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Milton Friedman on Politics, voting, and legislators

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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Milton Friedman, “Tyranny of the Status Quo” (Harcourt Brace Jovanovich, 1984), Ch. 4 “Defense”, pp. 76–77 (with Rose D. Friedman). https://miltonfriedman.org/quotes/defense-contractors-every-incentive-bottom-lines-high-prices-1984

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He also said

  1. 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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  2. 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
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  3. 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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