‘One of the great mistakes is to judge policies and programs by their intentions rather than their results.‘Milton Friedman Interview with Richard Heffner on The Open Mind (7 December 1975)
Professor Milton Friedman; (July 31, 1912 – November 16, 2006), was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences.
As a proponent for free markets, personal liberties, individual property rights and small government, Professor Friedman provides refreshing insight into both the mechanisms of an effective economy; and, the types of theory, decisions and policies which lead to an ineffective one.
If Professor Friedman was still with us today, it is quite likely that his anti-Keynesian, and pro-capitalism theories would be deemed ‘callous and hateful’ and he would likely be shunned by modern academia. Fortunately his words of wisdom have been enshrined and text and video – for the benefit of future generations of monetary and fiscal conservatives.
If you merely wanted a quick takeaway from this influential man, I have included some of his memorable quotes below. Directly following however, is a superb lecture delivered by Professor Friedman, on what he deems to be five myths of perception, which conceal economic realities from the public.
Myths That Conceals Reality
Five myths cloud our perception of both the past and the present.
(1) The “robber baron” myth, which holds that in late nineteenth-century America there were powerful men who became rich at the expense of the poor. The reality is that they became wealthy by being productive, and that there is no other period in history which saw such a rapid and widespread improvement in the well-being of the average individual;
(2) The myth that the Great Depression was caused by a failure of business, when it was, in fact, produced by a failure of government and specifically by the Federal Reserve System;
(3) The myth that government in the economy has expanded in response to public demand, when, actually, the public has had to be sold “hard” for politicians to enact every major social program;
(4) The “free lunch” myth, which forces the individual to pay more, no matter how the government raises money – by taxing individuals, by taxing businesses, or by printing more money; and
(5) The myth that government, like Robin Hood, transfers wealth from the rich to the poor, when the reality is that the government usually transfers wealth and income from both the very rich and the very poor to those in the middle.
Great and memorable quotes
- There’s no such thing as a free lunch.
- Inflation is taxation without legislation.
- Nothing is so permanent as a temporary government program.
- The government solution to a problem is usually as bad as the problem.
- Hell hath no fury like a bureaucrat scorned.
- Underlying most arguments against the free market is a lack of belief in freedom itself.
- A society that puts equality ahead of freedom, will end up with neither.
- Concentrated power is not rendered harmless by the good intentions of those who create it.
- Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.
- “The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.”
- “Government has three primary functions. It should provide for military defence of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government– in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.”
- “When unions get higher wages for their members by restricting entry into an occupation, those higher wages are at the expense of other workers who find their opportunities reduced.
When government pays its employees higher wages, those higher wages are at the expense of the taxpayer. But when workers get higher wages and better working conditions through the free market, when they get raises by firm competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody’s expense.
They can only come from higher productivity, greater capital investment, more widely diffused skills. The whole pie is bigger – there’s more for the worker, but there’s also more for the employer, the investor, the consumer, and even the tax collector.
That’s the way the free market system distributes the fruits of economic progress among all people. That’s the secret of the enormous improvements in the conditions of the working person over the past two centuries.”
- “I think that nothing is so important for freedom as recognizing in the law each individual’s natural right to property, and giving individuals a sense that they own something that they’re responsible for, that they have control over, and that they can dispose of.”