Milton Friedman Crushes Man's 3 Questions like Dixie Cups

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Yes, sir? Dr. Friedman, is there an economic system now or historically that has allowed free enterprise alone to determine which direction the economy goes? And secondly- I have a three-part question. Okay, fine. Secondly, in economics you have resources and how to best use these resources is a value judgment, but it seems to me you can have either free enterprise decide or government decide or some combination. Then don't you think a combination would be the best alternative? And thirdly, if I can remember it, isn't there some benefit to having the government steal our money? Which is what they do effectively; they'll hold a gun to our head and say pay us 40 percent of your income or go to jail. They take this money and they give it mostly to government employees. Well, the government employees spend it. The marginal propensity to consume is pretty high. So the people who were robbed have to do something creative to get the money back, and isn't this creative activity the real wealth of . . . ? Well, I take it that they would have to be still more creative if 98 percent were being spent by the government. (laughter) No, the third part of your thing is just pure fallacy from beginning to end, (laughter) ... because if those people who are now government employees were employed in creative activity and productive activity they would also be spending their money, and we'd have a greater total around. All you're doing...let's suppose for a moment- take the extreme case, that that 40 percent is being used just to have people sit around. The fact that they spend their money doesn't alter the situation. The only product there is is what the 60 percent produce, and that 60 percent is divided among 100 percent. If those 40 percent were also producing goods, then there would be more goods to go around among everybody. You are just involved in a fallacy of looking at dollars, which is important sometimes, instead of looking at the real product, the goods and services that people produce and people consume. Spending isn't good; what's good is producing. What we want to have is more goods and services. And as I say, the obvious indication that's clear is that if your logic were right, it would apply for 50 percent, 60 percent, 70, 90, 98, 100 percent, and obviously you would see that that would be a bunch of nonsense at that stage. It is desirable to have some money spent by government for those things, those services that we believe we can get more usefully and more effectively through government. If people are getting their money's worth, fine. That's why it's very desirable to have governmental expenditures take place at as local a level as possible, because you as a citizen of a small community can judge whether you are getting your money's worth. You can decide that you want to spend it. But when it comes to the federal government you tend to think that you are spending somebody else's money, and you are in a way, but he's spending yours. Now let me go back to the first two items. Is there any example of a society in which the fundamental determination of the direction of activity was determined by free enterprise, by free competition? Of course, most of history, most of societies today. Government does have 40 percent of our income that it spends, but it wastes half of it, so that as an effective matter 80 percent of our resources are being determined by free enterprise now. And if I go back to the whole period of the nineteenth century, to the whole period of the great growth of the U.S.; to Britain in the nineteenth century, the period when Britain emerged as a leader of the nations, at the height of Britain's power as the leading nation in the world, at the time of Queen Victoria's jubilee--in 1899 I think it was or something- celebrating the fiftieth anniversary, the golden jubilee of her reign--when Britain ruled the waves and had an empire on which the sun never set, total government spending in Britain was 10 percent of the national income. So of course there have been many examples over time in which free enterprise has dominated and predominantly been the major source of determination. Today it's true in Hong Kong, in Taiwan, in many countries around the world. Alright now, your second question is: does not the allocation of resources involve value judgments and isn't it better to have that value judgment shared by government and the people? Who is government? What's government? Is that something other than you and me? Is that something other than us operating through a different mechanism? Who can make value judgments? Only people. Resources don't make value judgments; governments don't make value judgments; people make value judgments. And the question is: what is the most effective way in which we as people can jointly, cooperatively express our values? Now, we express some of them individually in the family at home, separately, people, you and I alone. We express some of them by doing things for ourselves. We express some of them through voluntary groups--Boy Scouts, churches, charitable organizations. We express some of them through cooperation on a broader scale- on a free market through business enterprises that serve as intermediaries between people selling their productive services, producing products and selling the products. We express some of our values through doing things through government, and there is nothing wrong with doing that, provided we keep in control and don't let the government become the master instead of the servant. And the real problem is, in my opinion, that as we move from the local community to the state, from the state to the federal government, it becomes increasingly difficult for us to control the mechanism we have established and that mechanism tends to control us. That was the great wisdom of the Founding Fathers of this country, of the people who wrote the Constitution. That constitution was designed to limit government's powers in order to preserve the freedom of the individual, and what has happened in the past fifty years is that the fundamental character of the Constitution has really been changed. We have broadened enormously the conception of what is a governmental power and what is not, and have departed from that limited government until we have created a Frankenstein, an unlimited government that threatens to destroy us.
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Channel: Free To Choose Network
Views: 1,065,120
Rating: 4.8960128 out of 5
Keywords: Free To Choose Network, Ideas Matter, laissez faire, Milton Friedman (Academic), Economic Development (Organization Sector), Free Market (Literature Subject), Government, Economic Growth (Literature Subject), Free Trade (Literature Subject)
Id: rQLBitV69Cc
Channel Id: undefined
Length: 7min 11sec (431 seconds)
Published: Tue May 22 2012
Reddit Comments

I love Milton Friedman

👍︎︎ 5 👤︎︎ u/Nueg 📅︎︎ May 30 2019 🗫︎ replies

I'm a little bit less of a localist but it's basically me_irl

👍︎︎ 2 👤︎︎ u/Daktush 📅︎︎ May 30 2019 🗫︎ replies
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