There's No Such Thing as a Free Lunch

By Milton Friedman | Go to book overview

Chapter Ten
Government vs. the People

This chapter and, to a considerable measure, also the two that follow deal with the difference between the intentions of disinterested persons who support specific government interventions and the outcome of these interventions. The range of cases in which noble intentions produce ignoble results gives reason to believe that this outcome is not accidental.

Why is it that well-intentioned reformers so often end up as front men for special interests they would never knowingly represent? The underlying reason is the difference between the way the market operates and the way a political mechanism operates. In a market, I can get command over your money only if you agree. You are free to buy or to refuse to buy what I have to sell. It is therefore in my interest to try to figure out what you are willing to pay for and make it available to you. Of course, if I can, it is also in my interest to prevent other people from competing with me in providing whatever it is that I have to sell. But unless I can get the government to help me, it is very difficult for me to succeed. I may for a time get some other producers to join an agreement to fix at a high level the prices we charge, but the more successful we are, the greater the incentive for participants in the agreement to "chisel," or for outsiders to go into the business. In short, the market makes it in the interest of other people to serve you. You are protected from being overcharged not only by your own efforts but also by the efforts of other customers whose threat, implicit or explicit, to divert their custom induces sellers to keep prices down. You are protected even more effectively by the efforts of other sellers, who have a real interest in letting you know if you are being overcharged. In highly simplified form, this is the essence of Adam Smith's famous passage: although "every individual . . . intends only his own gain, . . . he is in this, as in many other cases, led by an invisible

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