Milton Friedman on What government is for
In some cases there is market failure. But it has to be balanced against government failure. It does not follow that, for every market failure, there is a governmental answer. And it does not follow that, for every government failure, there is a market answer. You have to look at both sides. I am not an anarchist. I believe we do need a government. But I believe we need one that is far more limited than the one we have now.
Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” Discussing environmental regulation: the interviewer has argued that because no one owns a river, a factory will pollute it unless a regulator steps in. Friedman has answered that such problems are usually better handled by pollution fees than by command-and-control regulation.
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Milton Friedman, “Mr. Market” (Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1, 1998). https://miltonfriedman.org/quotes/market-failure-balanced-against-government-failure-1998
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He also said
Although I wish the anarchists luck, since that’s the way we ought to be moving now. But I believe we need government to enforce the rules of the game. By prosecuting antitrust violations, for instance. We need a government to maintain a system of courts that will uphold contracts and rule on compensation for damages. We need a government to ensure the safety of its citizens—to provide police protection. But government is failing at a lot of these things that it ought to be doing because it’s involved in so many things it shouldn’t be doing.
Interview with Milton FriedmanInterview, 1973, Playboy, February 1973; reprinted in There’s No Such Thing as a Free Lunch (Open Court, 1975), p. 37Checked against the sourceFind the bookBut it’s not politically feasible. The pressures on Congress mean that it will be spent. Look at what’s been happening to the surplus so far. Congress has been getting rid of it as fast as it could—and under very difficult circumstances, because divided government up to now has meant that it’s been hard to get agreement on what to do. Even so, it has been able to put through a lot of government spending. History shows that over a long period of time government will spend whatever the tax system raises plus as much more as it can get away with. That’s why we’ve had universal deficits.
Context. Asked about the federal budget surplus. Peter Robinson put it to him that he had said he would be open to paying down the debt if it were politically feasible.
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 transcriptThe great danger to the consumer is monopoly—whether private or governmental. His most effective protection is free competition at home and free trade throughout the world. The consumer is protected from being exploited by one seller by the existence of another seller from whom he can buy and who is eager to sell to him. Alternative sources of supply protect the consumer far more effectively than all the Ralph Naders of the world.
Context. From Free to Choose (1980), written with Rose D. Friedman: the last paragraph before the conclusion of the chapter “Who Protects the Consumer?”, on consumer-protection regulation. Ralph Nader was the best-known consumer advocate of the time.
Free to ChooseBook, 1980, Ch. 7 “Who Protects the Consumer?”, p. 226Checked against the sourceFind the book
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