Skip to content
MiltonFriedman.org

Milton Friedman on Government spending and deficits

We Americans are far wealthier today than we were 60 years ago. But we are less free. And we are less secure. When I graduated from high school in 1928, total government spending at all levels in the United States was a little over 10 percent of the national income. Two-thirds of that spending was state and local. … Today, total government spending at all levels is 43 percent of the national income, and two-thirds of that is federal, one-third state and local. The federal portion is 30 percent of national income, or about 10 times what it was in 1928.

Context. From a talk at the banquet celebrating the opening of the Cato Institute’s new building in 1993. He has just said that over the past sixty years the country has been “starving the market that has been working and feeding the market that has been failing”: the economic market, under the incentive of profit, against the political market, under the incentive of power.

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. 57
Checked against the sourceFind the book

Where this comes from

Checked against the sourceThe wording was checked against the work itself.

Cite this passage

Milton Friedman, “The Real Free Lunch: Markets and Private Property” (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. 57. https://miltonfriedman.org/quotes/wealthier-less-free-government-spending-1928-ten-percent-43-percent-1993

Quoted for commentary and research. Rights in the underlying work remain with its rights holder, so cite the work itself, not only this page.

Topics

He also said

  1. Spending by government currently amounts to about 45 percent of national income. By that test, government owns 45 percent of the means of production that produce the national income. The U.S. is now 45 percent socialist.

    Context. After defining socialism as government ownership and control of the means of production, and ownership as the right to the income a thing produces.

    We Have Socialism, Q.E.D.
    Column, 1989, The New York Times, December 31, 1989, Section 4, p. 11
    Checked against the sourceRead the transcript
  2. There is enormous room for improvement in our educational system. Hardly any activity in the United States is technically more backward. We essentially teach children in the same way that we did 200 years ago: one teacher in front of a bunch of kids in a closed room.

    Context. From a February 1995 Washington Post article arguing that American elementary and secondary schooling must be radically reconstructed by privatizing much of it, through a universal voucher that lets parents choose their children’s schools, a plan he first proposed in 1955. He goes on to say that only competition from private enterprise, as in other industries, would bring real innovation in how children are taught.

    Public Schools: Make Them Private
    Column, 1995, The Washington Post, February 19, 1995; reprinted in full in the Congressional Record, Extensions of Remarks, March 28, 1995, pp. 9551 to 9552 (E703 to E704 in the daily edition), inserted by Representative Philip M. Crane., Congressional Record, March 28, 1995, p. 9552
    Checked against the sourceRead the originalRead the source
  3. Because if the government spends more or less, somebody else has less or more to spend. There’s an offsetting element unless the government spending is financed by printing money. What really matters is what happens to monetary policy. Monetary policy goes one way and fiscal policy goes the other way. If you look at all such examples, monetary policy has always dominated—not fiscal policy. If you reduce taxes then people have more to spend, but on the other hand, government has less to spend. Why is there any net increase in total spending?

    Context. Asked whether cutting taxes would stimulate a slowing economy, he said it would not, pointing to Japan, which in ten years of rolling recession had had four or five major fiscal stimulus programs, increases in government spending and reductions in taxes, all of them, he said, an utter failure. Asked why, he answered.

    Friedman on the Surplus
    Interview, 2001, Interview by Peter Robinson for Uncommon Knowledge, January 17, 2001; adapted in Hoover Digest 2001 No. 2
    Checked against the sourceRead the transcript

Think this quote is wrong, misattributed, or missing context? Report it and it gets fixed, not argued with.