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Milton Friedman on Spending other people's money

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. … Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.

Context. From David Asman’s May 15, 2004 interview with him, published by Fox News. Earlier in the conversation he had argued that education and medicine share one problem, third-party payment: someone gets a service from someone else who is paid by a third party; he then blamed that for medicine’s complications.

Interview with David Asman
Interview, 2004, Fox News, May 15, 2004; transcript published by Fox News as “‘Your World’ Interview With Economist Milton Friedman”
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Milton Friedman, “Interview with David Asman” (Fox News, 2004), May 15, 2004; transcript published by Fox News as “‘Your World’ Interview With Economist Milton Friedman”. https://miltonfriedman.org/quotes/there-four-ways-which-spend-money-spend-2004

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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
    Checked against the sourceRead the transcript
  2. Equally important, you cannot spend somebody else's money unless you first get it. … So the concept of doing good with somebody else's money has force or coercion built into it as an essential feature.

    Context. His second objection to doing good with somebody else's money, after the first (that nobody spends somebody else's money as carefully as his own), illustrated with New York City's budget.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
    Checked against the sourceWatch it
  3. Our problems have arisen from good people who are trying to do good, but trying to do good in a fundamentally flawed way. The welfare state is in many ways a noble construct, a noble concept. It's the concept that we ought to help our fellow men. … What flaws it is that it's one thing for you to help me out of your pocket. It's another thing for you to help me out of his pocket. And the fundamental flaw of the welfare state, in my opinion, is the idea that you should do good with somebody else's money.

    Context. Right after saying that the strategic necessity is a change in the climate of opinion that substitutes a belief in individual responsibility for what he calls the false belief in social responsibility, and that the problems have not come from evil people or a conspiracy.

    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
    Checked against the sourceWatch it

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