«Columbus did not seek a new route to the Indies in response to a majority directive».«If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a short-age of sand».«The greatest ad-vances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government».
From the speech given at the opening of the Cato Head-quarters in Wash-ington, D.C., May 6, 1993.
I am delighted to be here on the occasion of the opening of the Cato Headquarters. It is a beautiful building and a real tribute to the intellec-tual influence of Ed Crane and his associates.I have sometimes been associated with the apho-rism «There's no such thing as a free lunch», which I did not invent. I wish more attention were paid to one that I did in-vent, and that I think is particularly appropri-ate in this city, «Nobody spends somebody else's money as carefully as he spends his own». But all aphorisms are half-truths. One of our favorite fam-ily pursuits on long drives is to try to find the oppo-site of aphorisms. For ex-ample, «History never re-peats itself», but «There's nothing new under the sun». Or «look before you leap», but «He who hesitates is lost». The op-posite of «There's no such thing as a free lunch» is clearly «The best things in life are free».And in the real eco-nomic world, there is a free lunch, an extraordi-nary free lunch, and that free lunch is free markets and private property. Why is it that on one side of an arbitrary line there was East Germany and on the other side there was West Germany with such a different level of prosperity? It was be-cause West Germany had a system of largely free, private markets – a free lunch.
At the moment, we in the United States have available to us, if we will take it, some-thing that is about as close to a free lunch as you can have. Af-ter the fall of commu-nism, everybody in the world agreed that socialism was a fail-ure. Everybody in the world, more or less, agreed that capital-ism was a success.
The funny thing is that every capitalist country in the world apparently concluded that therefore what the West needed was more socialism. That's obviously absurd…
Free Lunches in the Budget
Let me give a few ex-amples. The Rural Elec-trification Administration
By Milton Friedman
I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possibleGovernments never learn.
Only people learn a decent education. As children, we were able to walk to school; in fact, we could walk in the streets without fear almost everywhere. In the depth of the Depression, when the number of truly disad-vantaged people in great trouble was larger than it is today, there was noth-ing like the current concern over personal safety, and there were few panhan-dlers littering the streets. What you had on the street were people trying to sell apples. There was a sense o self-reliance that, if it hasn't disappeared, is much less prevalent.In 1938 you could even find an apartment to rent in New York City. After we got married and moved to New York, we looked in the apartments-available column in the newspaper, chose half a dozen we wanted to look at, did so, and rented one. People used to give up their apartments in the spring, go away for the summer, and come back
Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless The government solution to a problem is usually as bad as the problem
№ 4 April 2010 in the autumn to find new apartments. It was called the moving season. In New York today, the best way to find an apartment is probably to keep track of the obituary columns. What's produced that dif-ference? Why is New York housing a disaster today? Why does South Bronx look like parts of Bosnia that have been bombed? Not because of private market, obviously, but be-cause of rent control.
Government Causes Social Problems
Despite the current rhetoric, our real prob-lems are not economic. I am inclined to say that our real problems are not economic despite the best efforts of government to make them so. I want to cite one figure. In 1946 government assumed re-sponsibility for produc-ing full employment with the Full Employment Act. In the years since then, unemployment has aver-aged 5.7 percent. In the years from 1900 to 1929 when government made no pretense of being re-sponsible for employment, unemployment averaged 4.6 percent. So, our un-employment problem too is largely government created. Nonetheless, the economic problems are not the real ones.Our major problems are social – deteriorating education, lawlessness and crime, homelessness, the collapse of family val-ues, the crisis in medical care, teenage pregnan-cies. Every one of these problems has been either produced or exacerbated by the well-intentioned efforts of government. It's easy to document two things: that we've been transferring resources from the private market to the government market and that the private mar-ket works and the govern-ment market doesn't.It's far harder to under-stand why supposedly in-telligent, well-intentioned people have produced these results. One rea-son, as we all know, that is certainly part of the an-swer is the power of spe-cial interests. But I believe that a more fundamental answer has to do with the difference between the self-interest of individuals when they are engaged in the private market and the self-interest of indi-viduals when they are engaged in the political market. If you're engaged in a venture in the private market and it begins to fail, the only way you can keep it going is to dig into your own pocket. So you have a strong incentive to shut it down. On the other hand, if you start exactly the same enterprise in the government sector, with exactly the same pros-pects for failure, and it beings to fail, you have a much better alterna-tive. You can say that your project or program should really have been undertaken on a big-ger scale; and you don't have to dig into your own pocket, you have a much deeper pocket into which to dig, that of the tax-payer. In perfectly good conscience you can try to persuade, and typically succeed in persuading, not the taxpayer, but the congressman, that yours is really a good project and that all it needs is a little more money. And so, to coin another aphorism, if a private venture fails, it's closed down. If a gov-ernment venture fails, it's expanded.
We sometimes think the solution to our problems is to elect the right people to Congress. I believe that's false, that if a random sample of people in this room were to replace the 435 people in the House and the 100 people in the Senate, the results would be much the same. With few exceptions, the peo-ple in Congress are de-cent people who want to do good. They're not de-liberately engaging in ac-tivities that they know will do harm. They are simply immersed in an environ-ment in which all the pres-sures are in one direction, to spend more money.Recent studies dem-onstrate that most of the pressure for more spend-ing comes from the gov-ernment itself. It's a self-generating monstrosity. In my opinion, the only way we can change it is by changing the incentives under which the people in government operate. If you want people to act differently, you have to make it in their own self-interest to do so.
As Ar-men Alchan always says, there's one thing you can count on ev-erybody in the world to do, and that's to put his self-interest above yours.
I have no magic for-mula for changing the self-interest of bureau-crats and members of Congress. Constitutional amendments to limit tax-es and spending, to rule out monetary manipula-tion, and to inhibit mar-ket distortions would be fine, but we're not going to get them. The only vi-able thing on the national horizon is the term-limits movement…