Milton Friedman, my favourite libertarian, advocated for a negative income tax as the best form of social safety net. It means that the minimum amount of money any person gets is not zero!
He also liked to point out that a lot of other government programs were in fact regressive: paid for in taxes by working class people and providing the benefit to middle class and up. A classic example of that is funding for higher education. It’s pretty darn regressive to pay for higher education with taxes collected from working class people whose children don’t even attend higher education!
He has a lot of other arguments that make a ton of sense. He is against any and all forms of subsidies for large businesses and he is against laws which create and protect monopolies and oligopolies.
The one thing I’m not clear on is how to organize society to protect against future government interference and especially corruption by special interests.
You need solid anticorruption laws the same way you need solid antitrust laws and they need to be liberally enforced. The problem is that neither have been since the 70’s. Regulatory capture by big business is a massive problem, and I am not sure if it is possible to 100% defend against.
I self identify libertarian but lean left. I’d argue that while things like funding higher education may currently be regressive, if free education extended from the current cap of 12th grade to encompass at least an associates level degree you would have a lot more lower and working class taking advantage of it and making it less regressive. With the country having jettisoned it’s manufacturing and blue collar industry, I would further argue this is necessary for the country to compete on the international stage.
Germany has government funded education throughout. It’s still regressive! They stream people into either working class tracks (hauptschule and realschule) or academic (gymnasium). In effect, this means working class students have far less opportunity to go to university in Germany than they do in the US, despite the latter’s problems with affordability.
Friedman would go 100% the other way and abolish public schools entirely, along with abolishing the minimum wage, subsidies for universities, subsidies for business, and tariffs. His argument is that the minimum wage puts a floor on the productivity of a worker which means many people who could be hired at a lower wage and be trained on the job instead do not get hired at all and have to pay for their own training through school (either directly with tuition or indirectly through taxes).
The current system ends up creating large classes of people who get an education in subject matter that’s totally irrelevant to their career (like someone studying sociology in order to work in HR). Why should we, as taxpayers, be paying for this? Employers should be paying to train their own workers on the job!
There is some merit to that, and free education has the same issues in other countries besides Germany. My planning process was to treat the 2 year associates degree like we do with high school, no performance testing or path tracking. Everyone is entitled to a high school diploma of they want one, and with an associates degree being the new high school diploma it makes sense to include it.
It is what we as a society have determined makes the bare minimum education standard for then learning the rest on the job. The employment sector has moved this bar from high school graduate to associates degree, and the education system should reflect that.
The complete abolishment of public everything and allowing the market to dictate and provide is great in theory, but the same was Marxist communism is. There are always those that will break the system for personal gain.
There are also efficiencies of scale that business in a healthy, non mono/duopolostic environment can’t take advantage of that the government can. This is why I put education and healthcare under the “provide for the common defense and well-being of the people” that it exists for. This is why we the taxpayers should be paying for education in what may be or appear totally irrelevant: it results in a net gain as far as expenditure across the country as a whole and makes companies better able to train workers on the job. It also allows easier job transitions allowing more economic mobility, and also helps maintains balance of power between the worker and the employer.
In a libertarian ideal the worker is not trapped working the job or for the specific employer because that is the only job they are trained for and where their healthcare comes from. It is a contract of mutual gain. It is unreasonable for a worker to start over from scratch to change jobs if an employer is not maintaining market wages. It also allows a worker to more easily become an entrepreneur and open his own company, as this requires a broader education basis to succeed at than the job he does for another.
Strong but limited regulation is need to keep markets free. Regulations preventing pollution of the environment as a common resource, truth in representation of goods and services, prevention of anticompetitive actions and regulatory capture., etc. Without this markets inevitably fall to monopoly and the system switches from mutualism to parasitism.
There is a careful balance to maintain and government overreach is just as easy in the other direction. This is true is any economic and sociological system though. Perfectly free laze fair markets do not exist the same way perfectly egalitarian communism doesn’t exist above the small commune level and for the same reasons. Or perfect democracy where everything is voted on by everyone and everyone is making fully informed and educated decisions. If none of these are possible in the real world, all we can do is take the best parts and attempt to create the best possible real world results.
Friedman actually has replies to many of the issues you’ve raised. He is not convinced that government can do anything efficiently and his argument rests on Darwinian principles: government employees are insulated from the consequences of their failed policies in a particular way that biases them towards towards inaction, inefficiency, and even waste.
For example, he talks about the bias of the FDA towards rejecting new drugs over approving them. If the FDA approves a new drug and it kills a handful of people it makes the front page of every newspaper in the country and becomes a huge scandal that costs the FDA heads their jobs. However, if the FDA rejects a drug that could have saved a million lives over several decades then nobody even knows about it!
