Freeman

ARTICLE

The Natural History of Governmental Intervention

AUGUST 01, 1972 by MILTON FRIEDMAN

Mary Peterson persuasively illustrates for seven selected agencies what might be called the natural history of governmental intervention into economic affairs: A real or fancied evil leads to demands to "do something about it"; a political coalition forms consisting of sincere high-minded reformers and equally sincere interested parties; the incompatible objectives of the members of the coalition (e.g., low prices to consumers and high prices to producers) are glossed over by fine rhetoric about "the public interest," "fair competition," and the like; the coalition succeeds in getting Congress (or a state legislature) to pass a law; the preamble to the law entombs the rhetoric and the body of the law grants power to governmental officials to "do something"; the high-minded reformers experience a glow of triumph and turn their attention to new causes; the interested parties go to work to make sure that the power is used for their benefit and generally succeed; success breeds its problems, requiring the scope of intervention to broaden; bureaucracy takes its toll so that even the initial special interests no longer benefit; ultimately, the effects are precisely the opposite of the noble objectives of the high-minded reformers without achieving the more mundane objectives of the special interests; yet the activity is so firmly established and so many vested interests are connected with it that repeal of the initial legislation is nearly inconceivable; instead, new governmental legislation is called for to cope with the problems produced by the old; and a new cycle begins.

From Milton Friedman’s Introduction to The Regulated Consumer by Mary Bennett Peterson (Los Angeles: Nash Publishing, 1971).

ASSOCIATED ISSUE

August 1972

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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