurt if and when it is terminated. Consider a tariff. When a tariff is first enacted, persons who produce the product covered by the tariff benefit. … As others enter the industry, returns are driven down roughly to the level where they were before. The result is that a larger number of persons are engaged in the industry, all earning roughly the same income that they had earned when employed earlier in other industries.

    Context. From the Friedmans’ account of why government programs, once started, are so hard to end. The ellipsis leaves out that the tariff gives existing producers a sheltered market and higher prices, and that their prosperity draws others into the industry. The paragraph goes on to say that when the tariff is removed, prices fall and some companies abandon the industry, so those hurt by ending it are not the people it first helped.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 3 “Causes and Cure: Government Spending, Taxes, and Deficits”, p. 43 (with Rose D. Friedman)
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Lives of the laureates (1985)

  1. So far, twenty-two people have received the Nobel award in economics. Not one of them has been female—so, to judge only from the past, the most important thing to do if you want to be a Nobel laureate is to be male. I hasten to add that the absence of females is not, I believe, attributable to male chauvinist bias on the part of the Swedish Nobel Committee. I believe that the economics profession as a whole would have been nearly unanimous that, during the period in question, only one female candidate met the relevant standards—the English economist Joan Robinson, who has since died. The failure of the Nobel Committee to award her a prize may well have reflected bias but not sex bias.
    Lives of the laureates
    Lecture, 1985, Lives of the Laureates: Seven Nobel Economists, ed. William Breit and Roger W. Spencer (MIT Press, 1986), p. 77
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An Open Letter to Bill Bennett (1989)

  1. Every friend of freedom, and I know you are one, must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence.

    Context. From an open letter to William Bennett, then the federal government’s drug czar, about the war on drugs. Just before, Friedman writes that his plea “comes from the bottom of my heart.”

    An Open Letter to Bill Bennett
    Column, 1989, The Wall Street Journal, September 7, 1989; reprinted as Ch. 1 in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 5
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We Have Socialism, Q.E.D. (1989)

  1. Airlines have had no difficulty in acquiring the planes and personnel to handle the increased traffic produced by deregulation. What has been the bottleneck? Airports. Why? Because they are government owned and operated.
    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
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  2. Child care? Program trading? Earthquakes? Pass a law. And every law comes with a price tag and is cited as a reason for higher taxes.

    Context. On the loudest complaints of the day: that government should do more, raise taxes, and impose more regulations.

    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
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  3. Major premise: Socialism is a failure. Even lifelong Communists now accept this proposition. Wherever socialism has been tried, it has proved unable to deliver the goods, either in the material form of a high standard of living or in the immaterial form of human freedom.

    Context. The first premise of the “conventional wisdom” he sets out as a syllogism whose conclusion is that the U.S. needs more socialism.

    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
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  4. Spending by government currently amounts to about 45 percent of national income. By that test, government owns 45 percent of the means of production that produce the national income. The U.S. is now 45 percent socialist.

    Context. After defining socialism as government ownership and control of the means of production, and ownership as the right to the income a thing produces.

    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
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  5. What is socialism? In its purest form, socialism is government ownership and control of the means of production. Ownership of anything implies the right to the income produced by that thing.
    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
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America’s Drug Forum interview (1991)

  1. So far as drugs itself is concerned, some years ago, Alaska legalized marijuana. Consumption of marijuana among high school students in Alaska went down. The Dutch, in Holland, do not prosecute soft drugs, like marijuana, and they would prefer not to prosecute hard drugs, but they feel impelled by the international obligations they’ve entered into, and consumption of marijuana by young people has gone down. And, equally more interesting, the average age of the users of hard drugs has gone up, which means they’re not getting any more new recruits.

    Context. From a television interview about the war on drugs. The interviewer has said that some argue alcohol consumption increased dramatically when Prohibition ended. Friedman has answered that it did not, and turns here to the evidence on drugs; he goes on to call that evidence “very mixed” and to grant that legalizing drugs might bring some additional addicts.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 69
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  2. Now suppose you legalized. Under current circumstances, a mother who is a crack addict and is carrying a baby is afraid to go get prenatal treatment because she turned herself into a criminal, she’s subject to being thrown into jail. Under legalized drugs, that inhibition would be off. And, you know, even crack addicts, mothers, have a feeling of responsibility to their children. And I have no doubt that under those circumstances, it would be possible to have a much more effective system of prenatal care, a much more effective system of trying to persuade people who are on drugs not to have children or to go off drugs while they have children.

    Context. From a television interview about the war on drugs. Friedman has just said that what bothers him most about crack is the “crack babies”, innocent victims who tend to be born underweight or mentally impaired, adding that alcohol harms more babies this way.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 67
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  3. In an ordinary free market business—let’s take potatoes, beef, anything you want—there are thousands of importers and exporters. Anybody can go into the business. But it’s very hard for a small person to go into the drug importing business because our interdiction efforts essentially make it enormously costly. So, the only people who can survive in that business are these large Medellin cartel kind of people who have enough money so they can have fleets of airplanes, so they can have sophisticated methods, and so on. … What more could a monopolist want? He’s got a government who makes it very hard for all his competitors and who keeps the price of his products high. It’s absolutely heaven.

    Context. From a television interview about the war on drugs. Friedman has just said that, from a purely economic point of view, the role of the government is to protect the drug cartel; asked whether it is doing a good job of it, he answers “Excellent” and explains. The ellipsis leaves out a sentence saying that by keeping goods out and arresting local marijuana growers, the government keeps the price of these products high.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 72
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  4. Of course, they’re entrepreneurs. The people who are running the drug traffic are no different from the rest of us, except that they have more entrepreneurial ability and less concern about not hurting other people. They’re more irresponsible in that way. But they’re in a business and they’re trying to make as much as they can. And they discovered a good way to make money was to dilute this crack with baking soda or whatever else—I mean, cocaine, whatever else they do—I don’t know the procedure—so that they could bring it out in five dollar and ten dollar doses.

    Context. From a television interview about the war on drugs. Friedman has said that crack would never have existed without drug prohibition: snorting cocaine became very expensive, and they were desperate to find a way of packaging it. The interviewer has put in, “The entrepreneurs.”

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 66
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  5. I’m an economist, but the economics problem is strictly tertiary. It’s a moral problem. It’s a problem of the harm which government is doing. I have estimated statistically that the prohibition of drugs produces, on the average, ten thousand additional homicides a year. It’s a moral problem that the government is going around killing ten thousand people.

    Context. From a television interview about the war on drugs. The interviewer has asked whether the whole drug problem is not an economic one; Friedman has answered that it is not an economic problem at all but a moral one, and the interviewer has asked “In what way?”

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 71
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  6. It does harm a great many other people, but primarily because it’s prohibited. There are an enormous number of innocent victims now. You’ve got the people whose purses are stolen, who are bashed over the head by people trying to get enough money for their next fix. You’ve got the people killed in the random drug wars. You’ve got the corruption of the legal establishment. You’ve got the innocent victims who are taxpayers who have to pay for more and more prisons, and more and more prisoners, and more and more police. You’ve got the rest of us who don’t get decent law enforcement because all the law enforcement officials are busy trying to do the impossible.

    Context. From a television interview about the war on drugs. The interviewer has just suggested that critics such as the former drug czar William Bennett would say the sale and distribution of illegal drugs harms other people, so government has to step in; “it” is that trade. He goes on to name the people of Colombia and Peru, killed because the United States cannot enforce its own drug laws.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 70
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  7. Of course, it is, and it is because it’s prohibited. See, if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That’s literally true.

    Context. From a television interview about the war on drugs. The interviewer has asked about the economics of the drug business and how it is affecting America’s major inner cities; “it is” answers that question.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 71
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  8. Marijuana is a very heavy, bulky substance and, therefore, it’s relatively easy to interdict. The warriors on drugs have been more successful interdicting marijuana than, let’s say, cocaine. So, marijuana prices have gone up, they’ve become harder to get. There’s been an incentive to grow more potent marijuana and people have been driven from marijuana to heroin, or cocaine, or crack.

    Context. From a television interview about the war on drugs. Friedman has said that the effect of making drugs criminal is to drive people from mild drugs to strong drugs; the interviewer has asked, “In what way?”

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 66
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  9. It’s a moral problem that the government is making into criminals people, who may be doing something you and I don’t approve of, but who are doing something that hurts nobody else. Most of the arrests for drugs are for possession by casual users. Now here’s somebody who wants to smoke a marijuana cigarette. If he’s caught, he goes to jail. Now is that moral? Is that proper? I think it’s absolutely disgraceful that our government, supposed to be our government, should be in the position of converting people who are not harming others into criminals, of destroying their lives, putting them in jail. That’s the issue to me.

    Context. From a television interview about the war on drugs. Just before, Friedman says that it is also a moral problem that the government’s drug war is causing thousands of additional killings each year. Just after, he says the money spent on the drug war is the trivial part of the problem.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 71
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  10. Well, maybe. Nobody can say with certainty what will happen along those lines. But I think it’s very dubious, because all of the experience with legal drugs is that there’s a tendency for people to go from the stronger to the weaker and not the other way around, just as you go from regular beer to light beer. That’s the tendency that there is: from cigarettes without filters to low-tar, filtered cigarettes, and so on. But I can’t rule out that what you’re saying might happen, but, and this is a very important but, the harm that would result from that would be much less than it is now, for several reasons.

    Context. From a television interview about the war on drugs. The interviewer has asked whether, if drugs were legalized and crack cocaine were available at a low cost, it could be devastating, since it is said to be so pleasurable that more people could get it and stay on it for longer.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 67
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  11. The one adverse effect that legalization might have is that there very likely would be more people taking drugs. That’s not by any means clear. But, if you legalized, you destroy the black market, the price of drugs would go down drastically. And as an economist, lower prices tend to generate more demand. However, there are some very strong qualifications to be made to that. The effect of criminalization, of making drugs criminal, is to drive people from mild drugs to strong drugs.

