Friedman on Ending Government Programs
By David Henderson
I’m working my way through chapters of both Milton Friedman‘s 1962 book, Capitalism and Freedom and Milton and Rose Friedman’s 1980 book, Free to Choose, to prepare for a colloquium next month at Capitaf (the Friedman’s summer home in Vermont that they bought with royalties from Capitalism and Freedom.) I’ll be a discussion leader with students from the University of Arkansas.
At the end of Capitalism and Freedom, Chapter II, “The Role of Government in a Free Society,” Milton writes:
Yet it is also true that such a government would have clearly limited functions and would refrain from a host of activities that are now undertaken by federal and state governments in the United States, and their counterparts in other Western countries. Succeeding chapters will deal in some detail with some of these activities, and a few have been discussed above, but it may help to give a sense of proportion about the role that a liberal would assign government simply to list, in closing this chapter, some activities currently undertaken by government in the U.S., that cannot, so far as I can see, validly be justified in terms of the principles outlined above:
1. Parity price support programs for agriculture.
2. Tariffs on imports or restrictions on exports, such as current oil import quotas, sugar quotas, etc.
3. Governmental control of output, such as through the farm program, or through prorationing of oil as is done by the Texas Railroad Commission.
4. Rent control, such as is still practiced in New York, or more general price and wage controls such as were imposed during and just after World War II.
5. Legal minimum wage rates, or legal maximum prices, such as the legal maximum of zero on the rate of interest that can be paid on demand deposits by commercial banks, or the legally fixed maximum rates that can be paid on savings and time deposits.
6. Detailed regulation of industries, such as the regulation of transportation by the Interstate Commerce Commission. This had some justification on technical monopoly grounds when initially introduced for railroads; it has none now for any means of transport. Another example is detailed regulation of banking.
7. A similar example, but one which deserves special mention because of its implicit censorship and violation of free speech, is the control of radio and television by the Federal Communications Commission.
8. Present social security programs, especially the old-age and retirement programs compelling people in effect (a) to spend a specified fraction of their income on the purchase of retirement annuity, (b) to buy the annuity from a publicly operated enterprise.
9. Licensure provisions in various cities and states which restrict particular enterprises or occupations or professions to people who have a license, where the license is more than a receipt for a tax which anyone who wishes to enter the activity may pay.
10. So-called “public-housing” and the host of other subsidy programs directed at fostering residential construction such as F.H.A. and V.A. guarantee of mortgage, and the like.
11. Conscription to man the military services in peacetime. The appropriate free market arrangement is volunteer military forces; which is to say, hiring men to serve. There is no justification for not paying whatever price is necessary to attract the required number of men. Present arrangements are inequitable and arbitrary, seriously interfere with the freedom of young men to shape their lives, and probably are even more costly than the market alternative. (Universal military training to provide a reserve for war time is a different problem and may be justified on liberal grounds.)
12. National parks, as noted above.
13. The legal prohibition on the carrying of mail for profit.
14. Publicly owned and operated toll roads, as noted above. This list is far from comprehensive.
In one of the questions I used to guide the students in reading this chapter, I wrote:
At the end he lists 14 government activities that should be ended. Go through the list and ask yourself where we are on each, compared to 1962 when he wrote. Note particularly #11.
It’s interesting to see the progress we’ve made on a few, especially on #11. Also, his reasoning earlier in the chapter on why gasoline taxes are preferable to tolls assumed toll booths slowing down traffic and he didn’t foresee what fellow Nobel Prize winner William S. Vickrey did anticipate: modern technology to obviate the need for toll booths.