Categories:
Political Economy
is this essay.
On questions of public policy, Friedman’s answer was always that it is better to allow individuals to make their own decisions than to impose government fiat. His opponents were always in the position of arguing that government must dictate an individual’s choice. This is a dubious proposition, and it is Friedman’s opponents who have had to resort to demagoguery and rhetorical tricks in debate. Their assertions — that individuals should cede their freedom to experts, that consumers require regulatory protection, or that individuals must submit to the “collective good” — do not stand up to Friedman’s logic.
READER COMMENTS
Matt
Nov 20 2006 at 3:44pm
Well, I start with my usual argument. Income taxes are not designed to redistribute wealth. The true purpose of the progressive income tax is to prevent the use of socialism by the wealthy, that is, prevent royalist institutional priviledge.
Milton got this, in a round about way, by proposing a negative income tax to replace the grab bag of welfare proposals. But he failed to mention the pricing incentive, which is to make everyone pay the same relative pain/gain for each increment/decrement in government.
Now, consider Milton and school vouchers. He claimed that public eductional requirements are justified by the “neighborhood effect”, that the benefits of educated citizens cannot be efficiently assigned and costed in the private sector! In other words, he advocates government mandates because of private sector market failure in assiging costs and benefits. Hence, he pursues a sort of government run, single payer insurance system for grammar school education. How did he get this this position?
Hist first error. We have local schools precisely because the costs and benefits are well known, and assignable. Look at the history of public schools. It is the case where there is so much agreement about price and benefit that local communities have chosen the economies of scale of government over inefficiency and distortion of government. This was not socialism, per se, it was the simple fact that in a well known market, with equal information there was little profit in private local schools. Everybody just punted the issue to local semi-independent school board monopolies. Capitalism simply had better things to do.
Then came the failure of inner city schools. But, my claim is, inner-city schools failed precisely because Milton’s negative income tax was never enacted.
Since the continued flattening of national taxes, their has been continual socialist incentives for the wealthy to grow government, and a incentive for the poor to shrink it. Yes, I am serious, since the Kennedy tax cuts, Reagan tax cuts, the rich became socialist, the poor have become libertarian. The extreme libertarianism and distrust of government by the poor has, disincentivized the inner city poor to cooperate with public education. In fact, the poor are disincentivized to cooperate with government on many levels.
Yes, flatten taxes on the rich and the poor become small government libertarians, they pay an increasing cost and receive less benefits. The wealthy become socialist, they get increasing benefit for less cost. The wealthy, having more influence, began the continual, unlimited growth of government in a flat taxed environment.
Milton may have gotten this right with the negative income tax, but the wealthy socialists at National Review and CATO did not support him .
James
Nov 20 2006 at 7:30pm
“Income taxes are not designed to redistribute wealth.”
I could care less about motive, but I find this claim remarkable nonetheless. Without exception, every tax in the history of the world has redistributed wealth away from the earner of that wealth into the hands of those persons who make the decisions directing fiscal policy. Would you have me believe that this regularity is due to coincidence rather than design?
Patrick R. Sullivan
Nov 21 2006 at 10:54am
I think Matt should devote a little time to informing himself of the history of public schools in America.
Hint; Tocqueville noted in Democracy in America how literate the average person was here compared to his native France. That was before Horace Mann got us off on his disastrous scheme.
TGGP
Nov 22 2006 at 12:22am
Matt, what the flying freak are you talking about? CATO is socialist and the poor are libertarians? Have you ever seen any poll by income/wealth that indicates support for socialist policies declines with higher brackets? When you say something like that, a socioeconomic equivalent of “The world is really flat and carried on the backs of four elephants” you’d better have some serious evidence to back it up. I’d suggest looking in the General Social Survey.
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