Economists From The United States

"I am a libertarian with a small "l" and a Republican with a capital "R". And I am a Republican with a capital "R" on grounds of expediency, not on principle."

"There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income."

"The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did."

"I think it is only because capitalism has proved so enormously more efficient than alternative methods that it has survived at all. (...) I'm not sure capitalism is the right word. There is a sense in which every society is capitalist. The Soviet Union was capitalist, but it was state capitalism. Latin American societies in the past have been capitalist, but it has been oligarchic capitalism. So what we really need to talk about is not capitalism but free market or competitive capitalism which is the system that we would like to have adopted, not just capitalism."

"The Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society."

"I was not in Chile as a guest of the government. I was in Chile as the guest of a private organization… I must say, it's such a wonderful example of a double standard, because I had spent time in Yugoslavia, which was a communist country. I later gave a series of lectures in China. When I came back from communist China, I wrote a letter to the Stanford Daily newspaper in which I said, '"It's curious. I gave exactly the same lectures in China that I gave in Chile. I have had many demonstrations against me for what I said in Chile. Nobody has made any objections to what I said in China. How come?""

"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."

"The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that’s why it’s so essential to preserving individual freedom."

"The unions might be good for the people who are in the unions but it doesn't do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn't do a thing for them."

"There's a smokestack on the back of every government program."

"In the course of General Westmoreland's testimony, he made the statement that he did not want to command an army of mercenaries. I stopped him and said, 'General, would you rather command an army of slaves?' He drew himself up and said, 'I don't like to hear our patriotic draftees referred to as slaves.' I replied, 'I don't like to hear our patriotic volunteers referred to as mercenaries.' But I went on to say, 'If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.' That was the last that we heard from the general about mercenaries."

"Joan Robinson, a leading Keynesian and radical, produced a specimen for me to analyze. I said something like, "This is obviously the writing of a foreigner, so it's difficult for me to analyze. But I would say it is written by someone who had considerable artistic but not much intellectual talent." It turned out to be the handwriting of Lydia Lopokova, the world-famous Russian ballerina whom Keynes had married. That was surely my greatest triumph of the year at Cambridge!"

"I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money and equally of no sharp decline in the stock of money that was not accompanied by a severe depression."

"The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe (monetary) contractions of 1920-1, 1929-33, and 1937-8. No other 20 year period in American history contains as many as three such severe contractions. This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System... and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities... Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank... To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers."

"Thank heaven that we don’t get all of the government that we are made to pay for."

"After the fall of communism, everybody in the world agreed that socialism was a failure. Everybody in the world, more or less, agreed that capitalism was a success. And every capitalist country in the world apparently deduced from that what the West needed was more socialism."

"The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another."

"The most unresolved problem of the day is precisely the problem that concerned the founders of this nation: how to limit the scope and power of government. Tyranny, restrictions on human freedom, come primarily from governmental restrictions that we ourselves have set up."

"So far, twenty-two people have received the Nobel award in economics. Not one of them has been female—so, to judge only from the past, the most important thing to do if you want to be a Nobel laureate is to be male. I hasten to add that the absence of females is not, I believe, attributable to male chauvinist bias on the part of the Swedish Nobel Committee. I believe that the economics profession as a whole would have been nearly unanimous that, during the period in question, only one female candidate met the relevant standards—the English economist Joan Robinson, who has since died. The failure of the Nobel Committee to award her a prize may well have reflected bias but not sex bias. The economists here will understand what I am talking about. … A second requirement is to be a U.S. citizen. Twelve of the twenty-two recipients of the Nobel Prize were from the United States, four from the United Kingdom, two from Sweden, and one each from four other countries. … Of the twelve Americans who have won the Nobel Prize in economics, nine either studied or taught at the University of Chicago. So the next lesson is to go to the University of Chicago."

"Spending by government currently amounts to about 45 percent of national income. By that test, government owns 45 percent of the means of production that produce the national income. The U.S. is now 45 percent socialist."

"Every friend of freedom... must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence."

"The broader and more influential organisations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend."

"With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves."

"Will we read next that government control of prices has created a shortage of sand in the Sahara?"

"Nothing is so permanent as a temporary government program."

"Governments never learn. Only people learn."

"There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves."

"The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both."

"Society doesn't have values. People have values."

"Whether it is in the slums of New Delhi or in the affluence of Las Vegas, it simply isn't fair that there should be any losers. Life is unfair — there is nothing fair about one man being born blind and another man being born with sight. There is nothing fair about one man being born of a wealthy parent and one of an impecunious parent. There is nothing fair about Muhammad Ali having been born with a skill that enables him to make millions of dollars one night. There is nothing fair about Marlene Dietrich having great legs that we all want to watch. There is nothing fair about any of that. But on the other hand, don't you think a lot of people who like to look at Marlene Dietrich's legs benefited from nature's unfairness in producing a Marlene Dietrich. What kind of a world would it be if everybody was an absolute identical duplicate of anybody else. You might as well destroy the whole world and just keep one specimen left for a museum. In the same way, it's unfair that Muhammad Ali should be a great fighter and should be able to earn millions. But would it not be even more unfair to the people who like to watch him if you said that in the pursuit of some abstract idea of equality we're not going to let Muhammad Ali get more for one nights fight than the lowest man on the totem pole can get for a days unskilled work on the docks. You can do that but the result of that would be to deny people the opportunity to watch Muhammad Ali. I doubt very much he would be willing to subject himself to the kind of fights he's gone through if he were to get the pay of an unskilled docker."

