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Milton Friedman on Government spending and deficits

Each recession has produced government spending programs supposedly as a temporary device to create jobs. But nothing is so permanent as a temporary government program. Those programs have typically moved into high gear only after the economy was on the road to recovery.
Tyranny of the Status Quo
Book, 1984, Harcourt Brace Jovanovich, “Jobs Bills”, p. 115 (with Rose D. Friedman)
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Milton Friedman, “Tyranny of the Status Quo” (Harcourt Brace Jovanovich, 1984), “Jobs Bills”, p. 115 (with Rose D. Friedman). https://miltonfriedman.org/quotes/nothing-so-permanent-temporary-government-program-1980

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He also said

  1. From the political point of view, increased spending may initially be designed to be temporary but few things become more permanent than temporary spending. Hence, the economists are in fact calling for a still higher level of government spending yet, in my view, reducing the scope of government is our most important single objective.

    Context. Asked about a statement by 100 economists, six of them Nobel laureates, calling for increased federal spending to spur growth.

    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
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  2. To state this conclusion differently, there is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. ( … ) The widespread belief that there is a permanent trade-off is a sophisticated version of the confusion between “high” and “rising” that we all recognize in simpler forms. A rising rate of inflation may reduce unemployment, a high rate will not.

    Context. From his presidential address to the American Economic Association, delivered in Washington on December 29, 1967, and printed in the March 1968 American Economic Review. He enclosed it with his 1968 statement to a House subcommittee, which reprinted it.

    The Role of Monetary Policy
    Journal article, 1968, American Economic Review, March 1968 (the reprint’s heading gives the month and year only; the volume, issue and page range are NOT established by this source and remain unverified); reprinted in the Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, December 1968, pp. 214 to 224. The reprint carries his footnote: presidential address delivered at the 80th annual meeting of the American Economic Association, Washington, D.C., December 29, 1967., p. 220 of the 1968 House reprint
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  3. With a typical government program, the persons who initially receive the benefits from a program are typically not the persons who would currently be harmed by its elimination: one group benefits when the program is first instituted; a different group is hurt if and when it is terminated. Consider a tariff. When a tariff is first enacted, persons who produce the product covered by the tariff benefit. … As others enter the industry, returns are driven down roughly to the level where they were before. The result is that a larger number of persons are engaged in the industry, all earning roughly the same income that they had earned when employed earlier in other industries.

    Context. From the Friedmans’ account of why government programs, once started, are so hard to end. The ellipsis leaves out that the tariff gives existing producers a sheltered market and higher prices, and that their prosperity draws others into the industry. The paragraph goes on to say that when the tariff is removed, prices fall and some companies abandon the industry, so those hurt by ending it are not the people it first helped.

    Tyranny of the Status Quo
    Book, 1984, Harcourt Brace Jovanovich, Ch. 3 “Causes and Cure: Government Spending, Taxes, and Deficits”, p. 43 (with Rose D. Friedman)
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