Milton Friedman on Social Security
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.
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Milton Friedman, “The Biggest Ponzi Scheme on Earth” (The New York Times, January 11, 1999, as “Social Security Chimeras”; reprinted with minor editorial changes in Hoover Digest 1999 No. 2, 1999). https://miltonfriedman.org/quotes/goldwater-voluntary-social-security-straitjacket-1999
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He also said
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 RealitySpeech, 1977, at 26:02Checked against the sourceWatch itAs 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.
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 ProfitsColumn, 1970, The New York Times Magazine, September 13, 1970, Section SM, p. 17Checked against the sourceRead the transcript
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