Milton Friedman on Prices and what they do
How do patriotism and judgment determine that the price of a widget may rise 2.8 per cent but the price of a wadget, only 0.3 per cent; the wage of a widgeteer by 2 per cent but of a wadgeteer, by 10 per cent? Clearly they do not. Arbitrary judgment, political power, visibility—these are what will matter.
Context. From the first of two New York Times op-ed essays written at Ely, Vermont, in October 1971, after the August 15 wage-price freeze and as the Nixon administration’s Phase II pay board and price board took over. The appeal, he has just written, is to “the patriotism, civic responsibility, and judgment of political appointees, most of whom represent vested interests.”
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Milton Friedman, “Morality and Controls: I” (The New York Times, October 28, 1971; reprinted in the Congressional Record, Senate, October 29, 1971, pp. 38201 to 38202, introduced by Senator Mark O. Hatfield of Oregon, who dates the two essays to “the October 28 and 29 editions of the New York Times”, under the header “[From the New York Times, Oct. 28, 1971]”, 1971), Congressional Record, October 29, 1971, pp. 38201–38202. https://miltonfriedman.org/quotes/widget-and-wadget-1971
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He also said
But, you will say, rationing by price hurts the poor relative to the rich. What of the poor man with his old jalopy as the only way to get to work. The answer is straightforward. If high oil prices impose special problems on some, let us provide funds to mitigate their problem. Let us not impose compulsion and waste on 95 per cent to avoid special measures for 5 per cent.
Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. Later in the column he adds that what is called for is higher prices for oil products “relative to other products—not general inflation.”
Why Some Prices Should RiseColumn, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775Checked against the sourceRead the originalIf the relation that has prevailed between money and prices for the past dozen years continues, and if the Federal Reserve continues to permit the quantity of money to grow by 10 per cent a year, inflation will proceed at a rate of about 6 per cent. Judged not by pronouncements, not by intentions, but by performance, that is the rate that monetary policy for the past four years has been directed at producing.
Context. From a June 1974 Newsweek column, written as computed price indexes showed double-digit inflation, arguing that the jump largely reflected price increases suppressed by the 1971 to 1973 controls, and that the underlying cause was money growing faster than output. A footnote to the first clause says the relation has “prevailed for as far back as the data go”, but that in the United States over the past dozen years it is “closer than the average relation.”
Perspective on InflationColumn, 1974, Newsweek (June 1974); reprinted in the Congressional Record, Extensions of Remarks, June 18, 1974, pp. 19786 to 19787, introduced by Representative Jack Kemp of New York, who calls it “his column this week in Newsweek.” The reprint gives no issue date, and the chart that ran with the column is not reproduced, Congressional Record, June 18, 1974, pp. 19786 to 19787Checked against the sourceRead the originalIt is a mark of how far we have gone on the road to serfdom that governmental allocation and rationing of oil is the automatic response to the oil crisis. This will not prevent higher prices, which will in fact do the job—but you may be sure that the rationing authorities will take the credit.
Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. The column’s closing paragraph.
Why Some Prices Should RiseColumn, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775Checked against the sourceRead the original
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