The Controversial Milton Friedman: «I Don't Believe in Democracy»

In this video from the grand opening of the Cato Institutes’s headquarters in Washington, D.C. in 1993, Milton Friedman gives a talk about popular political aphorisms, one of his favorites being the one he helped popularize in the title of his 1975 book, “There’s no such thing as a free lunch.” Milton Friedman, a recipient of the 1976 Nobel Prize for Economic Science, was one of the most recognizable and influential proponents of liberty and markets in the 20th century, and the leader of the Chicago School of economics. "Despite the current rhetoric, our real problems are not economic. I am inclined to say that our real problems are not economic despite the best efforts of the government to make them so. I want to cite one figure. In 1946 government assumed responsibility for producing full employment with the Full Employment Act. In the years since then, unemployment has averaged 5.7 percent. In the years from 1900 to 1929 when government made no pretense of being responsible for employment, unemployment averaged 4.6 percent. So, our unemployment 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 values, the crisis in medical care, teenage pregnancies. 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 market works and the government market doesn't. It's far harder to understand why supposedly intelligent, well-intentioned people have produced these results. One reason, as we all know, that is certainly part of the answer is the power of special 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 individuals 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 prospects for failure, and it beings to fail, you have a much better alternative. You can say that your project or program should really have been undertaken on a bigger 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 taxpayer. 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 government venture fails, it's expanded."