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Milton Friedman on Politics, voting, and legislators

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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Milton Friedman, “Tyranny of the Status Quo” (Harcourt Brace Jovanovich, 1984), Ch. 3 “Causes and Cure: Government Spending, Taxes, and Deficits”, p. 43 (with Rose D. Friedman). https://miltonfriedman.org/quotes/typical-government-program-beneficiaries-tariff-not-those-harmed-1984

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He also said

  1. Social 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. Market
    Interview, 1998, Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1
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  2. In one sense, it is poetic justice that my colleagues and I at colleges and universities should now be suffering under the bureaucratic lash. For we have done more than any other group to produce a climate of opinion favorable to big government. So long as affirmative-action programs were directed at greedy businesses and grasping trade unions, academia for the most part cheered. And even now that its own ox is being gored, the typical reaction is that the academic world is “different.”

    Context. From a Newsweek column on the Department of Health, Education, and Welfare’s claim that Hillsdale College, which accepted no federal funds, fell under federal affirmative-action rules because some of its students received federal grants, loans, or veterans’ benefits.

    Bureaucracy Scorned
    Column, 1975, Newsweek (December 29, 1975); reprinted in full in the Congressional Record, Senate, August 26, 1976, p. 28015, under the heading “[From Newsweek, Dec. 29, 1975]”, introduced by Senator Mark Hatfield. Later collected in Bright Promises, Dismal Performance: An Economist’s Protest (1983)., Congressional Record, August 26, 1976, p. 28015
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  3. Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports, or equivalently, from exporting as little as possible to pay for its imports.

    Context. From Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Tyranny of Controls”, on international trade.

    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, p. 41
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