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Milton Friedman

Milton Friedman was an American economist noted for his support for free markets and a reduction in the size of government. In 1976 he was awarded a Nobel Prize in Economics.

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  • Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. ... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.
    • The Counter-Revolution in Monetary Theory (1970)

  • On the level of political principle, the imposition of taxes and the expenditure of tax proceeds are governmental functions. We have established elaborate constitutional, parliamentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in accordance with the preferences and desires of the public — after all, "taxation without representation" was one of the battle cries of the American Revolution. We have a system of checks and balances to separate the legislative function of imposing taxes and enacting expenditures from the executive function of collecting taxes and administering expenditure programs and from the judicial function of mediating disputes and interpreting the law.
    Here the businessman — self-selected or appointed directly or indirectly by stockholders — is to be simultaneously legislator, executive and, jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds — all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on.

  • The political principle that underlies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate. There are no values, no "social" responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.
    The political principle that underlies the political mechanism is conformity. The individual must serve a more general social interest — whether that be determined by a church or a dictator or a majority. The individual may have a vote and say in what is to be done, but if he is overruled, he must conform. It is appropriate for some to require others to contribute to a general social purpose whether they wish to or not.
    Unfortunately, unanimity is not always feasible. There are some respects in which conformity appears unavoidable, so I do not see how one can avoid the use of the political mechanism altogether.
    • "The Social Responsibility of Business is to Increase its Profits" in The New York Times Magazine (13 September 1970)

  • So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not.
    • Interview "Milton Friedman Responds" in Chemtech (February 1974) p. 72.

  • I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere.
    • Interview with Richard Heffner on The Open Mind (7 December 1975)

  • I say thank God for government waste. If government is doing bad things, it's only the waste that prevents the harm from being greater.
    • Interview with Richard Heffner on The Open Mind (7 December 1975)

  • One of the great mistakes is to judge policies and programs by their intentions rather than their results.
    • Interview with Richard Heffner on The Open Mind (7 December 1975)

  • Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant little to the wealthy. The rich in ancient Greece would have benefited hardly at all from modern plumbing — running servants replaced running water. Television and radio — the patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading artists as domestic retainers. Ready-to-wear clothing, supermarkets — all these and many other modern developments would have added little to their life. They would have welcomed the improvements in transportation and in medicine, but for the rest, the great achievements of western capitalism have rebounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.
    • Free to Choose (1980) p.148

  • There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.
    • Free to Choose (1980), segment Who protects the consumer?

  • With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves.
    • Lecture "The Suicidal Impulse of the Business Community" (1983); cited in Filters Against Folly (1985) by Garrett Hardin ISBN 067080410X

  • The broader and more influential organisations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend.
    • Lecture "The Suicidal Impulse of the Business Community" (1983); cited in Filters Against Folly (1985) by Garrett Hardin

  • Every friend of freedom... must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence.
    • "An Open Letter to Bill Bennett" in The Wall Street Journal (7 September 1989)

  • 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.


  • The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe (monetary) contractions of 1920-1, 1929-33, and 1937-8. No other 20 year period in American history contains as many as three such severe contractions.
    This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System... and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities...
    Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank...
    To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers.
    • As quoted in The Money Masters (1995)

  • I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money and equally of no sharp decline in the stock of money that was not accompanied by a severe depression.
    • As quoted in The Money Masters (1995)

  • The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933
    • National Public Radio interview (Jan 1996)



  • The unions might be good for the people who are in the unions but it doesn't do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn't do a thing for them.
    • Interview with Brian Lamb, In Depth Book TV (2000)

  • The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did.
    • Financial Times [UK] (7 June 2003)

  • I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.

  • 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. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! 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. And that’s close to 40% of our national income.
    • Fox News interview (May 2004)

  • I am a libertarian with a small l and a Republican with a capital R. And I am a Republican with a capital R on grounds of expediency, not on principle.

  • Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money, set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!