    Context. From a television interview about the war on drugs. The interviewer has asked how legalization would adversely affect America. Asked next “In what way?”, Friedman explains that interdiction has made bulky marijuana scarcer and dearer, pushing people toward stronger drugs.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 65
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  12. But I have to admit that the one negative feature of legalizing drugs is that there might be some additional drug addicts. However, I want to qualify that in still another way. The child who’s shot in a slum in a pass-by shooting, in a random shooting, is an innocent victim in every respect of the term. The person who decides to take drugs for himself is not an innocent victim. He has chosen himself to be a victim. And I must say I have very much less sympathy for him. I do not think it is moral to impose heavy costs on other people to protect people from their own choices.

    Context. From a television interview about the war on drugs. Just before, Friedman says the evidence on whether legalization raises drug use is very mixed: when Alaska legalized marijuana, its use among high school students went down, and in Holland, which does not prosecute soft drugs, use by young people has gone down too.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), pp. 69–70
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  13. You know, the same thing happened under prohibition of alcohol as is happening now. Under prohibition of alcohol, deaths from alcohol poisoning, from poisoning by things that were mixed in with the bootleg alcohol, went up sharply. Similarly, under drug prohibition, deaths from overdose, from adulterations, from adulterated substances have gone up.

    Context. From the opening exchange of a television interview about the war on drugs. Asked how he sees America changing for the better if drugs were legalized, Friedman has described fewer prisons and homicides, and addicts no longer turned into criminals, able to get drugs whose quality they can be sure of.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 65
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  14. The proper role of government is exactly what John Stuart Mill said in the middle of the nineteenth century in On Liberty. The proper role of government is to prevent other people from harming an individual. Government, he said, never has any right to interfere with an individual for that individual’s own good. The case for prohibiting drugs is exactly as strong and as weak as the case for prohibiting people from overeating. We all know that overeating causes more deaths than drugs do. If it’s in principle OK for the government to say you must not consume drugs because they’ll do you harm, why isn’t it all right to say you must not eat too much because you’ll do harm?

    Context. From a television interview about the war on drugs. He goes on to ask why, on the same principle, government should not forbid skydiving or skiing as too dangerous, and where the line would be drawn.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 70
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  15. I see America with half the number of prisons, half the number of prisoners, ten thousand fewer homicides a year, inner cities in which there’s a chance for these poor people to live without being afraid for their lives, citizens who might be respectable who are now addicts not being subject to becoming criminals in order to get their drug, being able to get drugs for which they’re sure of the quality.

    Context. The opening exchange of a television interview about the war on drugs. The interviewer has asked how Friedman sees America changing for the better if drugs were legalized.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 65
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  16. Prohibition was repealed in 1933 when I was twenty-one years old, so I was a teenager during most of Prohibition. Alcohol was readily available. Bootlegging was common. Any idea that alcohol prohibition was keeping people from drinking was absurd. There were speakeasies all over the place. But more than that. We had this spectacle of Al Capone, of the hijackings, of the gang wars.

    Context. From a television interview about the war on drugs. Asked what early on shaped his belief that the drug laws may not be working, Friedman has said he does not recall ever favouring the prohibition of either alcohol or drugs.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 68
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  17. Anybody with two eyes to see could see that this was a bad deal, that you were doing more harm than good. In addition, I became an economist. And as an economist, I came to recognize the importance of markets and of free choice and of consumer sovereignty and came to discover the harm that was done when you interfered with them.

    Context. From a television interview about the war on drugs. Asked what early on shaped his belief that the drug laws may not be working, Friedman has recalled alcohol Prohibition, which ended when he was twenty-one: drinking went on in speakeasies, and there were Al Capone, the hijackings and the gang wars. “This” is Prohibition.

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), p. 68
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  18. What business do we have destroying and leading to the killing of thousands of people in Colombia because we cannot enforce our own laws? If we could enforce our laws against drugs, there would be no market for these drugs. You wouldn’t have Colombia in the state it’s in.

    Context. From a television interview about the war on drugs. He has been listing the innocent victims of drug prohibition at home (people robbed by addicts, those killed in the drug wars, taxpayers paying for prisons), and ends the list with “the people of Colombia and Peru and so on.”

    America’s Drug Forum interview
    Interview, 1991, With Randy Paige, taped at the International Conference on Drug Policy Reform, Washington, November 1991; reprinted as Ch. 8 “On Liberty and Drugs” in Friedman & Szasz on Liberty and Drugs, ed. Arnold S. Trebach and Kevin B. Zeese (Drug Policy Foundation Press, 1992), pp. 70–71
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Say 'No' to Intolerance (1991)

  1. At any rate, simple slogans like “The market will take care of it” or “noninterventionism” do not resolve the hard problems. We may very well agree on the direction we want to go in, but just how we’re going to go there and how far we’re going to go, that’s a much more difficult problem.

    Context. After saying that in some 30 years he has not been persuaded that national defense could be run as a private enterprise.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 20
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  2. Before there were airplanes, nobody thought of the problem of trespass through air. So simply saying “private property” is a mantra, not an answer. Simply saying “use the market” is not an answer.

    Context. Closing a run of examples (an airplane at 20,000 feet or at 50 feet, a neighbor’s loud hi-fi) of property questions he says need answers based on experience, not introspection.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 20
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  3. It is of course desirable to have a vision of the ideal, of Utopia. Far be it from me to denigrate that. But we can’t stop there. If we do, we become a cult or a religion, and not a living, vital force.

    Context. After arguing that it is irresponsible to describe the ideal and leave to somebody else how to get from here to there.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 20
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  4. The negative lesson is that we must beware of intolerance if we’re going to be really effective in persuading people. The writings of both Rand and Mises—and much libertarian literature—take for granted that hard questions have easy answers, that it’s possible to know something about the real world, to derive substantive conclusions, from purely a priori principles.

    Context. After criticizing Mises’s praxeology and Rand’s derivation of everything from A=A, while saying that nothing lessens his admiration for what both did to promote liberty and free markets.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 18
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  5. Re vouchers—and I’m now speaking of schooling vouchers—schooling is, next only to national defense, the largest socialist enterprise in the United States. And it is clearly as much of a failure as the socialist enterprises in Poland or Hungary or Czechoslovakia or East Germany.

    Context. Introducing vouchers and the negative income tax as his two examples of the utopian strand in libertarianism, before defending vouchers as a way of easing the transition from socialism to freedom.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 20
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  6. I have no right to coerce someone else, because I cannot be sure that I am right and he is wrong.

    Context. Opening the talk, after saying that the basic human value underlying his beliefs is tolerance, based on humility.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), p. 17
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  7. What this demonstrates, fundamentally, is that no simple principle is really adequate. We do not have all the answers, and there is no simple formula that will give us all the answers. That’s why humility, tolerance, is so basic, so fundamental. Because the only way that we can get a little closer to those fundamental principles is by being tolerant, by considering and respecting the opinions of people who disagree with us.

    Context. Concluding his example of a stranger about to jump from the Golden Gate Bridge, where he says most libertarians would grab him despite the principle of not initiating coercion.

    Say 'No' to Intolerance
    Speech, 1991, Liberty, vol. 4, no. 6 (July 1991), pp. 17-18
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Interview with Milton Friedman (1992)

  1. If I were to make up a balance sheet for the Federal Reserve, I could name many credit items on the research side, very few on the policy side.

    Context. Asked about the Federal Reserve, in a 1992 interview for the Minneapolis Fed’s magazine The Region. He had just credited the Fed’s economists with real contributions to monetary research.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  2. You cannot explain those activities of government, and there are hundreds more, as reflecting the will of "we the people." They reflect a system in which concentrated vested interests have been able to obtain great power and impose costs on a diffused consumer interest.

    Context. Following examples of import quotas on Japanese cars, sugar prices, and subsidized water for farmers.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  3. In order for deposit insurance to work, there has to be some private personal incentive for safe banking. That incentive was provided by the net worth of the proprietors of financial institutions. Eliminate that net worth and deposit insurance created a win-win position for proprietors of those enterprises to engage in risky activities.

    Context. Asked whether he still held his earlier view that deposit insurance was a worthwhile development.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  4. It would be highly desirable if Europe could have a common money, a single unified money, just as it's desirable for the United States that we have a single unified currency. But in order for that to be possible or desirable, you have to have a unified currency over an area in which people and goods move relatively freely, and in which there is enough homogeneity of interest so that severe political strains are not raised by divergent developments in different parts of the area.

    Context. Asked about Europe’s plan for a single currency.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  5. From the political point of view, increased spending may initially be designed to be temporary but few things become more permanent than temporary spending. Hence, the economists are in fact calling for a still higher level of government spending yet, in my view, reducing the scope of government is our most important single objective.

    Context. Asked about a statement by 100 economists, six of them Nobel laureates, calling for increased federal spending to spur growth.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  6. Abraham Lincoln talked about a government of the people, by the people, for the people. Today, we have a government of the people, by the bureaucrats, for the bureaucrats, including in the bureaucrats the elected members of Congress because that has become a bureaucracy too.

    Context. Asked what he would say are the unsolved economic problems of the day, in a 1992 interview for the Minneapolis Fed’s magazine The Region. He answered that the most unresolved problem is how to limit the scope and power of government.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  7. The most unresolved problem of the day is precisely the problem that concerned the founders of this nation: how to limit the scope and power of government. Tyranny, restrictions on human freedom, come primarily from governmental institutions that we ourselves set up.

    Context. Asked what he would say are the unsolved economic problems of the day.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  8. On a technical level, I believe that there is no persuasive evidence that, given the course of monetary policy and monetary aggregates, federal government deficits have any stimulative effect. They have a stimulative effect only insofar as they are financed by a more rapid increase in the quantity of money than would otherwise occur.

    Context. Asked about a statement by 100 economists calling for increased federal spending to spur growth.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  9. I'm not in favor of no government. You do need a government. But by doing so many things that the government has no business doing, it cannot do those things which it alone can do well. There's no other institution in my opinion that can provide us with protection of our life and liberty. However, the government performs that basic function poorly today, precisely because it is devoting too much of its efforts and spending too much of our income on things which are harmful.

    Context. In a 1992 interview for the Minneapolis Fed’s magazine The Region, after estimating that more than half of the nation’s productive resources are allocated by governments, federal, state and local.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  10. Just as we speak of non-tariff restrictions on international trade, I regard the kind of thing you're talking about as non-tariff restrictions on internal trade.

