There's No Such Thing as a Free Lunch

By Milton Friedman | Go to book overview

Chapter Nine
Social Security and Welfare

The two programs discussed in the columns of this chapter are part of a much more extensive set of programs enacted in the name of alleviating poverty. These programs include, in addition, farm price supports, public housing, urban renewal, model city programs, the assorted projects in President Johnson's mislabeled "war on poverty," and much else besides, some of which are discussed in later chapters.

Of all these programs, the welfare program is the only one that clearly transfers money to people who are in lower income classes than those who pay the taxes to finance the program--and perhaps for that reason is the program that is most widely regarded as a "mess" and failure.1 As the columns on Social Security indicate, that program very likely does precisely the opposite--that is, transfers income from lower to higher income classes. For many other so-called poverty programs (like farm price supports and urban renewal), "very likely" can be replaced by "certainly." I hasten to add that in addition to transferring income from some persons to others, all these programs involve much pure waste, so that the "benefit" to the recipient, whoever that may be, is far less than the cost to the taxpayer.

How misleading is the poverty label is sharply etched by the calculation that total governmental expenditures (federal, state, and local) on programs justified on grounds of alleviating poverty exceeded $75 billion in 1969-1970. If this money were really going to the "poor," they would be among the well-to-do! But of course most of it is going to people who by no stretch of the imagination can be regarded as

____________________
1
See M. Friedman and Wilbur Cohen, Social Security: Universal or Selective, American Enterprise Institute, Washington, 1972, pp. 48-49.

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