I was just watching an interview with Milton Friedman and he stated that,

There is a smoke stack on the back of every government program. That is to say that every government programs impose a cost on third parties where the third parties are not receiving compensation.

This came out of the context of discussing when government may need to intervene in the market. Milton Friedman and some other classical liberals (libertarians) think that the only case for government is when it is not feasible for market arrangements to make individuals pay another individual when harm is imposed on the that second individual. Requiring contractual parties to pay third parties, outside of the contractual agreement, who are harmed by the agreement, compensation for that harm.

After Milton Friedman made this point he brought up the concept of a smoke stack on the backs of every government program. That while it is important to consider these situations where government may intervene, it is also important be realistic about the ’smoke stacks’ that will be turned on as a result of utilizing the government.

He also mentioned Terry Anderson and PERC who has shown that often private arrangements are better for the environment than ‘command and control’ government regulation.

Watch the interview yourself.