    Context. Asked about a Minnesota state support package for an airline in exchange for a facility in the state.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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Money Mischief (1992)

  1. Analysis of the supply of money, and in particular of changes in the supply of money, is simple in principle but extremely complex in practice, both in our hypothetical world and in the current real world. Simple in principle, because the supply of money is whatever the monetary authorities make it; complex in practice, because the decisions of the monetary authorities depend on numerous factors.
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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  2. For both long and short periods there is a consistent though not precise relation between the rate of growth of the quantity of money and the rate of growth of nominal income. If the quantity of money grows rapidly, so will nominal income, and conversely. The relation is much closer for long than for short periods.
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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  3. Never underestimate the role of luck in the fate of individuals or of nations.
    Money Mischief
    Book, 1992, Ch. 9 Chile and Israel: Identical Policies, Opposite Outcomes
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  4. One reason why money is a mystery to so many is the role of myth or fiction or convention. I started this book with the chapter on stone money precisely in order to illustrate that point.
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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  5. Over short periods, the relation between growth in money and growth in nominal income is often hard to see, partly because the relation is less close for short than for long periods, but mostly because it takes time for changes in monetary growth to affect income. And how long a time is itself variable. Today’s income growth is not closely related to today’s monetary growth; it depends on what has been happening to money in the past. What happens to money today affects what is going to happen to income in the future.
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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  6. The term money has two very different meanings in popular discourse. We often speak of someone “making money,” when we really mean that he or she is receiving an income. We do not mean that he or she has a printing press in the basement churning out greenbacked pieces of paper. In this use, money is a synonym for income or receipts; it refers to a flow, to income or receipts per week or per year. We also speak of someone’s having money in his or her pocket or in a safe-deposit box or on deposit at a bank. In that use, money refers to an asset, a component of one’s total wealth.
    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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  7. Why should they also be accepted by private persons in private transactions in exchange for goods and services? The short answer—and the right answer—is that private persons accept these pieces of paper because they are confident that others will. The pieces of green paper have value because everybody thinks they have value. Everybody thinks they have value because in everybody’s experience they have had value …

    Context. “They” are the dollar’s pieces of green paper. Just before, he notes that the courts will regard them as discharging any debts stated in dollars.

    Money Mischief
    Book, 1992, Ch. 2 The Mystery of Money
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Milton Friedman: The Rise of Socialism is Absurd and There’s No Such Thing as a Free Lunch (1993)

  1. After the fall of communism, everybody in the world agreed that socialism was a failure. Everybody in the world, more or less, agreed that capitalism was a success. And every capitalist country in the world apparently deduced from that what the West needed was more socialism.
    Milton Friedman: The Rise of Socialism is Absurd and There’s No Such Thing as a Free Lunch
    Speech, 1993
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The Real Free Lunch: Markets and Private Property (1993)

  1. Why is it that on one side of an arbitrary line there was East Germany and on the other side there was West Germany with such a different level of prosperity? It was because West Germany had a system of largely free, private markets—a free lunch. The same free lunch explains the difference between Hong Kong and mainland China, and the prosperity of the United States and Great Britain. These free lunches have been the product of a set of invisible institutions that, as F. A. Hayek emphasized, are a product of human action but not of human intention.

    Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993. Turning around the saying “There’s no such thing as a free lunch,” long associated with him, he has just said that there is an extraordinary free lunch: free markets and private property.

    The Real Free Lunch: Markets and Private Property
    Speech, 1993, Remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 6, 1993 (Cato Policy Report, July/August 1993); reprinted in Toward Liberty: The Idea That Is Changing the World, ed. David Boaz (Cato Institute, 2002), p. 54
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  2. Another example illustrates Parkinson’s law in agriculture. In 1945 there were 10 million people, either family or hired workers, employed on farms, and the Department of Agriculture had 80,000 employees. In 1992 there were 3 million people employed on farms, and the Department of Agriculture had 122,000 employees.

    Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993, in a section on “free lunches in the budget”: programs that could be cut to the benefit of nearly everyone. His previous example was the Rural Electrification Administration, which kept going after every farm had electricity and a telephone.

    The Real Free Lunch: Markets and Private Property
    Speech, 1993, Remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 6, 1993 (Cato Policy Report, July/August 1993); reprinted in Toward Liberty: The Idea That Is Changing the World, ed. David Boaz (Cato Institute, 2002), p. 55
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  3. The Rural Electrification Administration was established to bring electricity to farms in the 1930s, when about 80 percent of the farms did not have electricity. When 100 percent of the farms had electricity, the REA shifted to telephone service. Now 100 percent of the farms have telephone service, but the REA goes merrily along. Suppose we abolish the REA, which is just making low-interest loans to concentrated interests, mostly electric and telephone companies. The people of the United States would be better off; they’d save a lot of money that could be used for tax reductions.

    Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993. He has said that what the country needs is “widespread benefits and concentrated sacrifice,” and gives this as the first of several examples of such free lunches in the federal budget.

    The Real Free Lunch: Markets and Private Property
    Speech, 1993, Remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 6, 1993 (Cato Policy Report, July/August 1993); reprinted in Toward Liberty: The Idea That Is Changing the World, ed. David Boaz (Cato Institute, 2002), p. 55
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  4. If we restrict you to home-grown sugar, it will be two or three times as expensive as if we include sugar from abroad. Which do you really think voters would choose? The people don’t want to pay higher prices. A small group of special interests, which reaps concentrated benefits, wants them to, and that is why sugar in the United States costs several times the world price. The people were never consulted. We are not governed by the people; that’s a myth carried over from Abraham Lincoln’s day. We don’t have government of the people, by the people, for the people. We have government of the people, by the bureaucrats, for the bureaucrats.

    Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993. Answering the claim that programs stay in the federal budget because people want them, he has proposed putting to the American people a simple choice: sugar grown mainly on American farms, or sugar that can also come without limit from abroad.

    The Real Free Lunch: Markets and Private Property
    Speech, 1993, Remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 6, 1993 (Cato Policy Report, July/August 1993); reprinted in Toward Liberty: The Idea That Is Changing the World, ed. David Boaz (Cato Institute, 2002), p. 56
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  5. On a more fundamental level, our present problems, both economic and noneconomic, arise mainly from the drastic change that has occurred during the past six decades in the relative importance of two different markets for determining who gets what, when, where, and how. Those markets are the economic market operating under the incentive of profit and the political market operating under the incentive of power. … And the importance of the political, or government, market has greatly expanded. We have been starving the market that has been working and feeding the market that has been failing.

    Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993.

    The Real Free Lunch: Markets and Private Property
    Speech, 1993, Remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 6, 1993 (Cato Policy Report, July/August 1993); reprinted in Toward Liberty: The Idea That Is Changing the World, ed. David Boaz (Cato Institute, 2002), pp. 56–57
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Why Government Is the Problem (1993)

  1. I do not believe in the concept of a competitive advantage in the global economy. We are not harmed by other people improving their standard of living relative to ours; we are helped. The notion of competitiveness, of which so much is spoken, makes sense for an individual enterprise but it does not make any sense for a country.

    Context. Answering an audience question in the question-and-answer session printed with the essay.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 17
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  2. The phenomenon of concentrated benefits and dispersed costs is a valid explanation for many governmental programs. However, I believe it does not go far enough to explain the kind of situation in which we now are.

    Context. From an essay adapted from his Wriston Lecture of November 19, 1991, where he sets aside the standard public-choice account before giving his own. He returns to it later in the essay to say it is “not the key problem.”

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 8
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  3. I do not believe the debt overhang is the real problem. I believe the real problem is government spending. Government debt is a problem in the long run. Obviously, if the government continues to run deficits for a long period of time, it will sooner or later have to monetize them. So I do not deny that is a real problem. However, it is a mistake to concentrate on the debt as such instead of concentrating on why the debt was created, which is by excessive government spending.

    Context. A spoken answer in the question-and-answer session printed with the essay, replying to a question about how serious the 1980s debt overhang was. The sentences immediately following are the “deficit is a form of taxation” passage.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 16
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  4. What is called a deficit is a form of taxation. It is a very bad form of taxation, but it is a form of taxation.

    Context. A spoken answer in the question-and-answer session printed with the essay, not a sentence he wrote in it. The essay itself was adapted from his Wriston Lecture of November 19, 1991; the publication does not date the question-and-answer session separately.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 16
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  5. However, it does have some good features. The deficit is the only thing that is keeping spending from going up still faster.

    Context. The sentences immediately after “What is called a deficit is a form of taxation,” in the same spoken answer. He is naming what he thought a deficit is good for, having just called it a very bad form of taxation.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, pp. 16 to 17
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  6. None of this means that government does not have a very real function. Indeed, the tragedy is that because government is doing so many things it ought not to be doing, it performs the functions it ought to be performing badly. The basic functions of government are to defend the nation against foreign enemies, to prevent coercion of some individuals by others within the country, to provide a means of deciding on our rules, and to adjudicate disputes.

    Context. From the essay’s survey of social problems he attributes to government. A footnote marker after the last word is omitted.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 6
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  7. It is ironic that the Great Depression was produced by government but was blamed on the private enterprise system.

    Context. Answering an audience question in the question-and-answer session printed with the essay.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 15
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  8. 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.

    Context. Closing his answer to an audience question about the diversity of the American population, in the question-and-answer session printed with the essay.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 18
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  9. You can rigidly enforce only those laws that most people believe to be good laws, that is, laws that proscribe actions that they would avoid even in the absence of laws. When laws render illegal actions that many or most people regard as moral and proper, they can be enforced only by brute force. Speed laws are an obvious example; alcohol prohibition, a more dramatic one.

    Context. From the section headed “Lawlessness and Crime.”

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 2
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  10. That illustrates a general rule: If a private enterprise is a failure, it closes down—unless it can get a government subsidy to keep it going; if a government enterprise fails, it is expanded. I challenge you to find exceptions.

    Context. Contrasting the bottom line faced by the same group of people running an enterprise in the private sector and in government.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 9
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  11. The difference is not that our government has been more efficient in avoiding pollution; it is that private enterprise finds that it is not profitable to pollute; it is more profitable to avoid pollution.

    Context. Comparing pollution in the United States with countries run by the government, such as Poland, the Soviet Union, and Romania.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 6
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  12. We preach free enterprise to the newly freed communist countries. We tell them to privatize, privatize, privatize, while we socialize, socialize, socialize.

    Context. After setting aside concentrated benefits and diffused costs as “not the key problem,” he names what he takes the key problem to be.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 12
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  13. I say that there is a reverse invisible hand: People who intend to serve only the public interest are led by an invisible hand to serve private interests which was no part of their intention.

    Context. Following his quotation of Adam Smith’s invisible hand.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 11
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  14. The point is that self-interest is served by different actions in the private sphere than in the public sphere. The bottom line is different.

    Context. His own explanation of why a government enterprise behaves differently, after rejecting the idea that the people in it are differently motivated.

    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 8
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Public Schools: Make Them Private (1995)

  1. There is enormous room for improvement in our educational system. Hardly any activity in the United States is technically more backward. We essentially teach children in the same way that we did 200 years ago: one teacher in front of a bunch of kids in a closed room.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. He goes on to say that only competition from private enterprise, as in other industries, would bring real innovation in how children are taught.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9552
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  2. There is no respect in which inhabitants of a low-income neighborhood are so disadvantaged as in the kind of schooling they can get for their children.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. He says the quality of schooling is far worse than in 1955, and blames the decline of the central cities, the centralization of public schools and the growing strength of teachers’ unions.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9551
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  3. I believe that the only way to make a major improvement in our educational system is through privatization to the point at which a substantial fraction of all educational services are rendered to individuals by private enterprises. Nothing else will destroy or even greatly weaken the power of the current educational establishment—a necessary precondition for radical improvement in our educational system. And nothing else will provide the public schools with the competition that will force them to improve in order to hold their clientele.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. Earlier in the article he names the school establishment, reinforced by the two national teachers’ unions, as the main obstacle to vouchers.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9552
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  4. About 90 percent of our kids now go to so-called public schools, which are really not public at all but simply private fiefs primarily of the administrators and the union officials.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. Just before, he argues that the system has grown worse as power moved from the local community to the school district, the state and the federal government, and as the teachers’ unions grew stronger.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9551
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  5. The problem is how to get from here to there. Vouchers are not an end in themselves; they are a means to make a transition from a government to a market system.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. “Here” is the present system, in which about 90 percent of children attend government schools; “there” is a large, competitive private industry offering a wide variety of schooling.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9552
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John Maynard Keynes (1997)

  1. Keynes believed that economists (and others) could best contribute to the improvement of society by investigating how to manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends, and then persuading benevolent civil servants and elected officials to follow their advice. The role of voters is to elect persons with the right moral values to office and then let them run the country.

    Context. From his essay on John Maynard Keynes, written for the volume of commentaries accompanying a 1989 German facsimile edition of Keynes’s General Theory (1936) and published in English by the Federal Reserve Bank of Richmond in 1997. He sets this view against his own: that economists should study which political institutions lead self-interested officials to serve the public interest, as Adam Smith showed the market leads self-interested individuals to do.

    John Maynard Keynes
    Journal article, 1997, Federal Reserve Bank of Richmond, Economic Quarterly, vol. 83, no. 2 (Spring 1997), pp. 1 to 23; first published in German translation in 1989, in the commentaries accompanying a facsimile edition of the General Theory (Verlag Wirtschaft und Finanzen, Düsseldorf)., p. 21
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  2. In judging Keynes’s overall influence on public policy, it is necessary to distinguish his bequest to technical economics from his bequest to politics. Keynes’s bequest to technical economics was strongly positive. His bequest to politics, in my opinion, was not. Yet I conjecture that his bequest to politics has had far more influence on the shape of today’s world than his bequest to technical economics. In particular, it has contributed greatly to the proliferation of overgrown governments increasingly concerned with every phase of their citizens’ daily lives.

    Context. From his essay on John Maynard Keynes, written for the volume of commentaries accompanying a 1989 German facsimile edition of Keynes’s General Theory (1936) and published in English by the Federal Reserve Bank of Richmond in 1997. By Keynes’s “bequest to politics” he means the view, which he illustrates from Keynes’s 1944 letter praising Hayek’s Road to Serfdom, that planning is safe if those carrying it out hold the right moral values.

    John Maynard Keynes
    Journal article, 1997, Federal Reserve Bank of Richmond, Economic Quarterly, vol. 83, no. 2 (Spring 1997), pp. 1 to 23; first published in German translation in 1989, in the commentaries accompanying a facsimile edition of the General Theory (Verlag Wirtschaft und Finanzen, Düsseldorf)., p. 20
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  3. I conclude that Keynes’s political bequest has done far more harm than his economic bequest and this for two reasons. First, whatever the economic analysis, benevolent dictatorship is likely sooner or later to lead to a totalitarian society. Second, Keynes’s economic theories appealed to a group far broader than economists primarily because of their link to his political approach.

    Context. From his essay on John Maynard Keynes, written for the volume of commentaries accompanying a 1989 German facsimile edition of Keynes’s General Theory (1936) and published in English by the Federal Reserve Bank of Richmond in 1997. “Benevolent dictatorship” is his name for Keynes’s view that society is best improved by persuading well-meaning officials, chosen for their moral values, to follow economists’ advice.

    John Maynard Keynes
    Journal article, 1997, Federal Reserve Bank of Richmond, Economic Quarterly, vol. 83, no. 2 (Spring 1997), pp. 1 to 23; first published in German translation in 1989, in the commentaries accompanying a facsimile edition of the General Theory (Verlag Wirtschaft und Finanzen, Düsseldorf)., p. 22
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  4. Some years ago, I remarked to a journalist from Time magazine, “We are all Keynesians now; no one is any longer a Keynesian.” In regrettable journalist fashion, Time quoted the first half of what I still believe to be the truth, omitting the second half. We all use Keynesian terminology; we all use many of the analytical details of the General Theory; we all accept at least a large part of the changed agenda for analysis and research that the General Theory introduced. However, no one accepts the basic substantive conclusions of the book, no one regards its implicit separation of nominal from real magnitudes as possible or desirable, even as an analytical first approximation, or its analytical core as providing a true “general theory.”

    Context. From his essay on John Maynard Keynes, written for the volume of commentaries accompanying a 1989 German facsimile edition of Keynes’s General Theory (1936) and published in English by the Federal Reserve Bank of Richmond in 1997. Here he describes how the General Theory’s influence on economists had changed since it appeared.

    John Maynard Keynes
    Journal article, 1997, Federal Reserve Bank of Richmond, Economic Quarterly, vol. 83, no. 2 (Spring 1997), pp. 1 to 23; first published in German translation in 1989, in the commentaries accompanying a facsimile edition of the General Theory (Verlag Wirtschaft und Finanzen, Düsseldorf)., p. 6
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It’s Time to End the War on Drugs (1998)

  1. Can any policy, however high-minded, be moral if it leads to widespread corruption, imprisons so many, has so racist an effect, destroys our inner cities, wreaks havoc on misguided and vulnerable individuals, and brings death and destruction to foreign countries?

    Context. From a January 1998 New York Times article, written twenty-five years after President Nixon declared a “war on drugs,” listing the harms he attributes to drug prohibition. This question closes the article.

    It’s Time to End the War on Drugs
    Column, 1998, Hoover Digest, 1998, no. 2; first published in The New York Times, January 11, 1998, as “There’s No Justice in the War on Drugs.”
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  2. Drug prohibition is one of the most important factors that have combined to reduce our inner cities to their present state. The crowded inner cities have a comparative advantage for selling drugs. Although most customers do not live in the inner cities, most sellers do. Young boys and girls view the swaggering, affluent drug dealers as role models. Compared with the returns from a traditional career of study and hard work, returns from dealing drugs are tempting to young and old alike. … Al Capone epitomizes our earlier attempt at Prohibition; the Crips and Bloods epitomize this one.

    Context. From a January 1998 New York Times article, written twenty-five years after President Nixon declared a “war on drugs,” listing the harms he attributes to drug prohibition. Under the heading “Destruction of Inner Cities.” The ellipsis marks one sentence left out: that the young are not deterred by the bullets that fly in disputes between drug dealers, bullets that fly only because dealing drugs is illegal.

    It’s Time to End the War on Drugs
    Column, 1998, Hoover Digest, 1998, no. 2; first published in The New York Times, January 11, 1998, as “There’s No Justice in the War on Drugs.”
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  3. Informers are not needed in crimes like robbery and murder because the victims of those crimes have a strong incentive to report the crime. In the drug trade, the crime consists of a transaction between a willing buyer and willing seller. Neither has any incentive to report a violation of law. On the contrary, it is in the self-interest of both that the crime not be reported. That is why informers are needed.

    Context. From a January 1998 New York Times article, written twenty-five years after President Nixon declared a “war on drugs,” listing the harms he attributes to drug prohibition. Under the heading “The Use of Informers,” he goes on to say that informers and the immense sums at stake generate corruption and violations of the civil rights of innocent people.

    It’s Time to End the War on Drugs
    Column, 1998, Hoover Digest, 1998, no. 2; first published in The New York Times, January 11, 1998, as “There’s No Justice in the War on Drugs.”
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  4. In 1970, 200,000 people were in prison. Today, 1.6 million people are: eight times as many in absolute number, six times as many relative to the increased population. In addition, 2.3 million are on probation and parole. The attempt to prohibit drugs is by far the major source of the horrendous growth in the prison population. There is no light at the end of that tunnel. How many of our citizens do we want to turn into criminals before we yell "enough"?

    Context. From a January 1998 New York Times article, written twenty-five years after President Nixon declared a “war on drugs,” listing the harms he attributes to drug prohibition. Under the heading “Filling the Prisons.” The figures are his, for 1970 and for the time of writing.

    It’s Time to End the War on Drugs
    Column, 1998, Hoover Digest, 1998, no. 2; first published in The New York Times, January 11, 1998, as “There’s No Justice in the War on Drugs.”
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Mr. Market (1998)

  1. I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Asked about the Austrian theory of the business cycle (Hayek, Ludwig von Mises and Murray Rothbard), which holds that recessions follow a boom of bad investment and must be allowed to run their course. He goes on to say that the Keynesians also did harm, by producing the stagflation of the 1970s.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  2. Yes, but I would substitute a computer for it, not a central bank. All you would have to do is have it buy or sell X dollars of securities. It is purely a technical matter.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” He has just said, “My ideal is to eliminate the Federal Reserve.” The interviewer asks whether his long-standing proposal of steady growth in a monetary aggregate would not still need a central bank to carry it out.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  3. In some cases there is market failure. But it has to be balanced against government failure. It does not follow that, for every market failure, there is a governmental answer. And it does not follow that, for every government failure, there is a market answer. You have to look at both sides. I am not an anarchist. I believe we do need a government. But I believe we need one that is far more limited than the one we have now.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Discussing environmental regulation: the interviewer has argued that because no one owns a river, a factory will pollute it unless a regulator steps in. Friedman has answered that such problems are usually better handled by pollution fees than by command-and-control regulation.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  4. I favor a negative income tax if and only if it is a substitute for all other welfare programs. I do not favor a negative income tax being tacked on to and in addition to the other programs. As so often happens, you have the problem of how do we get from where we are to where we would like to be? In my ideal world there would be no negative income tax. It would be a world in which the great bulk of people are able to earn their living in the market and in which there are private charitable organizations that help those who cannot. But we are not at that world and we can’t go to that world overnight. We have through our welfare programs essentially assumed responsibility for the lives of a large number of people. It is unconscionable simply to dump them in the street overnight. It is tempting to say you should completely end welfare, period. But you can’t do that.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Asked whether he would still favor a negative income tax that would put an income floor under everyone. The negative income tax, his proposal since the early 1960s, would pay people with low incomes a fraction of the amount by which their income falls short of a set level.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  5. If you are going to get the profits, you have to take the losses. I have always said the essence of a free-market system, which tends to be called a profit-and-loss system, is that the loss component is more important than the profit component. You need the discipline of the loss in order to keep the system going.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Discussing the 1995 U.S.-led rescue of Mexico, which he says bailed out New York bankers who had lent there, and which he opposed.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  6. Social Security, as we call it, is a combination of two separate programs, neither of which would have a chance of being enacted on its own. One program is a program of a flat-rate tax on wages up to a maximum: a regressive tax imposed at one of the worst places in the economic structure, where it introduces a gap between what the worker receives and what it costs the employer. You cannot conceive of that tax being enacted by itself as part of a financing program. The second component is a system of payments of subsidies, which, again, I cannot believe could have been enacted by itself. It is a system in which the amount a person receives depends on a whole variety of circumstances, some of which may be relevant and some of which may not be relevant to what you would like to have a subsidy program do. But you would never enact a subsidy program in which the largest subsidies go to the people who have earned the highest incomes. Yet when you tie the two together you have a sacred cow. I have always said it is one of the greatest marketing miracles of this century.

    Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Asked whether the United States should privatize Social Security as Chile had done.

    Mr. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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The Hong Kong Experiment (1998)

  1. Economists and social scientists complain that we are at a disadvantage compared with physical and biological scientists because we cannot conduct controlled experiments. However, the experiments that nature throws up can be every bit as instructive as deliberately contrived experiments. Take the fifty-year experiment in economic policy provided by Hong Kong between the end of World War II and this past July, when Hong Kong reverted to China.

    Context. From an article, written in 1997 after Hong Kong reverted to China, comparing fifty years of economic policy in Hong Kong, run on nearly laissez-faire lines, with Britain, Israel and the United States; reprinted in the Hoover Digest in 1998. He goes on to treat Hong Kong as the experimental case and Britain, Israel and the United States as the controls.

    The Hong Kong Experiment
    Column, 1998, Hoover Digest, 1998, no. 3; reprinted from National Review, December 31, 1997, where it ran as “The Real Lesson of Hong Kong.”
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  2. I first visited Hong Kong in 1955, shortly after the initial inflow of refugees. It was a miserable place for most of its inhabitants. The temporary dwellings that the government had thrown up to house the refugees were one-room cells in a multistory building that was open in the front: one family, one room. The fact that people would accept such miserable living quarters testified to the intensity of their desire to leave Red China.

    Context. From an article, written in 1997 after Hong Kong reverted to China, comparing fifty years of economic policy in Hong Kong, run on nearly laissez-faire lines, with Britain, Israel and the United States; reprinted in the Hoover Digest in 1998. After the Communists took mainland China, refugees poured into Hong Kong, whose population grew from about 600,000 at the end of World War II to more than six million by 1997.

    The Hong Kong Experiment
    Column, 1998, Hoover Digest, 1998, no. 3; reprinted from National Review, December 31, 1997, where it ran as “The Real Lesson of Hong Kong.”
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  3. In short, from 1960 to 1996, Hong Kong’s per capita income rose from about one-quarter of Britain’s to more than a third larger than Britain’s. It’s easy to state these figures. It is more difficult to realize their significance. Compare Britain—the birthplace of the Industrial Revolution, the nineteenth-century economic superpower on whose empire the sun never set—with Hong Kong, a spit of land, overcrowded, with no resources except for a great harbor. Yet within four decades the residents of this spit of overcrowded land had achieved a level of income one-third higher than that enjoyed by the residents of its former mother country. I believe that the only plausible explanation for the different rates of growth is socialism in Britain, free enterprise and free markets in Hong Kong.

    Context. From an article, written in 1997 after Hong Kong reverted to China, comparing fifty years of economic policy in Hong Kong, run on nearly laissez-faire lines, with Britain, Israel and the United States; reprinted in the Hoover Digest in 1998. Hong Kong was a British crown colony. While Britain moved toward socialism and the welfare state after World War II, its financial secretary in Hong Kong, John Cowperthwaite, kept the colony to free trade and low taxes.

    The Hong Kong Experiment
    Column, 1998, Hoover Digest, 1998, no. 3; reprinted from National Review, December 31, 1997, where it ran as “The Real Lesson of Hong Kong.”
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  4. The real lesson of Hong Kong for the United States is that we’re using our resources inefficiently. Our government is spending our money to subsidize tobacco and to penalize smoking; to subsidize childbearing and to discourage childbearing; to build new housing and to tear down housing; to subsidize agriculture and to penalize agriculture; and on and on—not to mention converting square miles of forests into billions of paper forms and spending many man-years of labor filling them out and then filing them.

    Context. From an article, written in 1997 after Hong Kong reverted to China, comparing fifty years of economic policy in Hong Kong, run on nearly laissez-faire lines, with Britain, Israel and the United States; reprinted in the Hoover Digest in 1998. Just before, he notes that income per head in Hong Kong was almost the same as in the United States, while government spending took less than 15 percent of national income there and more than 40 percent in the United States.

    The Hong Kong Experiment
    Column, 1998, Hoover Digest, 1998, no. 3; reprinted from National Review, December 31, 1997, where it ran as “The Real Lesson of Hong Kong.”
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Two Lucky People (1998)

  1. Joan Robinson, a leading Keynesian and radical, produced a specimen for me to analyze. I said something like, "This is obviously the writing of a foreigner, so it's difficult for me to analyze. But I would say it is written by someone who had considerable artistic but not much intellectual talent." It turned out to be the handwriting of Lydia Lopokova, the world-famous Russian ballerina whom Keynes had married. That was surely my greatest triumph of the year at Cambridge!
    Two Lucky People
    Book, 1998
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Two Lucky People: Memoirs (1998)

  1. In the course of his testimony, he made the statement that he did not want to command an army of mercenaries. I stopped him and said, 'General, would you rather command an army of slaves?' He drew himself up and said, 'I don't like to hear our patriotic draftees referred to as slaves.' I replied, 'I don't like to hear our patriotic volunteers referred to as mercenaries.' But I went on to say, 'If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.' That was the last that we heard from the general about mercenaries.

    Context. From his memoir. He is recalling General Westmoreland, top commander of the American troops in Vietnam and then, he believed, Army Chief of Staff, testifying against a volunteer army before the Advisory Commission on an All-Volunteer Armed Force, of which Friedman was a member. The memoir prints all but the last sentence inside a longer quotation of an earlier first-person account.

    Two Lucky People: Memoirs
    Book, 1998, University of Chicago Press, Ch. 23 “Adviser to Presidents Nixon and Reagan”, p. 380
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How Asia Fell (1999)

  1. Under a clean floating rate, there cannot be a foreign exchange crisis. There may be internal crises, as in Japan, but they would not be accompanied by a foreign exchange crisis. The reason is simple: Changes in exchange rates absorb the pressures that in a pegged regime lead to crises. The foreign exchange crisis that affected Korea, Thailand, Malaysia, and Indonesia did not spill over to New Zealand or Australia because those countries had floating exchange rates.

    Context. From an article on the East Asian financial crisis, which he traces to three elements: stagnation in Japan, the pegging of exchange rates to the U.S. dollar by national central banks, and the existence and policies of the International Monetary Fund. Earlier, he defines clean floating as a regime in which the central bank does not intervene in the market to affect the exchange rate.

    How Asia Fell
    Column, 1999, The Times (London), October 12, 1998, as “Clear Lessons to Be Learnt from the East Asian Episode”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  2. The IMF was established at Bretton Woods in 1944 to serve one purpose only: to supervise the operation of the system of fixed exchange rates established at Bretton Woods. That system ended on August 15, 1971, when President Nixon, as part of a package of economic changes including wage and price ceilings, closed the gold window; that is, he ended the commitment that the United States had undertaken at Bretton Woods to buy and sell gold at $35 an ounce. With the official death of the Bretton Woods system in 1973, the IMF should have been abolished. But few things are so permanent as government agencies, including international agencies. The IMF, sitting on a pile of funds, sought and found a new function: serving as an economic consulting agency to countries in trouble. It found plenty of clients, even though its advice was not always good.

    Context. From an article on the East Asian financial crisis, which he traces to three elements: stagnation in Japan, the pegging of exchange rates to the U.S. dollar by national central banks, and the existence and policies of the International Monetary Fund.

