Milton Friedman on Paternalism and consumer protection
More generally, the fraction of a person’s income that it is reasonable for her or him to set aside for retirement depends on that person’s circumstances and values. It makes no more sense to specify a minimum fraction for all people than to mandate a minimum fraction of income that must be spent on housing or transportation. Our general presumption is that individuals can best judge for themselves how to use their resources. Mr. Feldstein simply asserts that in this particular case the government knows better.
Context. From an article on proposals to replace part of Social Security with individual investment accounts, written while the federal budget was in surplus. He is answering the economist Martin Feldstein, who had argued in 1995 that contributions to a privatized system must be mandatory, first because some individuals are too shortsighted to provide for their own retirement.
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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/individuals-best-judge-retirement-saving-1999
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But, if we are to use effectively these abstract models and this descriptive material, we must have a comparable exploration of the criteria for determining what abstract model it is best to use for particular kinds of problems, what entities in the abstract model are to be identified with what observable entities, and what features of the problem or of the circumstances have the greatest effect on the accuracy of the predictions yielded by a particular model or theory.
The Methodology of Positive EconomicsJournal article, 1953, Essays in Positive Economics (University of Chicago Press, 1953), p. 42Checked against the sourceFind the bookI favor it on economic grounds because it enables the ultimate consumer—the ultimate individual, you and me—to decide how the money should be used. You know, it makes no sense for me to send my money to Washington to have somebody in Washington decide how to use it. I’d rather decide how to use it myself—whether for charity or for welfare or for other purposes. So that’s the first and most important argument. But the political argument for it is that it’s the only way to keep Congress from spending it. … That’s why for a long time now I have been in favor of any tax cut, under any circumstances, in any way, in any form whatsoever.
Context. Asked about the third option for handling the federal budget surplus, tax cuts, and whether he favors it above all. The ellipsis marks a question from Peter Robinson, “Only if Congress doesn’t have the money can it be prevented from spending it?”, and the word “Right.” with which his answer begins.
Friedman on the SurplusInterview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2Checked against the sourceRead the transcriptSocial Security, as we call it, is a combination of two separate programs, neither of which would have a chance of being enacted on its own. One program is a program of a flat-rate tax on wages up to a maximum: a regressive tax imposed at one of the worst places in the economic structure, where it introduces a gap between what the worker receives and what it costs the employer. You cannot conceive of that tax being enacted by itself as part of a financing program. The second component is a system of payments of subsidies, which, again, I cannot believe could have been enacted by itself. It is a system in which the amount a person receives depends on a whole variety of circumstances, some of which may be relevant and some of which may not be relevant to what you would like to have a subsidy program do. But you would never enact a subsidy program in which the largest subsidies go to the people who have earned the highest incomes. Yet when you tie the two together you have a sacred cow. I have always said it is one of the greatest marketing miracles of this century.
Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Asked whether the United States should privatize Social Security as Chile had done.
Mr. MarketInterview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1Checked against the sourceRead the transcript
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