Milton Friedman on the Responsibility to the Poor
Classic Milton Friedman in 1978 at Stanford University.
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Professor Mark J. Perry's Blog for Economics and Finance
Sunday, April 11, 2010
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- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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42 Comments:
It is nice to listen to MF's utopian visions. He might have spent just a few too many years in an ivory tower somewhere, but nice reasoning.
Not sure if MF every ran a small manufacturing company, or grocery store, or ever drove a big-rig for five years. My guess is not.
MF also called for a progressive consumption tax to finance wartime expenditures. We are in the middle of a $10 trillion Global War on Terror, as evidenced by Obama's deepening commitments to the nine-year saga in Iraqistan.
I call on my fellow Milton Friedmanites to demand the wartime progressive consumption tax.
There is only one response to the mountain of gibberish that "Benjamin" has posted on this site - and this is it.
Well said, Milton!!!!! So true, and we are, as a country, so blind to the evils Government has foisted on us. I would vote on legislation directly, I wish we were all congress and not be pawns of our "elected officials." If normal, everyday people had to figure out how to pay for Government to function as it does today, there would be drastic policy changes. For instance, I think the tax system would change to an annual fee without regard to income or expense of the individual. I say this because everyone uses the same school regardless of income, same firemen, same police, same pipes, same electric lines, etc. We all use these things regardless of whether one is a surgeon, one a lawyer, a landscaper, fireman, bead seller, artist, singer, student. And that's all government should do: Provide for our basic needs and nothing else. Everything else Government has done has ended in disaster - minimum wage, income tax, wars, poverty, housing bubbles and busts, obesity and factory food, etc.
Did Friedman really think that "bad government schools" were the culprit? Did he give some thought to what makes a good school good and a bad school bad?
Also, conspicuously absent was any mention of the effect of unskilled immigration on the unemployment rates of native unskilled workers.
>"Not sure if MF every ran a small manufacturing company, or grocery store, or ever drove a big-rig for five years. My guess is not."
You may want to view that clip again, or view it for the first time if you haven't done so already. You seem to have missed a point or two.
One needn't have done those things to understand them, or be qualified to discuss them.
As Dr. Friedman points out one needn't be poor to understand poverty, any more than a doctor needs to be a victim of cancer to treat cancer.
Anon @ 4:17
THat's it! That says it all. Nothing more is needed to sum up Benji's comments.
jd051572, be careful what you wish for. Remember that true democracy is two wolves and a sheep voting on what's for dinner.
>""If normal, everyday people had to figure out how to pay for Government to function as it does today..."
I don't think most people WANT government to function as it does today.
I agree with almost all the things you blame government for, but I'm having trouble blaming government for obesity.
Thanks for posting this Mr. Perry.
@Benjamin
"MF also called for a progressive consumption tax to finance wartime expenditures."
Enough of this non-sense already. He was a clerk at the Treasury during the war. A clerk!!
"Not sure if MF every ran a small manufacturing company, or grocery store, or ever drove a big-rig for five years. My guess is not."
Your guess, like everything else you said, is wrong.
"We are in the middle of a $10 trillion Global War on Terror..."
We can't be at war. A war would be newsworthy, wouldn't it? Well, I watch the news every day and I have never heard it mentioned since about Nov. '08. This was also the last time I heard the name Cindy Sheehan. So, I figure the war must have ended sometime around then.
I think that the major point that MF missed is that the world is not full of market imperfections caused by the government. instead I believe it is the case that the world is full of persistent market imperfections due to charastricts of the human nature.
Implying that poverty is not only due to governmental actions but mainly due to human biases and information asymetries.
It's amazing that 32 years after this video was taken the world is still full of people who think government pulls people out of poverty. Every socialized nation is a failure. The war on poverty is a failure.
The poor's standard of living is higher than ever in America (cell phones, cable tv, affordable food, refrigerators, etc) thanks to capitalism.
But still they keep the horse blinders on. Still they blame capitalism.
I wish we could separate America into two economic systems. Those who want massive government ownership and control, and those who want a Milton Friedman type economy.