    How Asia Fell
    Column, 1999, The Times (London), October 12, 1998, as “Clear Lessons to Be Learnt from the East Asian Episode”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  3. Mexico, it is said, was bailed out by a $50 billion financial aid package from a consortium including the IMF, the United States, other countries, and other international agencies. The reality is that Mexico was not bailed out. Foreign entities—banks and other financial institutions—that had made dollar loans to Mexico that Mexico could not repay were bailed out. The internal recession that followed the bailout was deep and long and left the ordinary Mexican citizen with a sharply reduced income facing higher prices for goods and services. That remains true today.

    Context. From an article on the East Asian financial crisis, which he traces to three elements: stagnation in Japan, the pegging of exchange rates to the U.S. dollar by national central banks, and the existence and policies of the International Monetary Fund. Just before, he calls the Mexican crisis of 1995 the most recent example of a major currency crisis in a country with a central bank and pegged exchange rates.

    How Asia Fell
    Column, 1999, The Times (London), October 12, 1998, as “Clear Lessons to Be Learnt from the East Asian Episode”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  4. Second, the IMF has been a destabilizing factor in East Asia, not so much because of the conditions it imposed on clients, whether good or bad, as by sheltering private financial institutions from the consequences of unwise investments. It is not too much to say that, had there been no IMF, there would have been no East Asia crisis, though countries might have had internal crises—as with Japan, whose troubles cannot be blamed on the IMF.

    Context. From an article on the East Asian financial crisis, which he traces to three elements: stagnation in Japan, the pegging of exchange rates to the U.S. dollar by national central banks, and the existence and policies of the International Monetary Fund. This is the second of the two points with which he concludes; the first is that a developing country should prefer either a truly fixed rate with no national central bank or a floating rate plus a national central bank to a pegged exchange rate.

    How Asia Fell
    Column, 1999, The Times (London), October 12, 1998, as “Clear Lessons to Be Learnt from the East Asian Episode”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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Social Security Socialism (1999)

  1. I have often speculated that an ingenious way for a socialist to achieve his objective in the United States would be to persuade Congress, in the name of fiscal responsibility, to (1) fully fund obligations under Social Security and (2) invest the accumulating reserves in the private capital market by purchasing equity interests in domestic corporations.

    Context. Written after President Clinton proposed that a quarter of the funds set aside for Social Security be invested in the stock market. Just before, he contrasts Margaret Thatcher, who reversed Britain’s drift to socialism by selling off government-owned enterprises, with a plan for the U.S. government to buy private equities.

    Social Security Socialism
    Column, 1999, The Wall Street Journal, January 26, 1999; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  2. Have we not learned from the experience of the past century that private property is the key bulwark of personal freedom? Has that experience not shown how dangerous it is to transfer a larger and larger fraction of the productive assets of the country into the hands of a government bureaucracy?

    Context. From an article on President Clinton’s proposal that the government invest part of the Social Security funds in private equities. Just before, he estimates that had the whole Social Security surplus been invested in stocks since 1937, the trust fund would by the end of 1997 have owned more than half of all domestic corporations, and says the calculation shows how seriously government purchase of private securities would threaten our freedom.

    Social Security Socialism
    Column, 1999, The Wall Street Journal, January 26, 1999; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  3. To preserve the fiction that Social Security is insurance, however, federal government interest-bearing bonds of a corresponding amount have been deposited in a so-called trust fund. That is, one branch of the government, the Treasury, has given an interest-bearing IOU to another branch, the Social Security Administration. Each year thereafter, the Treasury gives the Social Security Administration additional IOUs to cover the interest due. The only way that the Treasury can redeem its debt to the Social Security Administration is to borrow the money from the public, run a surplus in its other activities, or have the Federal Reserve print the money—the same alternatives that would be open to it to pay Social Security benefits if there were no trust fund. But the accounting sleight of hand of a bogus trust fund is counted on to conceal this fact from a gullible public.

    Context. From an article on President Clinton’s proposal to invest part of the Social Security funds in the stock market. Just before, he explains that Congress has collected more in Social Security taxes than current benefits required, though less than the future liability it was incurring, and that “the excess revenue has been spent in the ordinary course of government business.”

    Social Security Socialism
    Column, 1999, The Wall Street Journal, January 26, 1999; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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Take It To The Limits: Milton Friedman on Libertarianism (1999)

  1. There's a smokestack on the back of every government program.
    Take It To The Limits: Milton Friedman on Libertarianism
    Interview, 1999
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The Biggest Ponzi Scheme on Earth (1999)

  1. In 1964, Barry Goldwater was much reviled for suggesting that participation in Social Security be voluntary. I thought that was a good idea then; I still think it is. I find it hard to justify requiring 100 percent of the people to adopt a government-prescribed straitjacket to avoid encouraging a few “lower-income individuals to make no provision for their old age deliberately, knowing that they would receive the means-tested amount.”

    Context. From an article on proposals to replace part of Social Security with individual investment accounts, written while the federal budget was in surplus. The words he quotes at the end are Martin Feldstein’s second reason for making contributions mandatory: that a means-tested program for the aged might encourage some lower-income individuals to make no provision for old age deliberately.

    The Biggest Ponzi Scheme on Earth
    Column, 1999, The New York Times, January 11, 1999, as “Social Security Chimeras”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  2. More generally, the fraction of a person’s income that it is reasonable for her or him to set aside for retirement depends on that person’s circumstances and values. It makes no more sense to specify a minimum fraction for all people than to mandate a minimum fraction of income that must be spent on housing or transportation. Our general presumption is that individuals can best judge for themselves how to use their resources. Mr. Feldstein simply asserts that in this particular case the government knows better.

    Context. From an article on proposals to replace part of Social Security with individual investment accounts, written while the federal budget was in surplus. He is answering the economist Martin Feldstein, who had argued in 1995 that contributions to a privatized system must be mandatory, first because some individuals are too shortsighted to provide for their own retirement.

    The Biggest Ponzi Scheme on Earth
    Column, 1999, The New York Times, January 11, 1999, as “Social Security Chimeras”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  3. The payroll tax is a bad tax: a regressive tax on productive activity. It should long since have been repealed. Privatizing Social Security would be a good occasion to do so.

    Context. From an article on proposals to replace part of Social Security with individual investment accounts, written while the federal budget was in surplus. Just before, he argues that the debt created by funding Social Security’s promises to every participant could be paid, like any other government debt, by taxing, borrowing, creating money or cutting other spending, so there is no more reason to pay it with a payroll tax than any other part of the debt.

    The Biggest Ponzi Scheme on Earth
    Column, 1999, The New York Times, January 11, 1999, as “Social Security Chimeras”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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  4. The link between the payroll tax and benefit payments is part of a confidence game to convince the public that what the Social Security Administration calls a social insurance program is equivalent to private insurance, in that, in the Administration’s words, “the workers themselves contribute to their own future retirement benefit by making regular payments into a joint fund.” Balderdash. Taxes paid by today’s workers are used to pay today’s retirees. If money is left over, it finances other government spending—though, to maintain the insurance fiction, paper entries are created in a “trust fund” that is simultaneously an asset and a liability of the government. When the benefits that are due exceed the proceeds from payroll taxes, as they will in the not very distant future, the difference will have to be financed by raising taxes, borrowing, creating money, or reducing other government spending. And that is true no matter how large the “trust fund.” The assurance that workers will receive benefits when they retire does not depend on the particular tax used to finance the benefits or on any “trust fund.” It depends solely on the expectation that future Congresses will honor promises made by earlier Congresses—what supporters call “a compact between the generations” and opponents call a Ponzi scheme.

    Context. From an article on proposals to replace part of Social Security with individual investment accounts, written while the federal budget was in surplus. The quotation inside the passage is from the Social Security Administration.

    The Biggest Ponzi Scheme on Earth
    Column, 1999, The New York Times, January 11, 1999, as “Social Security Chimeras”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2
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Commanding Heights: Milton Friedman interview (2000)

  1. We have as many criminals as we have because we have as many laws to break as we have. You take the situation in the United States. We have two million people in prison, four million people who are under parole or under supervision. Why? Because of our mistaken attempt to control what people put in their bodies. Prohibition of so-called drugs, of illegal drugs, is a major reason for all of those prisons. And those are victimless crimes, which should not be crimes.

    Context. In a PBS interview for the series Commanding Heights, on the Internet making it easier for criminals to conduct their affairs, where he said one has to distinguish between criminals and criminals.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “Where We Stand Today,” interview conducted October 1, 2000
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  2. The big difference between government coercion and private markets is that government can use coercion to make an exchange in which A benefits and B loses. But in the market, if A and B come to a voluntary agreement, it's because both of them are better off.

    Context. Asked why he could see the black market as a positive thing, in a PBS interview for the series Commanding Heights. He goes on to say that breaking the law counts against it.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “The Economic Logic Behind Black Markets,” interview conducted October 1, 2000
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  3. The emphasis of that talk was that free markets would undermine political centralization and political control. And incidentally, I should say that I was not in Chile as a guest of the government. I was in Chile as the guest of a private organization.

    Context. Answering whether he expected free markets to undermine Pinochet. Replaces an earlier Wikiquote version that joined this answer to a later one with an ellipsis, skipping an interviewer question in between.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On His Role in Chile Under Pinochet,” interview conducted October 1, 2000
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  4. The Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society.

    Context. Asked whether the Chilean economy had done well in the end, after his 1975 visit to Chile under General Pinochet, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On His Role in Chile Under Pinochet,” interview conducted October 1, 2000
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  5. I must say, it's such a wonderful example of a double standard, because I had spent time in Yugoslavia, which was a communist country. I later gave a series of lectures in China. When I came back from communist China, I wrote a letter to the Stanford Daily newspaper in which I said, '"It's curious. I gave exactly the same lectures in China that I gave in Chile. I have had many demonstrations against me for what I said in Chile. Nobody has made any objections to what I said in China. How come?"

    Context. Asked whether the Chile episode damaged his reputation, he said most of the intellectual elite had sided with Allende and regarded him as a traitor for speaking in Chile; this passage follows. The unmatched quotation marks before his letter are as printed in the PBS transcript.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On His Role in Chile Under Pinochet,” interview conducted October 1, 2000
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  6. The Federal Reserve system had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve system, you had the worst banking crisis in the history of the United States. There's no other example I can think of, of a government measure which produced so clearly the opposite of the results that were intended.