So the FDA is extremely biased towards rejecting anything and everything that comes their way. But since companies can sue the FDA if they don’t exactly follow the law when rejecting drugs, the FDA has developed extremely long and detailed and cumbersome documentation processes. The forms and the trials are so extensive and cumbersome they take years and billions of dollars to complete. And the end result is that many drugs never even start the process because the companies have no guarantee of being able to recover their investment!
His alternative to all this is simple: tort law. A robust tort law allows people to sue drug companies for selling harmful drugs. This is actually how things worked before the FDA existed and it led to drugs such as Aspirin that might never have existed in today’s regime!
Anyway, the hardest thing about trying to evaluate Friedman’s arguments is that each one is pretty compelling in isolation but the sum total of all the changes is such a radical departure from what we have now that it’s hard to fathom.
I think I’m coming around to it though. One thing that’s indisputable is that our current governments have totally betrayed us and left everyone polarized, isolated, angry, and utterly lacking trust in societal institutions.
Thank you for taking the time to discuss this with me, I am finding this very enjoyable and educational.
I agree with Friedman in principle, but then I look at Ford and the other car companies with the Pinto and Takara airbags, etc. The cost of paying lawsuits gets factored in and until the cost point breaks over the deaths and injuries are just a cost of doing business. With regulation that actually has teeth and enforcement, just doing the bodies-to-profits calculations becomes an untenable solution and the recalls happen even if they aren’t profitable. I don’t think a private tort system is capable of having the teeth to achieve this in the real world. It is why Libertarianism still has a central government. It will have its inefficiencies, but it’s a right tool for the right job kind of thing.
Same with asbestos, lead, fillers in food, etc. The damages from them are so divorced from the product that many may not know who or what caused it. Lawsuits have a hard time with those kinds of things even if you know exactly which business is the cause. Look at tobacco and leaded gasoline and myriad others where lawsuits failed initially because damage was difficult to prove before the government stepped in. If fossil fuel companies can pay for the science that muddies the water on climate change, what chance does John Doe have doing enough through a lawsuit to stop DuPont from flooding the planet with forever chemicals?
I like where Friedman is coming from, but I hold him at the same level as Marx or any other economic theorist: assuming a spherical cow, at a specific temperature, without friction, and without wind resistance. I like Henry George the same way. That’s why I still claim to be a libertarian (just a left leaning centrist one), because I think Friedman and George are actually the better end result and closer to a workable solution than Marx. Marx was onto something though, and shouldn’t be dismissed outright. I do think we have stuff to learn from all branches of economic theory, and subscribe to a “the truth will be somewhere in the middle” philosophy.
Friedman actually has addressed the Ford Pinto question directly. He makes the very good point that it’s not a matter of principle, it’s a difference of opinion on the cost-benefit analysis. The deaths that resulted from Ford’s decision not to install a $13/car shield to protect the gas tank were tragic and regrettable but the argument that we can’t put a price on human lives does not fly.
We HAVE to put that price on a human life if we’re going to use cost-benefit analysis as a tool to help allocate resources. It doesn’t matter whether it’s a communist government party official, a liberal democratic courtroom, or the CEO of a business. The calculation needs to be done because resources are finite.
Friedman makes the rather dramatic point of asking whether it would be worth it to spend a billion dollars to save a person’s life. No matter what number you might ultimately settle on, there will always be disagreement because there are always alternative ways to spend the same money that might save even more lives. It would definitely not be worth it to spend NASA money to make the world’s safest car if that means a million people starve to death due to that choice of resource allocation.
Friedman is not opposed to central government of course. He mentions it in that video that he believes in the court system. He also believes government is the right call for several other functions which he discusses in other lectures (national defence and of course legislation to protect people’s rights and resolve disputes and other issues that arise).
For what it’s worth, the amount of money Ford lost in the long run, from lawsuits and settlements paid, reputational damage, loss of marketshare, loss of R&D, and loss of consumer confidence was astronomical. Ford learned the hard way that marketing for automobiles is not about convincing a consumer to buy your car once, it’s about convincing them that they made the right decision to buy your car so that they continue buying cars from you for the rest of their life.
In other words, brand loyalty is absolutely everything to car manufacturers and if you abuse that trust you lose bigtime. Now the Ford Pinto will live on forever as an example of corporate shortsightedness and callousness. There are plenty of people who would never buy a Ford again for that mistake.
He’s one of the most famous economists of the 20th century. There’s a ton of YouTube videos of him debating all kinds of people and giving lectures on many different topics from his perspective.
Milton Friedman, my favourite libertarian, advocated for a negative income tax as the best form of social safety net. It means that the minimum amount of money any person gets is not zero!
He also liked to point out that a lot of other government programs were in fact regressive: paid for in taxes by working class people and providing the benefit to middle class and up. A classic example of that is funding for higher education. It’s pretty darn regressive to pay for higher education with taxes collected from working class people whose children don’t even attend higher education!
He has a lot of other arguments that make a ton of sense. He is against any and all forms of subsidies for large businesses and he is against laws which create and protect monopolies and oligopolies.
The one thing I’m not clear on is how to organize society to protect against future government interference and especially corruption by special interests.
You need solid anticorruption laws the same way you need solid antitrust laws and they need to be liberally enforced. The problem is that neither have been since the 70’s. Regulatory capture by big business is a massive problem, and I am not sure if it is possible to 100% defend against.
I self identify libertarian but lean left. I’d argue that while things like funding higher education may currently be regressive, if free education extended from the current cap of 12th grade to encompass at least an associates level degree you would have a lot more lower and working class taking advantage of it and making it less regressive. With the country having jettisoned it’s manufacturing and blue collar industry, I would further argue this is necessary for the country to compete on the international stage.
Germany has government funded education throughout. It’s still regressive! They stream people into either working class tracks (hauptschule and realschule) or academic (gymnasium). In effect, this means working class students have far less opportunity to go to university in Germany than they do in the US, despite the latter’s problems with affordability.
Friedman would go 100% the other way and abolish public schools entirely, along with abolishing the minimum wage, subsidies for universities, subsidies for business, and tariffs. His argument is that the minimum wage puts a floor on the productivity of a worker which means many people who could be hired at a lower wage and be trained on the job instead do not get hired at all and have to pay for their own training through school (either directly with tuition or indirectly through taxes).
The current system ends up creating large classes of people who get an education in subject matter that’s totally irrelevant to their career (like someone studying sociology in order to work in HR). Why should we, as taxpayers, be paying for this? Employers should be paying to train their own workers on the job!
There is some merit to that, and free education has the same issues in other countries besides Germany. My planning process was to treat the 2 year associates degree like we do with high school, no performance testing or path tracking. Everyone is entitled to a high school diploma of they want one, and with an associates degree being the new high school diploma it makes sense to include it.
It is what we as a society have determined makes the bare minimum education standard for then learning the rest on the job. The employment sector has moved this bar from high school graduate to associates degree, and the education system should reflect that.
The complete abolishment of public everything and allowing the market to dictate and provide is great in theory, but the same was Marxist communism is. There are always those that will break the system for personal gain.
There are also efficiencies of scale that business in a healthy, non mono/duopolostic environment can’t take advantage of that the government can. This is why I put education and healthcare under the “provide for the common defense and well-being of the people” that it exists for. This is why we the taxpayers should be paying for education in what may be or appear totally irrelevant: it results in a net gain as far as expenditure across the country as a whole and makes companies better able to train workers on the job. It also allows easier job transitions allowing more economic mobility, and also helps maintains balance of power between the worker and the employer.
In a libertarian ideal the worker is not trapped working the job or for the specific employer because that is the only job they are trained for and where their healthcare comes from. It is a contract of mutual gain. It is unreasonable for a worker to start over from scratch to change jobs if an employer is not maintaining market wages. It also allows a worker to more easily become an entrepreneur and open his own company, as this requires a broader education basis to succeed at than the job he does for another.
Strong but limited regulation is need to keep markets free. Regulations preventing pollution of the environment as a common resource, truth in representation of goods and services, prevention of anticompetitive actions and regulatory capture., etc. Without this markets inevitably fall to monopoly and the system switches from mutualism to parasitism.
There is a careful balance to maintain and government overreach is just as easy in the other direction. This is true is any economic and sociological system though. Perfectly free laze fair markets do not exist the same way perfectly egalitarian communism doesn’t exist above the small commune level and for the same reasons. Or perfect democracy where everything is voted on by everyone and everyone is making fully informed and educated decisions. If none of these are possible in the real world, all we can do is take the best parts and attempt to create the best possible real world results.
Friedman actually has replies to many of the issues you’ve raised. He is not convinced that government can do anything efficiently and his argument rests on Darwinian principles: government employees are insulated from the consequences of their failed policies in a particular way that biases them towards towards inaction, inefficiency, and even waste.
For example, he talks about the bias of the FDA towards rejecting new drugs over approving them. If the FDA approves a new drug and it kills a handful of people it makes the front page of every newspaper in the country and becomes a huge scandal that costs the FDA heads their jobs. However, if the FDA rejects a drug that could have saved a million lives over several decades then nobody even knows about it!
So the FDA is extremely biased towards rejecting anything and everything that comes their way. But since companies can sue the FDA if they don’t exactly follow the law when rejecting drugs, the FDA has developed extremely long and detailed and cumbersome documentation processes. The forms and the trials are so extensive and cumbersome they take years and billions of dollars to complete. And the end result is that many drugs never even start the process because the companies have no guarantee of being able to recover their investment!
His alternative to all this is simple: tort law. A robust tort law allows people to sue drug companies for selling harmful drugs. This is actually how things worked before the FDA existed and it led to drugs such as Aspirin that might never have existed in today’s regime!
Anyway, the hardest thing about trying to evaluate Friedman’s arguments is that each one is pretty compelling in isolation but the sum total of all the changes is such a radical departure from what we have now that it’s hard to fathom.
I think I’m coming around to it though. One thing that’s indisputable is that our current governments have totally betrayed us and left everyone polarized, isolated, angry, and utterly lacking trust in societal institutions.
Thank you for taking the time to discuss this with me, I am finding this very enjoyable and educational.
I agree with Friedman in principle, but then I look at Ford and the other car companies with the Pinto and Takara airbags, etc. The cost of paying lawsuits gets factored in and until the cost point breaks over the deaths and injuries are just a cost of doing business. With regulation that actually has teeth and enforcement, just doing the bodies-to-profits calculations becomes an untenable solution and the recalls happen even if they aren’t profitable. I don’t think a private tort system is capable of having the teeth to achieve this in the real world. It is why Libertarianism still has a central government. It will have its inefficiencies, but it’s a right tool for the right job kind of thing.
Same with asbestos, lead, fillers in food, etc. The damages from them are so divorced from the product that many may not know who or what caused it. Lawsuits have a hard time with those kinds of things even if you know exactly which business is the cause. Look at tobacco and leaded gasoline and myriad others where lawsuits failed initially because damage was difficult to prove before the government stepped in. If fossil fuel companies can pay for the science that muddies the water on climate change, what chance does John Doe have doing enough through a lawsuit to stop DuPont from flooding the planet with forever chemicals?
I like where Friedman is coming from, but I hold him at the same level as Marx or any other economic theorist: assuming a spherical cow, at a specific temperature, without friction, and without wind resistance. I like Henry George the same way. That’s why I still claim to be a libertarian (just a left leaning centrist one), because I think Friedman and George are actually the better end result and closer to a workable solution than Marx. Marx was onto something though, and shouldn’t be dismissed outright. I do think we have stuff to learn from all branches of economic theory, and subscribe to a “the truth will be somewhere in the middle” philosophy.
Thanks! I’m really enjoying the discussion too!
Friedman actually has addressed the Ford Pinto question directly. He makes the very good point that it’s not a matter of principle, it’s a difference of opinion on the cost-benefit analysis. The deaths that resulted from Ford’s decision not to install a $13/car shield to protect the gas tank were tragic and regrettable but the argument that we can’t put a price on human lives does not fly.
We HAVE to put that price on a human life if we’re going to use cost-benefit analysis as a tool to help allocate resources. It doesn’t matter whether it’s a communist government party official, a liberal democratic courtroom, or the CEO of a business. The calculation needs to be done because resources are finite.
Friedman makes the rather dramatic point of asking whether it would be worth it to spend a billion dollars to save a person’s life. No matter what number you might ultimately settle on, there will always be disagreement because there are always alternative ways to spend the same money that might save even more lives. It would definitely not be worth it to spend NASA money to make the world’s safest car if that means a million people starve to death due to that choice of resource allocation.
Friedman is not opposed to central government of course. He mentions it in that video that he believes in the court system. He also believes government is the right call for several other functions which he discusses in other lectures (national defence and of course legislation to protect people’s rights and resolve disputes and other issues that arise).
For what it’s worth, the amount of money Ford lost in the long run, from lawsuits and settlements paid, reputational damage, loss of marketshare, loss of R&D, and loss of consumer confidence was astronomical. Ford learned the hard way that marketing for automobiles is not about convincing a consumer to buy your car once, it’s about convincing them that they made the right decision to buy your car so that they continue buying cars from you for the rest of their life.
In other words, brand loyalty is absolutely everything to car manufacturers and if you abuse that trust you lose bigtime. Now the Ford Pinto will live on forever as an example of corporate shortsightedness and callousness. There are plenty of people who would never buy a Ford again for that mistake.
That name sounds familiar.
He’s one of the most famous economists of the 20th century. There’s a ton of YouTube videos of him debating all kinds of people and giving lectures on many different topics from his perspective.