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Milton Friedman on Poverty and development

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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Milton Friedman, “The Hong Kong Experiment” (Hoover Digest, 1998, no. 3; reprinted from National Review, December 31, 1997, where it ran as “The Real Lesson of Hong Kong.”, 1998). https://miltonfriedman.org/quotes/hong-kong-1955-miserable-place-refugees-1998

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  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. 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.”
    Checked against the sourceRead the source
  3. 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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