July 31st would have been free market economist Milton Friedman’s one-hundredth birthday. I have posted the following videos in his honor. These videos not only include Friedman’s eloquent defense of free market principles, but also they illustrate the truism that the more things change, the more they stay the same. I look forward to a lively discussion.
The Free Lunch Myth
A Question of Price Not Principle
A Society That Aims For Equality Before Liberty Will End Up With Neither Equality Nor Liberty
On Labor Unions
On the Great Depression
Debunking the “Fair Share” Argument
Addressing the “You Didn’t Build That” Argument
I find these clips pretty useful Sean and I’m am going to review them to glean what value they have to offer today in light of the fact that fewer regulations and lower taxes that have been in place since some of these interviews were held appear to not only have NOT improved life for most people but were in good measure responsible for the 2008 Recession.
I’m not sure how you intended the one video to reveal anything about the “You didn’t build it” argument other than Milton pointing out that it was federal land grants for railroads that enabled this industry to grow. Was that your point? That Obama was right that industries wouldn’t have succeeded on their own had it not been for the aid of tax payer money paying for roads, right-of-ways, and other infrastructure to encourage and enable business growth?
“I’m not sure how you intended the one video to reveal anything about the “You didn’t build it” argument other than Milton pointing out that it was federal land grants for railroads that enabled this industry to grow.”
That wasn’t Friedman’s point at all. His point was that government was only 3% of GDP during this time of dramatic economic expansion. Land grants to railroads were a fraction of what drove the American economic engine then. It was private industry that drove the other 97% of GDP.
“That Obama was right that industries wouldn’t have succeeded on their own had it not been for the aid of tax payer money paying for roads, right-of-ways, and other infrastructure to encourage and enable business growth?”
This is what is so absurd about Obama’s argument. Did the Army build these roads? For the most part private industry did. Government had to hire someone to build them. Again, Friedman never argues that government has no role, only that government’s role is to uphold the enforcement of contracts. The reason for the recession is not because of lack of regulation. In fact, financial firms found new ways to make money after existing regulation choked off more traditional ways of making money (IPO offerings for instance via Sarbanes Oxley). The Dodd-Frank Act is a classic case of that. People cannot refinance their homes because of some of the more restrictive provisions of the bill. Reinstituting Glass Steagull would have done the trick, yet politicians who have no financial literacy whatsoever have intervened in the markets and it shows. Obama’s stewardship of our economy has been an unmitigated disaster.
“Land grants to railroads were a fraction of what drove the American economic engine then. It was private industry that drove the other 97% of GDP.”
Okay, but didn’t most of this occur during those years, as we started transforming from an agricultural/rural economy to an industrial/urban one and where most people worked for slave wages, had no health benefits, worked 6, sometimes 7 days a week, with higher mortality rates? All this expansion came at price that hurt most laborers and benefitted the very wealthy, much like we have today. Monopolies developed back then too that enriched many Robber Barons and eliminated competition, which until the government finally came and regulated such transactions, made more than a few men very wealthy. It was also during this time that governments were supportive of businesses and helped them stymie efforts for unions to form and negotiate a livable wage.
This failure of “free markets” to share the wealth during this economic expansion through better wages and improve working conditions is perhaps responsible in part for bigger government as they instituted agencies to protect citizens against business exploitation and unsafe food processing, etc. Failure to consider the ramifications of treating people like objects rather than as human beings is what ultimately led to reforms that created a stronger working class and the need for some government oversight of business.
“This is what is so absurd about Obama’s argument. Did the Army build these roads? For the most part private industry did. Government had to hire someone to build them”
Exactly, without the financial resources of the U.S. government to fund these large and necessary improvements they would most likely never have been done. No doubt private capital has done quite a bit on its own but over time they have become more dependent on government subsidies, tax breaks and no oversight to force them to build products safer in order to make the huge profits they do today.
Legitimate infra-stucture jobs that benefit everyone can only be funded by taxpayer money. Lakes and Rivers, air and drinking water have always been part of the public commons and thus require the public funding of such infrastructure. Naturally they will employ private industry but that’s the beauty of it all. Public funds helping private industry by creating jobs that will in turn create an environment where more free enterprise can begin and grow and create more jobs.
But sadly the government has gotten into the market beyond what is necessary and vital and much of what we spend on is to feed the military-industrial complex. Capitalism itself is not the do-all many think it is and as they promote more consumption to keep profits high we create a culture of consumerism that demands more jobs to provide income to buy more products to keep profits high, etc. etc.
What this points to is that times were different when this country was new and economic expansion had plenty of room to grow. But clearly we don’t any longer and as jobs necessary to keep consumption growing slowly disappear along with a livable wage, you will have consequences that will require a compassionate government to step in and help offset some of the inequities that the free market system ultimately spawned. As Milton stated in one of those clips, “there aren’t any such things as a hundred percent one way and a hundred percent the other. Everything is mixed, of course.”
So I would say that true free markets have their limits and that any government growth is as likely, if not more so, the a result of “industrialist” than any “social welfare” mentality. Always trying to pawn big government off on the spending for social welfare programs or government jobs is a red-herring IMO.
I love watching clips of Milton Friedman. He looks like a Jewish baker masquerading as a wise man. He’s very funny, especially when laughing at his own jokes. As far as his analysis of the causes of the Great Depression, that’s one of the funniest jokes I’ve heard in a long, long time. It reminded me of watching him “debate” J. K. Galbreath in my dorm as a college junior. Naturally, Friedman tried to convince the audience that Keynesian economics was all b.s. and that the government was the cause of nearly all things bad (sound familiar?) Galbreath in turn pointed out that it was the lack of government intervention that led to the Great Depression and that it was ludicrous to think that worrying about the money supply when people were literally starving would have done nothing but spawn great debates at the smokey dinner clubs where the big bankers hung out. Friedman may have garnered a Nobel for his theory on monetary policy, but as an actual policy maker he was a joke.
If Friedman is a joke, why does the Fed keep interest rates low in this environment? How did Paul Volcker curb inflation in the early 1980s?