I wonder which group would have lower poverty?
This makes me want to stand up and cheer! Funny how many kids, two generations later, still have that same know-it-all smirk on their face as they fight to march us all off to our doom.
Where is the Milton Friedman of our times?
The sad thing is that Friedman, Hayek, Mises, Rothbard, Rand and others are all dead. And there is no-one alive today that has replaced them.
So what exactly is our exit strategy for the war on poverty?
Unfortunately, this is the usual slight-of-hand we get from economists/commentators on the right, on this question anyway. MF is asked whether society has a responsibility to the poor. His answer should have been an honest "No". Period. He's not asked about the minimum wage, or governmnet-run schools, or the welfare state; responsibility to the poor (or to the sick) either exists or doesn't exist.
this is in response to Marko who asks: "Where is the Milton Friedman of our times?"
His name is Alan Greenspan. He was a big fan of Friedman and followed his theories to the letter.
'nuff said.
Actually, Q, you may need to listen again. Friedman answered the question far more directly than any politician or pundit today would. He said directly that government has no responsibility to the poor. Only people have a responsibility to help others. It was at that point he went on to give examples of how government intervention is the root cause of many of the problems people want it to solve.
Q, I think you confused the question by asking what responsibility 'society' has. That muddles the distinction between government and individuals. The question was what responsibility government has, and MF was clear the answer is "none". Individuals may feel a responsibility to the poor and help them, as may social institutions such as corporations, charitable institutions and churches, but i think by saying 'society' you are missing this important distinction.
Anon 8:23 - one of the things I am lamenting about MF was his crystal clarity and courage to say what is true and right. When Greenspan speaks, he is clear as mud and always tried, as Fed Chairman anyway, to be all things to all people more or less. Whatever his actual views, he is not what I had in mind, but thanks for trying. I suspect you knew that :)
MF: "First of all, the government doesn't have any responbility. People have responsibility. This building doesn't have responsibility. You and I have responsibility. People have responsibility. Second. The question is how can we as people exercise our responsibility toward our fellow man most effectively. That's the problem."
I did listen again to the exchange, carefully. And I think the answer MF gives is more thoughtful than I first thought (as is the question more thoughtful than I first thought) though it all remains incomplete. I don't know why MF says "this building doesn't have respinsibility", but he seems to cave in to notion that "we" do have a responsibilty, but a responsibility that cannot (he suggests, I believe) be addressed through governmnet policy, any governmnet policy (that works to hinder or regulate market freedom).
Should it matter to the govt in a MF world if unemployment in America settles in at 10%, black unemployment is at 20%, and there are 50 million Americans without affordable healthcare...? If a new economic model proved to be more efficient at addressing poverty etc, would we be obliged to adopt it because we have a responsibility toward our fellow man?
Anonymous said: "I wish we could separate America into two economic systems. Those who want massive government ownership and control, and those who want a Milton Friedman type economy."
We have already seen that experiment. Look at wealth, poverty and the environment in West Germany vs. East Germany. Somehow today's "progressives" want to forget that lesson
"this is in response to Marko who asks: "Where is the Milton Friedman of our times?"
His name is Alan Greenspan. He was a big fan of Friedman and followed his theories to the letter.
'nuff said.
4/12/2010 8:23 AM"
This statement is foolish. MF was a huge proponent of a consistent monetary policy and the minimization of the role of the Fed. Greenspan was a proponent of easy money and a dominant role of the Fed. Greenspan taxed the public through inflation, something that MF was vehemently opposed to.
Milton Firedman may have been a "clerk" during the Big One, but he published a paper in the American Economic Review in 1943, in which he advocated a progressive consumption tax to finance war-time mobilization.
We are now permanently mobilized in our war on terror--indeed, we are occupying two nations as we speak, and may attack a third (Iran). Some people, usually connnected to our foreign policy-military apparatus, say this GWOT will take 80 years, if done right.
Okay, let's finance it right.
Benji The Self-Proclaimed True Economic Conservative,
How about instead of raising taxes, we get rid of the mountain of new spending your boyfriend Barack is piling on?
