Milton Friedman Famous Quotes

I have been enormously impressed by the role that pure chance plays in determining our life history. I was reminded of some famous lines of Robert Frost: Two roads diverged in a yellow wood, And sorry I could not travel both I took the one less travled by, And that has made all the difference. As I recalled my own experience and development, I was impressed by the series of lucky accidents that determined the road I traveled. > From "Lives of the Laureates" pg.67

Sometime during the 1960s, the Nobel laureate economist Milton Friedman was consulting with the government of a developing Asian nation. Friedman was taken to a large-scale public works project, where he was surprised to see large numbers of workers wielding shovels, but very few bulldozers, tractors, or other heavy earth-moving equipment. When asked about this, the government official in charge explained that the project was intended as a “jobs program.” Friedman’s caustic reply has become famous: “So then, why not give the workers spoons instead of shovels?” Friedman

There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent—William Graham Sumner's famous example of B and C deciding what D shall do for A.

The great irony, then, is that the nation’s most famous modern conservative economist became the father of Big Government, chronic deficits, and national fiscal bankruptcy. It was Friedman who first urged the removal of the Bretton Woods gold standard restraints on central bank money printing, and then added insult to injury by giving conservative sanction to perpetual open market purchases of government debt by the Fed. Friedman’s monetarism thereby institutionalized a régime which allowed politicians to chronically spend without taxing. Likewise, it was the free market professor of the Chicago school who also blessed the fundamental Keynesian proposition that Washington must continuously manage and stimulate the national economy. To be sure, Friedman’s “freshwater” proposition, in Paul Krugman’s famous paradigm, was far more modest than the vast “fine-tuning” pretensions of his “salt-water” rivals. The saltwater Keynesians of the 1960s proposed to stimulate the economy until the last billion dollars of potential GDP was realized; that is, they would achieve prosperity by causing the state to do anything that was needed through a multiplicity of fiscal interventions. By contrast, the freshwater Keynesian, Milton Friedman, thought that capitalism could take care of itself as long as it had precisely the right quantity of money at all times; that is, Friedman would attain prosperity by causing the state to do the one thing that was needed through the single spigot of M1 growth.

Similarly, Alexis de Tocqueville, the famous French political philosopher and sociologist, in his classic Democracy in America, written after a lengthy visit in the 1830s, saw equality, not majority rule, as the outstanding characteristic of America. “In America,” he wrote,   the aristocratic element has always been feeble from its birth; and if at the present day it is not actually destroyed, it is at any rate so completely disabled, that we can scarcely assign to it any degree of influence on the course of affairs. The

broad-based tax cut . . . accommodated by a program of open market purchases . . . would almost certainly be an effective stimulant to consumption.... A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.... Of course . . . the government could . . . even acquire existing real or financial assets. If . . . the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open market operations in private assets.

Inflation’, wrote Milton Friedman in a famous definition, ‘is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.

History, it is said, is written by the victors. In the late 1920s, Hayek claimed that monetary policy had taken the wrong course and predicted a deflationary bust. Irving Fisher, on the other hand, saw nothing wrong at the time with either America’s economy or its monetary policy, famously opining in the summer of 1929 that US stocks had reached a ‘permanently high plateau’. If accuracy of prediction is what matters for economic theory, as Milton Friedman later claimed, then Hayek’s interpretation should have become the received wisdom of his profession. Yet the Austrian’s interpretation of the 1920s and its aftermath has been more or less air-brushed from the history books, while Fisher’s monetarist view has become received wisdom.

Today, Adam Smith is famous as the father of capitalism and an advocate of a central tenet of free market thought: that greed is supposedly good and it drives markets. This was an idea pushed by neoliberal economists, inspired by Friedrich Hayeck and Milton Friedman, who had no knowledge of the history of moral philosophy, or of Scotland. What they missed is that no gentleman of his time could ever espouse greed, least of all a professor of moral philosophy. Indeed, Adam Smith recognized greed as an economic driver, and saw it as necessary, but also realized that it was a problem for society. His work was not an espousal of greed, but rather a response to it. His work was an attempt to find a way to reign in commercial greed to support the agrarian order, which he believed to be inherently more productive than business.

A student of the Great Depression drawn into the topic by Friedman and Schwartz, Bernanke retained a keen awareness of the Fed’s role and responsibility. Only a few years earlier, at a conference celebrating Friedman’s ninetieth birthday, Bernanke famously paid homage to the pair: “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”1 This connection between the Fed and economic depression—burned into public consciousness by Friedman and Schwartz’s pathbreaking book—would be the essential starting point for navigating the crisis.

When John Kenneth Galbraith rose to deliver the presidential address of the American Economic Association in 1972, the angular Harvard professor and supremely self-confident adviser to presidents was arguably the most famous living economist in America. From The Affluent Society in 1958 to The New Industrial State in 1967, his critical accounts of capitalism's tendencies to underfund social goods and concentrate corporate control had been fixtures on the best-seller lists. Galbraith's thirteen-part BBC television series on the workings of capitalism in 1977 was to help goad the production of Milton Friedman's counterassertion of 1980, the PBS series Free to Choose, an iconic statement of the new market ideology.

As Milton Friedman famously put it, ‘Only a crisis – actual 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 the politically inevitable.’51

Inflation’, wrote Milton Friedman in a famous definition, ‘is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.’ What