Free to Choose by Milton Friedman: Episode “Created Equal” (Part 2 of transcript and video)
Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series.
Created Equal [2/7]. Milton Friedman’s Free to Choose (1980)
Ever since the end of World War II, British domestic policy has been dominated by the search for greater equality. Measure after measure has been adopted, designed to take from the rich and give to the poor. Unfortunately, the results have been very different from those that were intended by the high-minded people who were quite properly offended by the class structure that dominated Britain for centuries. There have been vast redistributions of wealth but it is very hard to say that the end result has been a more equitable distribution. Instead, new classes of privilege have been created to replace or supplement the old. The bureaucracy, secure in their jobs protected against inflation both when they work and after they retire. The trade unions, who profess to represent the most down-trodden workers but who in fact consist of the highest paid laborers in the land. The aristocrats of the labor movement and the new millionaires the people who have been cleverest most ingenious at finding ways around the rules, the regulations, the laws that have emanated from over there, who have found ways to avoid paying tax on the income they have acquired. To get their wealth and their money overseas beyond the hands of the tax collector. A vast reshuffling, yes. A greater equity, hardly.
The Hoonde Menuhin school in the south of England is also a place of privilege. Musically talented children from all over the world compete for a chance to come here to study.
Much of the moral fervor behind the drive for equality comes from the widespread belief that it is not fair that some children should have a great advantage over others simply because they happen to have wealthy parents. Of course it is not fair, but is there any distinction between the inheritance of property and the inheritance of what, at first sight, looks very different. These youngsters have inherited wealth, not in the form of bonds or stocks, but in the form of talent. That 15_year_old is an accomplished cellist. His father is a distinguished violinist. It is no accident that most of the children at this school come from musical families. The inheritance of talent is no different from an ethical point of view from the inheritance of other forms of property, of bonds, of stocks, of houses, or of factories. Yet, many people resent the one but not the other.
Or look at the same issues from the point of view of the parent __ if you want to give your child a special chance, there are different ways you can do it. You can buy them an education __ an education that will give him skills enabling him to earn a higher income. Or, you can buy him a business or you can leave him property, the income from which will enable him to live better. Is there any ethical difference between these three ways of using your property, or again, if the state leaves you any money to spend over and above taxes, should you be permitted to spend it on riotous living but not permitted to leave it to your children? The ethical issues involved are subtle and complex. They are not to be resolved by resort to such simplistic formulas as fair shares for all. Indeed, if you took that seriously, it is the youngsters with less musical skills, not those with more, who should be sent to this school in order to compensate for their inherited disadvantage.
When the evening started, all of these players had about the same number of chips in front of them. But as the play progressed they surely didn’t __ some won and some lost. By the end of the evening, some of them will have a big pile of chips, others will have small ones. There will be big winners; there will be big losers. In the name of equality, should the winnings be redistributed to the losers so that everybody ends up where he started? That would take all the fun out of the game, even the losers wouldn’t like that. They might like it tonight, but would they come back again to play if they knew that whatever happened, they would end up exactly where they had started?
What does Las Vegas have to do with the real world? A great deal more than you might think. It is one very important part of our life in highly concentrated form. Every day, all of us are making decisions that involve gambles. Sometimes, they are big gambles, as when we decide what occupation to pursue or whom to marry. More often, they are small gambles as when we decide whether to cross the street against the traffic. But each time, the question is who shall make the decision __ we or somebody else. We can make the decision only if we bear the consequences. That is the economic system that has transformed our society in the past century and more. That is what gave the Henry Fords, the Thomas Alva Edisons, the Christian Barnards, the incentives to produce the miracles that have benefited us all. It’s what gave other people the incentive to provide them with the finance for their ventures. Of course, there were lots of losers along the way. We don’t remember their names, but remember, they went in with their eyes open; they knew what they were doing; and win or lose, we society benefited from their willingness to take a chance.
Lance von Allmen has an idea, he is taking a chance. Who knows, I suppose it is possible that we might all benefit from it one day, but that isn’t why he is taking a chance. He is doing it just because he wants to get rich.