"[I]t is very hard to achieve good objectives through bad means. And the means we have been using are bad in two very different respects. In the first place, all of these programs involve some people spending other people’s money for objectives that are determined by still a third group of people. Nobody spends somebody else’s money as carefully as he spends his own. Nobody has the same dedication to achieving somebody else’s objectives that he displays when he pursues his own. Beyond this, the [welfare] programs have an insidious effect on the moral fiber of both the people who administer the programs and the people who are supposedly benefiting from it. For the people who administer it, it instills in them a feeling of almost Godlike power. For the people who are supposedly benefiting it instills a feeling of childlike dependence. Their capacity for personal decision making atrophies. The result is that the programs involved are misuse of money, they do not achieve the objectives which it was their intention to achieve. But far more important than this, they tend to rot away the very fabric that holds a decent society together."

"The strongest argument for free enterprise is that it prevents anybody from having too much power. Whether that person is a government official, a trade union official, or a business executive. If forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, are willing to buy, or else they have to go into a different business."

"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 history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it's 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 the free-enterprise system."

"They think that the cure to big government is to have bigger government... the only effective cure is to reduce the scope of government - get government out of the business."

"There's a sense in which all taxes are antagonistic to free enterprise … and yet we need taxes. We have to recognize that we must not hope for a Utopia that is unattainable. I would like to see a great deal less government activity than we have now, but I do not believe that we can have a situation in which we don't need government at all. We do need to provide for certain essential government functions — the national defense function, the police function, preserving law and order, maintaining a judiciary. So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."

"[A] society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom."

"You can only aim at equality by giving some people the right to take things from others. And what ultimately happens when you aim for equality is that A and B decide what C should do for D, except that they take a bit of commission off on the way.”"

"In my opinion, a society that aims for equality before liberty will end up with neither equality nor liberty. A society that aims first for liberty will not end up with equality, but it will end up with a closer approach to equality than any other kind of system that has ever been developed."

"Keep your eye on one thing and one thing only: how much government is spending, because that is the true tax. Every budget is balanced. There is no such thing as an unbalanced federal budget. You're paying for it. If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing. The thing that you keep your eye on is what government spends. And the real problem is to hold down government spending as a fraction of our income. And if you do that, you can stop worrying about the deficit."

"Let me take the example which is today the greatest sacred cow of them all—Social Security. Was there an overwhelming demand for Social Security in the 1930s when the law was adopted? Far from it. There was no public demand for it, it had to be sold. How was it sold? By the slickest devices of Madison Avenue, by imaginative packaging and deceptive labeling. Social Security was sold as an insurance scheme. It is not an insurance scheme. There is very little relationship to the amount of money any one individual pays and the amount of money he is entitled to receive. Social Security is a combination of a bad tax system with a bad way of distributing welfare… If you look at the tax system, who could defend a wage tax, a tax on wages up to a maximum, a tax on work, a tax which discourages employers from hiring people, and discourages people from going to work; a tax which is borne by the lowest wage group, workers? It is a regressive tax. You could never in a million Sundays… have gotten such a tax passed as a tax."

"The reality is that if you look at every program that the government has adopted in the direction of extending its scope, it took an enormous propaganda campaign by special propaganda groups to get those measures passed. There was no underlining public demand for those measures. On the contrary, the demand had to be created, it had to be developed, it had to be produced. And it was created, it was developed, it was produced, by people… who sincerely wanted to see an expansion in the scope of government."

"The great enemy of human freedom is the Government. By taking money out of our pockets and spending it, it destroys our freedom."

"It's nice to elect the right people, but that isn't the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things."

"That is a widespread myth, that it is possible to spend money with nobody paying for it. You have everybody screaming that we ought to have new, bigger, more generous government programs. Where are we going to raise the money? Tax business. But business corporations can’t pay any taxes. A corporate executive may sign the check, but where does he get the money? From his stockholders or from his customers or from his employees. Unlike the federal government, he doesn’t have a printing press in his basement. So the only way he can pay money to the government is imposing a burden on somebody. Government cannot spend money at nobody’s expense."

"This leads to my next myth—the myth that government can spend money at nobody’s expense. What was really involved in that last story was that somehow the local people do not pay out the money coming down from Washington somebody else does. Of course, the truth is that the money makes a round trip between Florida and Washington, and there is a discount taken off for cash as it passes through Washington. Some of you may remember that wonderful description of government by the French economist, Frederic Bastiat, who said that government is that fiction whereby everybody believes that he can live at the expense of everybody else."

"The elementary truth is that the Great Depression was produced by government mismanagement. It was not produced by the failure of private enterprise, it was produced by the failure of government to perform a function which had been assigned to it."

"In this day and age, we need to revise the old saying to read, "Hell hath no fury like a bureaucrat scorned.""

"One of the great mistakes is to judge policies and programs by their intentions rather than their results."

"I say thank God for government waste. If government is doing bad things, it's only the waste that prevents the harm from being greater."

"I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing and it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere."