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Milton Friedman on Poverty and development

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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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-income-britain-socialism-free-markets-1998

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  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. 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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  3. 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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