  • If a tax cut increases government revenues, you haven't cut taxes enough.
    • As quoted in "Milton Friedman's Last Lunch" at Forbes.com (11 December 2006)

  • The true test of any scholar's work is not what his contemporaries say, but what happens to his work in the next 25 or 50 years. And the thing that I will really be proud of is if some of the work I have done is still cited in the text books long after I am gone.
    • As quoted in The Power of Choice (January 2007)

Capitalism and Freedom (1962)

  • The free man will ask neither what his country can do for him nor what he can do for his country.
    • Introduction

  • Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions. So also did political freedom in the golden age of Greece and in the early days of the Roman era.
    History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 10

  • Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated — a system of checks and balances.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom"

  • The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rule of the game" and as an umpire to interpret and enforce the rules decided on.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 15

  • A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.
    • Ch. 1 "The Relation Between Economic Freedom and Political Freedom", 2002 edition, page 15

  • With respect to teachers' salaries .... Poor teachers are grossly overpaid and good teachers grossly underpaid. Salary schedules tend to be uniform and determined far more by seniority.
    • Ch. 6 "The Role of Government in Education"

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  • Governments never learn. Only people learn.

  • Hell hath no fury like a bureaucrat scorned.

  • Is it really true that political self-interest is somehow nobler than economic self-interest?

  • I am a limited-government libertarian.

  • If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can only gain at the expense of another

  • Inflation is the one form of taxation that can be imposed without legislation.

  • The business of business is business.

  • The government solution to a problem is usually as bad as the problem.

  • We don't have a desperate need to grow. We have a desperate desire to grow.

  • We have a system that increasingly taxes work and subsidizes non-work.

  • What is not forbidden in Sweden, is obligatory.

  • What would the people who sold us goods do with the money? They'd get dollars. What would they do with the dollars? Eat them?!
    • In response to a suggestion that total free trade would end in cheaper foreign products flooding the market and causing unemployment.

  • If you pay people not to work and tax them when they do, don't be surprised if you get unemployment.

  • Everywhere, and at all times, economic progress has meant far more to the poor than to the rich.

  • Complete free trade is not politically feasible. Why? Because it's only in the general interest and in no one's special interest. The benefits of a tariff are visible. [Union workers] can see they are "protected". The harm which a tariff does is invisible. It's spread widely. There are people that don't have jobs because of tariffs but they don't know it.

  • Corruption is government intrusion into market efficiencies in the form of regulations.

  • Only a crisis, real or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

  • The stock market and economy are two different things.

  • If you put the federal government in charge of the Sahara desert in five years there’d be a shortage of sand.

  • There is nothing so permanent as a temporary government program.

  • "Thanks to economists, all of us, from the days of Adam Smith and before right down to the present, tariffs are perhaps one tenth of one percent lower than they otherwise would have been." Very long pause. "And because of our efforts, we have earned our salaries ten-thousand fold." -- Speaking at a meeting of the American Economic Association http://mises.org/story/2393

On drug prohibition

  • I’m in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal.

  • It is because it's prohibited. See, if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That's literally true.
    • One role of prohibition is in making the drug market more lucrative.

  • So long as large sums of money are involved — and they are bound to be if drugs are illegal — it is literally impossible to stop the traffic, or even to make a serious reduction in its scope.

  • There is no logical basis for the prohibition of marijuana. $7.7 billion is a lot of money, but that is one of the lesser evils. Our failure to successfully enforce these laws is responsible for the deaths of thousands of people in Colombia. I haven't even included the harm to young people. It's absolutely disgraceful to think of picking up a 22-year-old for smoking pot. More disgraceful is the denial of marijuana for medical purposes.

Misattributed

  • There's no such thing as a free lunch.
    • Also often misattributed to Robert A. Heinlein because both helped popularize the expression – Friedman with a book with that title. The phrase actually dates to at least the 1930's.

Quotes about Friedman

  • Everybody loves to argue with Milton, particularly when he isn't there.
    • George Shultz, quoted in
      • The Bank [of Canada] gave it a college try, it really did. It just doesn't work that way.
        • John Crow, former governor of the Bank of Canada, on implementing Friedman's theories; quoted by
          • I don't give a good goddamn what Milton Friedman says. He's not running for re-election!
            • Richard Nixon, President of the United States, quoted by
 
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