    Context. Asked what actually caused the Great Depression, in a PBS interview for the series Commanding Heights. He had just distinguished the ordinary recession of 1929 from its conversion into a major depression by bad monetary policy.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “The Great Depression,” interview conducted October 1, 2000
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  7. I gave a talk at the Catholic University of Chile under the title "The Fragility of Freedom." The essence of the talk was that freedom was a very fragile thing and that what destroyed it more than anything else was central control; that in order to maintain freedom, you had to have free markets, and that free markets would work best if you had political freedom. So it was essentially an anti-totalitarian talk.

    Context. Describing the lecture he gave in Santiago during his 1975 visit to Chile.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On His Role in Chile Under Pinochet,” interview conducted October 1, 2000
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  8. I've asked people who were in favor of free markets and free enterprise, people who formerly had been of a different view, what caused them to change their mind. I'm talking particularly not about economists, not about professionals, but generally ordinary people, most of whom had been socialist or in favor of government control at one time and had come over to free markets. And two names have come up over and over again: Hayek on the one hand, The Road to Serfdom from Hayek, and Ayn Rand on the other, Atlas Shrugged and her other books.

    Context. Asked whether reading Hayek’s The Road to Serfdom had an impact on him, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Friedrich Hayek and the Mont Pelerin meeting,” interview conducted October 1, 2000
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  9. The most important single central fact about a free market is that no exchange takes place unless both parties benefit.

    Context. Asked why he could see the black market as a positive thing, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “The Economic Logic Behind Black Markets,” interview conducted October 1, 2000
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  10. Nixon was the most socialist of the presidents of the United States in the 20th century. ( … ) Well, his ideas were not socialist, quite the opposite, but if you look at what happened during his administration, first of all, the number of pages in the Federal Register, which is full of regulations about business, doubled during his regime.

    Context. The omission is a one-line remark by the interviewer between his two sentences.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Richard Nixon,” interview conducted October 1, 2000
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  11. The problem with Nixon was not intelligence and not prejudices. The problem with him was that he was willing to sacrifice principles too easily for political advantage.

    Context. On President Nixon, in a PBS interview for the series Commanding Heights, recalling his meetings with Nixon and George Shultz in the Oval Office. He had just said Nixon had “one of the highest IQs of any public official” he had met.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Richard Nixon,” interview conducted October 1, 2000
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  12. 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.

    Context. Asked why private property is so central to freedom, given the Marxist claim that property is theft, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Freedom and Free Markets,” interview conducted October 1, 2000
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  13. And once you get something in government, it's very hard to get it out. So I think there is a real danger. I don't think we can regard the war as won by any manner of means. I think it still is true that it takes continued effort to keep a society free.

    Context. Asked whether the pendulum could swing back toward government control.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “Where We Stand Today,” interview conducted October 1, 2000
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  14. The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that’s why it’s so essential to preserving individual freedom.

    Context. Asked why free markets and freedom are inseparable, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Freedom and Free Markets,” interview conducted October 1, 2000
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  15. The only way you could get the inflation down was by having monetary contraction. There was no way you could do that without having a temporary recession. The great error in the earlier period had been that whenever there was a little contraction there was a tendency to expand the money supply rapidly in order to avoid unemployment. That stop-and-go policy was really what bedeviled the Fed during the '60s and '70s.

    Context. On why Reagan's support for Paul Volcker's tight money mattered.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Ronald Reagan,” interview conducted October 1, 2000
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  16. Stagflation was the end of naive Keynesianism. Now obviously the term "Keynesian" can mean anything you want it to mean, and so you have new Keynesianism, but this particular feature was put to an end by the stagflation episode.

    Context. Asked whether the stagflation of the 1970s was the end of Keynesianism, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On John Maynard Keynes,” interview conducted October 1, 2000
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  17. Governments can most effectively collect taxes on things that can't move. That's why property taxes are invariably the first tax.

    Context. On how the Internet would affect government's ability to tax.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “Where We Stand Today,” interview conducted October 1, 2000
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  18. Other kinds of regulations, particularly regulations on personal behavior, have gone up. It's social control that has been taking the place of narrow economic control. ( … ) They're not a threat to the free market. They're a threat to human freedom.

    Context. The omission is the interviewer’s next question: “Do you feel some of those regulations are ultimately a threat to the free market?” The last two sentences are his whole answer to it.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “Where We Stand Today,” interview conducted October 1, 2000
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  19. There is no doubt who won the intellectual argument. There is no doubt that the received intellectual opinion of the world today is much less favorable towards central planning and controls than it was in 1947. What's much more dubious is who won the practical argument. The world is more socialist today than it was in 1947. Government spending in almost every Western country is higher today than it was in 1947, as a fraction of income, not simply in dollars.

    Context. Asked, more than half a century after the first Mont Pelerin meeting in 1947, who had won the argument.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “Where We Stand Today,” interview conducted October 1, 2000
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  20. World War II affirmed what everybody knew for a long time. If you print enough money and spend it you can create an appearance of activity and prosperity. That's what it confirmed. It did not confirm his theories about how you preserve full employment over a long time.

    Context. Asked, in a PBS interview for the series Commanding Heights, whether he agreed with John Kenneth Galbraith that World War II “affirmed Keynes and his policies.” He had just said he did not agree at all.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On John Maynard Keynes,” interview conducted October 1, 2000
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In Depth Book TV (2000)

  1. The unions might be good for the people who are in the unions but it doesn't do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn't do a thing for them.
    In Depth Book TV
    Interview, 2000
    Not yet checked

Friedman on the Surplus (2001)

  1. I favor it on economic grounds because it enables the ultimate consumer—the ultimate individual, you and me—to decide how the money should be used. You know, it makes no sense for me to send my money to Washington to have somebody in Washington decide how to use it. I’d rather decide how to use it myself—whether for charity or for welfare or for other purposes. So that’s the first and most important argument. But the political argument for it is that it’s the only way to keep Congress from spending it. … That’s why for a long time now I have been in favor of any tax cut, under any circumstances, in any way, in any form whatsoever.

    Context. Asked about the third option for handling the federal budget surplus, tax cuts, and whether he favors it above all. The ellipsis marks a question from Peter Robinson, “Only if Congress doesn’t have the money can it be prevented from spending it?”, and the word “Right.” with which his answer begins.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
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  2. But it’s not politically feasible. The pressures on Congress mean that it will be spent. Look at what’s been happening to the surplus so far. Congress has been getting rid of it as fast as it could—and under very difficult circumstances, because divided government up to now has meant that it’s been hard to get agreement on what to do. Even so, it has been able to put through a lot of government spending. History shows that over a long period of time government will spend whatever the tax system raises plus as much more as it can get away with. That’s why we’ve had universal deficits.

    Context. Asked about the federal budget surplus. Peter Robinson put it to him that he had said he would be open to paying down the debt if it were politically feasible.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
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  3. What happened was the Great Depression, which changed people’s views. Before the Great Depression, the general public vision was that the government was a necessary evil and that you should rely on the private market. The Great Depression was wrongly attributed—in my opinion, it was produced by government mismanagement—to a failure of the capitalist system, and public attitudes changed drastically as a result. From regarding the government as a necessary evil the public came to regard the government as the answer to all problems, which set in motion, beginning with FDR’s New Deal, a process under which government has been growing incrementally from then on.

    Context. Asked why federal spending stayed small relative to the economy for most of the country’s history, although the institutions and incentives had always been there, and what changed it.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
    Checked against the sourceRead the transcript
  4. Because if the government spends more or less, somebody else has less or more to spend. There’s an offsetting element unless the government spending is financed by printing money. What really matters is what happens to monetary policy. Monetary policy goes one way and fiscal policy goes the other way. If you look at all such examples, monetary policy has always dominated—not fiscal policy. If you reduce taxes then people have more to spend, but on the other hand, government has less to spend. Why is there any net increase in total spending?

    Context. Asked whether cutting taxes would stimulate a slowing economy, he said it would not, pointing to Japan, which in ten years of rolling recession had had four or five major fiscal stimulus programs, increases in government spending and reductions in taxes, all of them, he said, an utter failure. Asked why, he answered.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
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How to Cure Health Care (2001)

  1. The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.

    Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965. This opens his conclusion, which goes on to medical savings accounts and, as “a more radical reform,” catastrophic insurance for every family.

    How to Cure Health Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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  2. Employer financing of medical care has caused the term insurance to acquire a rather different meaning in medicine than in most other contexts. We generally rely on insurance to protect us against events that are highly unlikely to occur but that involve large losses if they do occur—major catastrophes, not minor, regularly recurring expenses. We insure our houses against loss from fire, not against the cost of having to cut the lawn. We insure our cars against liability to others or major damage, not against having to pay for gasoline. Yet in medicine, it has become common to rely on insurance to pay for regular medical examinations and often for prescriptions.

    Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965.

    How to Cure Health Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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  3. Enactment of Medicare and Medicaid provided a direct subsidy for medical care. The cost grew much more rapidly than originally estimated—as the cost of any handout invariably does. Legislation cannot repeal the nonlegislated law of demand and supply: the lower the price, the greater the quantity demanded; at a zero price, the quantity demanded becomes infinite. Some method of rationing must be substituted for price, which invariably means administrative rationing.

    Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965.

    How to Cure Health Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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  4. Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.

    Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965.

    How to Cure Health Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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  5. We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

    Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965. Just before, he explains that medical care is exempt from income tax only when the employer provides it.

    How to Cure Health Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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Reflections on the Great Depression (2002)

  1. I’m not sure capitalism is the right word. There is a sense in which every society is capitalist. The Soviet Union was capitalist, but it was state capitalism. Latin American societies in the past have been capitalist, but it has been oligarchic capitalism. So what we really need to talk about is not capitalism but free market or competitive capitalism which is the system that we would like to have adopted, not just capitalism.

    Context. From an interview for Randall E. Parker’s Reflections on the Great Depression (2002), answering Parker’s question whether capitalism has to keep proving that it can be economically efficient without being destructive of reasonable equality, as Robert Solow had said. Parker put the question to several of the economists he interviewed.

    Reflections on the Great Depression
    Interview, 2002, Interview by Randall E. Parker, in his Reflections on the Great Depression (Edward Elgar, 2002), pp. 52–53
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Financial Times (2003)

  1. The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did.

    Context. From a June 2003 interview in the Financial Times. The target he means is the quantity of money as the guide for central banks’ day-to-day policy, the procedure he had long urged on the Federal Reserve.