I am fine with cutting all federal expenditures, and balancing the budget. Indeed, my favorite method for balancing the federal budget is to return to each state to rough equal of federal revenues received from that state.
Good luck getting that frugal. conservative idea past the all the pink skin showing in the Red Bloc--those states that get federal lard back far in excess of what they send, including Alaska, Wyoming, Alabama, Montana etc.
The Red Bloc is one reason the R-Party can never balance the budget. The federal rural subsidy is the keystone of our Rec Bloc states. Without more and more federal lard, rural America would blow away.
@Benny The Man
"Milton Firedman may have been a "clerk" during the Big One, but he published a paper in the American Economic Review in 1943, in which he advocated a progressive consumption tax to finance war-time mobilization."
I guess there is something magical about the year 1943. You see, if you published a paper which 'advocated' a progressive consumption tax in that specific year, somehow it nullifies everything you say or publish for the next 63 years!!
Actually, there's a better explanation. You don't understand the difference between positive and normative economics.
Benji The Selective Milton Friedman Authority:
"Indeed, my favorite method for balancing the federal budget is to return to each state to rough equal of federal revenues received from that state."
Really, that would do it?? Do you have a source for that assertion? And how do you deal with military bases that are mainly in the south, where a disproportionate share of the fighting men come from? How about the elderly who retire to southern climates and receive their SS and Medicare there?
"The Red Bloc is one reason the R-Party can never balance the budget. The federal rural subsidy is the keystone of our Rec Bloc states. Without more and more federal lard, rural America would blow away."
The Red Bloc did balance the budget during the Gingrich Congress of the late 90's. Seriously, the way you blame the right for the federal behemoth, at a time when the clown you voted for is burying us in debt, it's just mindless.
What do you include in the federal rural subsidy? How does it stand up to your boyfriend's massive healthcare takeover, or his trillion dollar stimulus rathole?
Anon and Paul:
Friends: MF's support of the progressive consumption tax makes complete sense within his view. He never liked taxing productive behavior. Neither do I. Indeed, consmoption taxes are preferred to income taxes by nearly all classic economists.
Yes, I like the idea of each state getting back roughly what it kicks into the federal kitty.
The South and Southwest have turned our Department of Defense into a gravy train and jobs bill. If you read your histories, you will learn that LBJ showed the way, as a Texas C-man and Senator.
The only way to pare down the federal fat-saurus is with a meat axe. Whack, whack, whack!
Tell the Pentagon they have to defend our shores with "only" $400 billion, and see what they propose. Eliminate Dep't of Education, and Commerce. Wipe out HUD. And, as Ron Paul proposes,. shut down most, if not all, overseas military bases, relics of a bygone and expensive empire.
I nearly forgot: Totally eliminate the USDA. Raze it to the ground, and try to kill the roots, so it will never come back.
And then return to each state roughly equal to what they kick in.
Q, that is a thoughtful question. I believe that the purpose of government is to maintain a free market (liberty). I don't believe that a more free market would end up with higher unemployment. If unemployment stayed that high even with a market that was more free than it is now, we would need to look to see if anything the government was doing was suppressing the employment level, and remove that impediment. I don't think we should be looking at what the market is doing 'wrong' and trying to 'fix' it. That is what government is doing now, and they keep piling error on error and making it worse, in my opinion.
Benji,
"He never liked taxing productive behavior. Neither do I. Indeed, consmoption taxes are preferred to income taxes by nearly all classic economists."
And yet you advocated raising taxes on the rich right here on this blog not too long ago.
You didn't answer any of my questions. Your boyfriend is burying us, and your response is to attack the right. Again, that's just mindless.
This comment has been removed by the author.
We have already seen that experiment. Look at wealth, poverty and the environment in West Germany vs. East Germany. Somehow today's "progressives" want to forget that lesson
I don't think so. Todays Progressives would LOVE to have a government like West Germany.
America's conservatives would fight them to the death.
I believe that the purpose of government is to maintain a free market (liberty).
And to correct market failures.
