Skip to content
MiltonFriedman.org

Milton Friedman on Poverty and development

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
Checked against the sourceFind the book

Where this comes from

Checked against the sourceThe wording was checked against the work itself.

Cite this passage

Milton Friedman, “The Real Free Lunch: Markets and Private Property” (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. https://miltonfriedman.org/quotes/east-west-germany-hong-kong-free-lunch-markets-private-property-1993

Quoted for commentary and research. Rights in the underlying work remain with its rights holder, so cite the work itself, not only this page.

Topics

He also said

  1. 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.”
    Checked against the sourceRead the source
  2. 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
    Checked against the sourceRead the original
  3. 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
    Checked against the sourceFind the book

Think this quote is wrong, misattributed, or missing context? Report it and it gets fixed, not argued with.