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Milton Friedman on Government spending and deficits

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.”
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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/real-lesson-hong-kong-resources-inefficiently-1998

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He also said

  1. Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own.

    Context. Asked why private property is so central to freedom, given the Marxist claim that property is theft, in a PBS interview for the series Commanding Heights.

    Commanding Heights: Milton Friedman interview
    Interview, 2000, PBS, “On Freedom and Free Markets,” interview conducted October 1, 2000
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  2. 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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  3. The SST issue is often presented as if the question were: Should or should not an SST be built in the United States? That seems to me the wrong question. I favor the building of an SST in the United States, if private enterprise finds it profitable to do so, after paying all costs, including any environmental costs imposed on third parties. On the other hand, I oppose the building of an SST in the United States if that requires governmental subsidies. I oppose governmental subsidization of the SST for exactly the same reasons that I oppose governmental subsidization of the production of food, or of automobiles, or of furniture, or of electric power. I believe in a free enterprise system. A governmental decision to produce an SST largely at its own expense is a step toward socialism and away from free enterprise.

    Context. From a statement he sent to Senator William Proxmire’s Joint Economic Committee in December 1972 for its hearings on the supersonic transport (SST). The Senate had voted in March 1971 to halt federal funding of an American SST, and the hearings considered whether to revive it.

    Statement on the SST
    Letter, 1972, Letter to Senator William Proxmire, chairman of the Joint Economic Committee, dated December 11, 1972, submitting a statement for the record of the committee’s hearings on the supersonic transport; printed in full in the Congressional Record, Senate, January 11, 1973, p. 796, inserted by Senator Proxmire., Congressional Record, January 11, 1973, p. 796
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