Let's not get too carried away with liberty. The more liberty one person enjoys, the more his neighbor needs to be protected from it.
Since we all deserve equal protection for life and liberty we all must endure equal responsibilities and limitations as well.
>"Where is the Milton Friedman of our times?"
For similar economic thought try Thomas Sowell. Also give Ron Paul a listen.
Alan Greenspan began as a disciple of Ayn Rand, and over time turned 180% into the big government cheerleader we see today. A fascinating development. I could better understand the opposite transformation.
It would appear that his vision clouded instead of cleared as the years went by.
>"Indeed, my favorite method for balancing the federal budget is to return to each state to rough equal of federal revenues received from that state."
Better yet, let's just leave that revenue in the individual states to start with. No reason to launder it through the US Treasury.
>"Eliminate Dep't of Education, and Commerce. Wipe out HUD. And, as Ron Paul proposes,. shut down most, if not all, overseas military bases, relics of a bygone and expensive empire.
I nearly forgot: Totally eliminate the USDA. Raze it to the ground, and try to kill the roots, so it will never come back."
Benjamin!! What's happened to you? These are all great ideas.
"Also, conspicuously absent was any mention of the effect of unskilled immigration on the unemployment rates of native unskilled workers"...
Ahhh, did you miss the part about the federal government mandated minimum wage David Pinsen?
"THat's it! That says it all. Nothing more is needed to sum up Benji's comments"...
Ditto!
Sadly Simon says: "I think that the major point that MF missed is that the world is not full of market imperfections caused by the government. instead I believe it is the case that the world is full of persistent market imperfections due to charastricts of the human nature"...
Leave it a socialist to the miss the point of the 'free' market...
In the free market the supposed imperfections by one person is the potential wealth track for another...
Bob Wright asks the multi-trillion dollar question: "So what exactly is our exit strategy for the war on poverty?"...
Constitutional consistency, none of the this 'living document' crapola?
Q says: "MF is asked whether society has a responsibility to the poor. His answer should have been an honest "No". Period. He's not asked about the minimum wage, or governmnet-run schools, or the welfare state; responsibility to the poor (or to the sick) either exists or doesn't exist"...
Apparently YOU Q didn't understand a word Dr. Friedman said...
BTW Q how many 'poor people' have you brought into your domicile, fed out of your pantry, and put your clothes on their backs?
how many 'poor people' have you brought into your domicile, fed out of your pantry, and put your clothes on their backs?
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Two.
Constitutional consistency,
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How is that supposed to work if the Constitution is fossilized and everything around it since then is changing.
Sounds like reactionary yearning for "the good ole days".
In the free market the supposed imperfections by one person is the potential wealth track for another...
===============================
Makes it sound like you think that in a hands off deal one person wins and one loses. One has more knowledge, capital, or ambition than the other.
In s true free market deal, both parties come out ahead. That does not preclude the idea that you could not have a brokered, or mediated deal in which both parties still come out ahead.
Naturally the broker is going to take a commission, so you could argue that the transaction is not as efficient. However that ignores the value added by virtue of the fact the transaction would not have taken place otherwise.
The constitution calls it promoting the general welfare.
The poor's standard of living is higher than ever in America (cell phones, cable tv, affordable food, refrigerators, etc) thanks to capitalism.
=================================
Thanks to capitalism AND the government. If we had pure capitalism and pure free markets the poor would be the Dickensian poor.
You can't assume that all this wealth enjoyed by the poor is due only to capitalism since capitalism and govenment have existed simultaneously.
Replying to Anonymous said:
"I wish we could separate America into two economic systems. Those who want massive government ownership and control, and those who want a Milton Friedman type economy."
The reality is we DO have two economic systems; one that hands out entitlements to groups of people and one that taxes the producers to pay for those entitlements. The ones receiving the entitlements remain "slaves" to the government, with progressives telling them they are "victims" of big oil, big banks, big insurance, racism, sexism, whatever! They give up their pride and accountability for the hand-outs and keep the progressives in power. This balance is now at a tipping point, the producers can no longer support the takers.
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