by Above photo courtesy of Medium.
Milton Friedman: Economist. University of Chicago Professor. Nobel Prize Winner.
His work and his words have been praised, admonished, revered, and at times taken out of context.
Here are some noteworthy Milton Friedman Quotes with links to the clips and context in which he said them. I’ll let you read the quotes, watch the clips, and decide for yourself whether you agree or disagree with his controversial ideas.
Contents
On Greed and Virtue
Donahue: When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have nots, when you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism? And whether greed’s a good idea to run on?
Friedman: Well first of all, tell me is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded industry, are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, is exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.
Donahue: But it seems to reward not virtue as much as ability to manipulate the system.
Friedman: And what does reward virtue? You think the communist commissar rewards virtue? You think a Hitler rewards virtue? You think, excuse me, if you’ll pardon me, do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self interest is nobler somehow than economic self interest? You know I think you’re taking a lot of things for granted, and just tell me where in the world you find these angels, who are going to organize society for us? I don’t even trust you to do that.
On The Rich
Guest: Why is it that we have so many millionaires and everything in the United States, and we still have so many impoverished people who try to get up into the world? Why is it we have this lack of money where people who can’t support themselves decently and get a decent job where all these big men are up on top making oodles and oodles of money. They don’t need it. They can only eat that much.
Friedman: What do you suppose they do with it? If they don’t eat it and they don’t use it, what do you suppose they do with it?
Guest: They hoard it.
Friedman: What do you mean they hoard it? You mean they keep it under their pillows?
Guest: No, they keep investing it.
Friedman: Investing in what?
Guest: Well, in oil and everything.
Friedman: What are they investing in? Don’t get off the subject. What do they invest it in?
Guest: Well, they invest it in different things that the little people need.
Friedman: Do they invest in factories?
Guest: Yes.
Friedman: Does some of that money end up in machines?
Guest: Yes.
Friedman: Do those factories and machines provide ordinary working people with jobs or not? What do you suppose the productivity of the country would be, the wage rate would be, if the total amount of capital in this country today, was what it was a hundred years ago?
Where do you suppose the improvements of productivity come from, except from the investment by people of their savings.
But let me go to your fundamental question. First place, nirvana is not for this world. There is no paradise. Of course we have a lot of people who are poorly off. But if you look at it over time, if you get a sense of proportion, the wellbeing of the ordinary people has been the main thing that has been improved by economic progress and economic growth and development. And most residual hard cases of poverty today are the result again of a failure of government.
On Wealth Distribution
Guest: Most of what I’ve heard you talking about has been about distribution of income, rather than the distribution of wealth. Now you wouldn’t argue, at least I hope you wouldn’t, that the person in let’s say India is genetically inferior say to the person in America. It’s rather through the purely arbitrary circumstance of birth that he is in a country with a less developed economy, or in a family that doesn’t have as large a share of capital. That’s not something that he is to blame for. So even if the free market system equitably works and everyone progresses an equal amount, that person who started out with a lesser share of capital is still going to end up with a lesser share of the capital, and there’s nothing in the free market system that’s going to enable him to make up for what was a purely arbitrary deficit in the first place, and given that the kind of people who become successful capitalists do not become that way by giving away their wealth voluntarily, isn’t it necessary to forcibly redistribute wealth before you can begin to operate under a capitalist system?
Friedman: No it is not. The only way in which you can redistribute effectively wealth, is by destroying the incentives to have wealth. And the question is, what is the way, what is the system which will offer those people who are so unlucky to be born without good positions, what is the system that will provide them the greatest opportunity?
Guest: One possible way of redistributing the wealth without affecting the incentives to earn as much income as possible is simply to have a 100% inheritance tax. Because that won’t affect the incentives, it’s only after the person is dead anyway.
Friedman: I beg your pardon. I don’t know the family you come from. As you grow up, you will discover this is really a family society not an individual society. We tend to talk about a individualist society, but it really isn’t, it’s a family society. And the greatest incentives at all, the incentives that have really driven people on, have largely been the incentives of family creation, of family pursuing, establishing their families on a decent system. What is the effect of a 100% inheritance tax? The effect of a 100% inheritance tax is to encourage people to dissipate their wealth in high living.
Guest: What’s the harm in that?
Friedman: The harm in that is, where do you get the factories? Where do you get the machines? Where do you get capital investment? Where do you get the incentive to improve technology, if what you’re doing is to establish a society in which the incentive is for people who, if they by accident accumulate wealth, to waste it in frivolous entertainment? You know, the thing is, the thing that is amazing, people don’t really recognize, is the extent to which the market system has in fact encouraged people and enabled people to work hard and sacrifice in what I must confess I often regard as an irrational way, for the benefit of their children. One of the most curious things to me in observation, is that almost all people value the utility with which their children will get from consumption higher than they value their own. Here are parents, who have every reason to expect that their children to have a higher income than they ever had, and they scrimp and save to be able to leave something for their children. I think you’re sort of like a bull in a china shop if you talk about a 100% inheritance tax having no incentive effect. It would destroy a continuing society. It would destroy a society.
On Government’s Role on Poverty
Guest: In prefacing my question, I’d like to refer to what president Kennedy said that if a free society cannot help the many who are poor, it cannot save the many who are rich. To say that, well we are a government of the people, and when there is a large sector of the people, who are hurting, perhaps it is the responsibility of this government of the people to help out. My question is: How free are the poor? How free are the unemployed? How free are those who are disadvantaged? So in reference to that, what is government’s role?
Friedman: I’m glad to see one vote for the poor. First of all, the government doesn’t have any responsibility. People have responsibility. This building doesn’t have responsibility. You and I have responsibility. People have responsibility. Second, the question is, how can we as people exercise our responsibility to our fellow man most effectively. That’s the problem. So far as poverty is concerned, there is never in history been a more effective machine for eliminating poverty than the free enterprise system in the free market. The period in which you had the greatest improvement in the lot of the ordinary man, was a period in the 19th and early 20thcentury. Those of us in this room, are the heirs of that. We benefitted from the way in which our parents and our grandparents were able to come here and by virtue of the freedom that were offered to them were able to make better lives to themselves, them and us.
Next, if you look at the real problems of poverty and denial of freedom to people in this country, almost every single one of them is a result of government action, and would be eliminated in you eliminated the bad government failures. Let me be precise and specific. Why do we have so high an unemployment rate among black teenagers? It’s a disgrace and a scandal. Why do we have so a high unemployment rate? First of all because we give them lousy schooling through governmental schools which make them unqualified to hold decent jobs. And second of all, we require employers to discriminate them, by not hiring them unless their productively is enough to justify a minimum wage. The minimum wage rate is the most anti-(word omitted) law in the books. It’s the most anti-(word omitted) law because it precisely, having first not enabled the young blacks to have a decent schooling so that they can have productivity, we next deny them the on the job training that they might get if you could induce employers by being able to hire them for relatively low wages, to give them on the job training, that would make them qualify for higher payment and higher productivity.
And the third place, we have constructed a governmental welfare scheme which has been a machine for producing poor people. We have induced people to come under control of welfare. I’m not blaming the people don’t misunderstand me, it’s our fault, for constructing so perverse and so ill-shaped a monster as a whole set of welfare programs we have under which we encourage people families to break up, we encourage people to move from one part of the country and come to another, under which we have in effect made many people poorer.
Random audience member: Have you ever been on welfare? Or poor? Without money?
Friedman: Of course. More so than most of the people in this room.
How many of you have worked a 12 hour day and gotten paid $0.78? But that’s wholly irrelevant. Is there one of you who is going to say that you don’t want a doctor to treat you for cancer unless he himself has had cancer? I could go down the line, when it is all said and done, while there are people in this country who are worse off than other people, by and large, even the poorest people in this country are relatively well off compared to the conditions in many other countries in the world.
Wrapping Up
What do you think of the Milton Friedman quotes and his ideas? Let me know in the comments below!
