Milton Friedman on Welfare and Self-Interest
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Milton Friedman on Welfare and Self-Interest

The thing about the welfare state is that
when you start on this route everything goes fine. To begin with, you are imposing taxes
on 90 percent of the people–small taxes–and are able to give considerable benefits to
10 percent of the people. But the problem is that as time goes on, more and more people come in and either express a desire or are given a chance at a part of the proceeds. So you gradually get to the position where 50 percent of the people are providing benefits to the other 50 percent of the people. And then you ultimately get to the position where 100 percent of the people are paying taxes in order to provide benefits to 100 percent of the people. And you are then in that situation which Frédéric Bastiat described so well 150 years ago when he said that government is that fiction whereby everybody believes he can live at the expense of everybody else. the laws of the market work as well in the political arena as they work in the economic arena. We have all of us had a tendency to look at economic organization and political organization in very different ways. When we come to the economy as economists, political scientists or what-not, we say well it has laws of its own. We ask if you change this what will happen? And we say of course we will treat people in the market as pursuing their own interests– the worker will try to get the highest wages, the consumer will try to get the lowest price, the employer will try to get the best deal, the producer will try to make the most profit. But then when we come to the political arena, we tend to look at it a little differently. We tend to say, well now, let’s figure out what would be the right thing to do from the social point of view, let’s persuade our fellows to vote for it, and once we’ve voted for it, we’ll have the results we want. But surely we have to look at it from a different point of view. We have to say that people who are in the political arena are also people; they are also trying to do what’s best for themselves. The politicians are in business; they are trying to maximize the number of votes they get maybe not the number of votes, but they are trying to act in such a way as to get enough votes to get elected. The bureaucrats–I don’t mean that in any invidious way; I’ll become more invidious about them later but at the moment I don’t want to start that way–you or I as a bureaucrat, if we’re in that position, are going to pursue our own interest. In saying that we pursue our own interest, they don’t have to be narrow interests. The great martyrs in the world have pursued their own interest as they have seen them, but everybody is going to pursue his own interest. As a great friend of mine, an economist at UCLA, Armen Alchian, always says: “There is one thing you can depend on everybody else to do; you can absolutely depend on him. You can always depend on him to put his interest ahead of yours.”

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5 thoughts on “Milton Friedman on Welfare and Self-Interest

  1. People almost always put their own interests first but not always. It is not that dependable. Regardless. Friedman is still da bomb! 🙂

  2. Public Choice Theory.

    It's always surprised me how people believe that the government is somehow different, and that the things they do are somehow 'above' the weaknesses of mankind.

    'There's a problem in the world – things are as I think they should be. Let's get the government to fix it'. So silly.

  3. If corporations main goal is to maximize profit then there's no reason for them to obey environmental regulations and instead would just dump their toxic waste into the water and other areas. Oh, wait they already do that, not to mention all the time's employees of companies have gotten cancer. Doesn't even mention how the US even began, legit a country thats founded on the bodies of native Americans and how the US government could not stand without congress being able to levy taxes.

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