    Financial Times
    Column, 2003, Financial Times
    Not yet checked

Interview with David Asman (2004)

  1. There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. … Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.

    Context. From David Asman’s May 15, 2004 interview with him, published by Fox News. Earlier in the conversation he had argued that education and medicine share one problem, third-party payment: someone gets a service from someone else who is paid by a third party; he then blamed that for medicine’s complications.

    Interview with David Asman
    Interview, 2004, Fox News, May 15, 2004; transcript published by Fox News as “‘Your World’ Interview With Economist Milton Friedman”
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Charlie Rose Show (2005)

  1. I am a libertarian with a small "l" and a Republican with a capital "R". And I am a Republican with a capital "R" on grounds of expediency, not on principle.
    Charlie Rose Show
    Speech, 2005
    Not yet checked

Free to Choose (2005)

  1. Throughout this long period, we have been repeatedly frustrated by the gulf between the clear and present need—the burning desire of parents to have more control over the schooling of their children—on the one hand, and the adamant and effective opposition of trade union leaders and educational administrators to any change that would in any way reduce their control of the educational system.

    Context. From an essay written fifty years after his 1955 article “The Role of Government in Education,” in which he first proposed school vouchers. “We” is he and his wife, with whom, he writes, he set up a foundation to promote parental choice. Just before, he lists the limited voucher and tax-credit programs then in effect.

    Free to Choose
    Column, 2005, The Wall Street Journal, June 9, 2005; reprinted in Hoover Digest 2005 No. 3 under the title “Free to Choose”
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  2. A Nation at Risk stimulated much soul-searching and a whole series of major attempts to reform the government educational system. These reforms, however extensive or bold, have, it is widely agreed, had a negligible effect on the quality of the public school system. Although spending per pupil has more than doubled since 1970 after allowing for inflation, U.S. students continue to rank low in international comparisons; dropout rates are high; scores on SATs and the like have fallen and remain flat. Simple literacy, let alone functional literacy, in the United States is almost surely lower at the beginning of the twenty-first century than it was a century earlier—and all this despite a major increase in real spending per student since A Nation at Risk was published.

    Context. From an essay written fifty years after his 1955 article “The Role of Government in Education,” in which he first proposed school vouchers. A Nation at Risk, the 1983 report of the National Commission on Excellence in Education, quoted Paul Copperman’s warning that the educational skills of one generation would not equal those of their parents.

    Free to Choose
    Column, 2005, The Wall Street Journal, June 9, 2005; reprinted in Hoover Digest 2005 No. 3 under the title “Free to Choose”
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  3. The good news is that, despite these setbacks, public interest in and support for vouchers and tax credits continue to grow. Legislative proposals to channel government funds directly to students rather than to schools are under consideration in something like 20 states. Sooner or later there will be a breakthrough; we shall get a universal voucher plan in one or more states. When we do, a competitive private educational market serving parents who are free to choose the school they believe best for each child will demonstrate how that market can revolutionize schooling.

    Context. From an essay written fifty years after his 1955 article “The Role of Government in Education,” in which he first proposed school vouchers. Just before, he describes two statewide voucher initiatives in California, in 1993 and 2000, both of which led in the polls nine months before the vote and were defeated after a well-financed campaign against them.

    Free to Choose
    Column, 2005, The Wall Street Journal, June 9, 2005; reprinted in Hoover Digest 2005 No. 3 under the title “Free to Choose”
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How to Cure Health Care (2005)

  1. I’m old enough to have participated in the medical system before World War II. And there was no third party. And the most obvious difference is when you went to a doctor or a hospital, the first question you were asked before the war was, “What’s wrong with you?” When you go to a hospital or a doctor now, what they ask is, “What’s your insurance?”

    Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Discussing why most American medical bills are paid by third parties, insurers and government, rather than by patients.

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
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  2. Well the first and most important reform would be to eliminate the tax exemption of employer-provided medical care. … There’s no reason and logic, no reason on principle why medical care should be treated differently from other things. Food is just as essential to the life and health of a child. So is shelter and clothing. But those things we more or less let the private market take care of. What differentiates health? You might say, “Well, there are large costs involved. Sometimes you have to have big operations.” Well that’s what the private insurance is for. You have a large cost in a fire in a building. But that doesn’t mean that we have government fire insurance.

    Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Asked how he would reform the U.S. health-care system if he could ignore political realities. The ellipsis marks Robinson’s follow-up (“You’d do that before abolishing Medicare and Medicaid.”) and Friedman’s “Yes.”

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
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  3. The major defect of our present system is that employees, most of them, are spending in practice more on medical care than they would if they had their free choice. They’re getting something for free—supposedly for free—that somebody else is paying for.

    Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Just before, he says that if employer-paid medical care lost its tax exemption, employers could pay the money as higher wages and employees could decide how much of it to spend on medical care.

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
    Checked against the sourceRead the transcript
  4. We spend more per capita on medicine and health care by far than any other country. The major increase has come since 1965. And that’s because in 1965 the United States enacted Medicare and Medicaid. And that was a stimulus to greater spending.

    Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Asked why the share of national income spent on health care rises in every industrial country. He answers that people grow richer and live longer and that medical care is a good people spend more on as they do, but that the rise has been far greater in the United States.

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
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  5. It came about because during World War II you had wage and price controls. One bad piece of legislation leads to other bad pieces of legislation. We had wage and price controls, and yet we had a real boom because of the pressure for war production. In the process, employers found it hard to get workers. … But they couldn’t pay higher wages, and so they started off with special additions that weren’t covered by the rules and regulations. And they found that one of the most popular additions they could offer was health care. And so health care spread.

    Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Asked why most medical payments are made by third parties. The ellipsis marks Robinson’s interjection (“A lot of the manpower was overseas fighting the war.”) and Friedman’s “Yes, that’s true also. They had a lot of woman power.” He goes on to say that Congress later exempted employer-provided health care from taxation.

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
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Milton Friedman's Last Lunch (2006)

  1. If a tax cut increases government revenues, you haven't cut taxes enough.
    Milton Friedman's Last Lunch
    Column, 2006, Forbes
    Not yet checked

The Romance of Economics (2006)

  1. In 1945–46, intellectual opinion was almost entirely collectivist. But practice was free market. Government was spending something like 20–25 percent of national income. But the ideas of people were all for more government. And so from 1945 to 1980, you had a period of galloping socialism.

    Context. Explaining what he called “the story of the postwar period” in the United States. He went on to say that government spending rose from 20 to 40 percent of national income, and that the visible effects of regulation turned opinion back toward capitalism, which in his view was why Ronald Reagan was elected in 1980.

    The Romance of Economics
    Interview, 2006, Interview by Tunku Varadarajan, The Wall Street Journal; reprinted in Hoover Digest 2006 No. 4
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  2. It’s neither one nor the other … But it’s good for freedom. In principle, you ought to have completely open immigration. But with the welfare state it’s really not possible to do that.

    Context. Asked whether immigration, especially illegal immigration, is good or bad for the economy. Asked next whether one can’t have immigration reform without welfare reform, he answered that one can have immigration reform, but “you can’t have open immigration without largely the elimination of welfare.”

    The Romance of Economics
    Interview, 2006, Interview by Tunku Varadarajan, The Wall Street Journal; reprinted in Hoover Digest 2006 No. 4
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  3. Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money, set forth a hypothesis that was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn’t mean that he wasn’t a great man!

    Context. Answering whether Keynes was a “natural economist,” after naming Adam Smith, Alfred Marshall, Keynes and George Stigler as the economists he would invite to dinner.

    The Romance of Economics
    Interview, 2006, Interview by Tunku Varadarajan, The Wall Street Journal; reprinted in Hoover Digest 2006 No. 4
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  4. I have found, over a long time, that some people are natural economists. They don’t take a course, but they understand—the principles seem obvious to them. Other people may have Ph.D.s in economics, but they’re not economists. They don’t think like an economist. Strange, but true.

    Context. Replying when the interviewer apologized for not being an economist; his first words were “You mean you’re not a trained economist.”

    The Romance of Economics
    Interview, 2006, Interview by Tunku Varadarajan, The Wall Street Journal; reprinted in Hoover Digest 2006 No. 4
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Why Money Matters (2006)

  1. The prosperous 1920s in the United States were followed by the most severe economic contraction in its history. In our Monetary History (1963), Anna Schwartz and I attributed the severity of the contraction to a monetary policy that permitted the quantity of money to decline by one-third from 1929 to 1933. Since 1963, two episodes have occurred that are almost mirror images of the U.S. economy in the 1920s: the 1980s in Japan, and the 1990s in the United States. All three episodes were marked by a long period of rapid economic growth, sparked by rapid technological change and the emergence of new industries, and accompanied by a stock market boom that terminated in a crash. Monetary policy played a role in these booms but only a supporting role. Technological change appears to have been the major player.

    Context. An article adapted from an academic paper he was working on at the age of 94; it appeared in the Wall Street Journal the day after his death. Just before, he describes the booms of the 1920s in the United States, the 1980s in Japan and the 1990s in the United States as three episodes of a natural experiment in monetary policy.

    Why Money Matters
    Column, 2006, The Wall Street Journal, 2006, the day after his death; reprinted in Hoover Digest 2006 No. 4
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  2. The results of this natural experiment are clear, at least for major ups and downs: What happens to the quantity of money has a determinative effect on what happens to national income and to stock prices. The results strongly support Anna Schwartz’s and my 1963 conjecture about the role of monetary policy in the Great Contraction. They also support the view that monetary policy deserves much credit for the mildness of the recession that followed the collapse of the U.S. boom in late 2000.

    Context. An article adapted from an academic paper he was working on at the age of 94; it appeared in the Wall Street Journal the day after his death. Its closing paragraph, after charts comparing the quantity of money, nominal GDP and stock prices before and after the peaks of the three booms: money fell sharply after 1929, stagnated in Japan after 1992, and rose steadily in the United States after 2001.

    Why Money Matters
    Column, 2006, The Wall Street Journal, 2006, the day after his death; reprinted in Hoover Digest 2006 No. 4
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