Free to Choose by Milton Friedman: Episode “Created Equal” (Part 6 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 [6/7]. Milton Friedman’s Free to Choose (1980)

(Laughter)

PIVEN: If you look at the leadership of the black __

(Applause)

FRIEDMAN: But I want to go back to the __

MCKENZIE: Yeah.

FRIEDMAN: __ I want to carry it back to an earlier point. Number one, there’s no question but what equality of results, if it comes about through a framework of freedom, is a desirable result. Number two, I argue in the film I’ve argued here that in point of fact you get greater equality of actual results by a system under which people are free to achieve unequal results. That for the poor people of the world that Frances Fox Piven was talking about, the most effective mechanism for enabling them to improve their status is not a governmental program which seeks to ascribe to them certain positions which seeks to provide them with certain goods and services, but a governmental program which tries to eliminate arbitrary barriers to advancement. I would say that in this world the greatest source of inequality has been special privileges granted by government. That government, you may talk a great deal, there may be a lot of talk about how we’re going to eliminate inequality. But if you look at __ go back to your case of Britain. Is there any doubt that one of the effects of governmental intervention in Britain has been to create new opportunities for special classes. That the way to get wealthy in a society that supposedly is aiming at equality, that the way to get wealthy is to get a special government permit to import __ to get foreign exchange or to import goods or to __ in this country to set up a television station. Those are the ways in which you get inequality.

JAY: Well I think, Milton, you grossly misrepresent the British experience and here perhaps I might make the point. First of all, the burden of taxation in Britain is lower then it has been for many years than in any other of the countries of the European community, the overall burden of taxation. Secondly, you will immediately come back and say, “Aaah, but the marginal rates of personal taxation have been extremely high.” Perfectly true, but not as high as they were in the United States until the early 1960s. It’s interesting to note in passing that when the United States reduced its ninety percent maximum personal rate to fifty percent, the rate of economic growth in the United States, and I’m not suggesting cause and effect, fell from the previously very low rate of 2 percent a year to about naught-point-four percent in the period since. So that any notion that there is an absolutely one-to-one relationship between the degree of personal taxation and efficiency is wholly mythical. Thirdly it__ thirdly__

FRIEDMAN: Well I’ll tell you what you can do with statistics.

(Laughter)

JAY: __ now let me, __ well, you ought to read. You ought to look at the facts. It’s easy to make glib remarks about statistics, but look at the facts.

FRIEDMAN: I know, but __

JAY: Look at the fact that in Britain over the last thirty years, during which period according to you Britain has been crushed by egalitarianism, whereas the United States has been soaring away in the glorious state of liberty. The rate of economic growth in Britain has been faster than that of the United States. How do you explain that?

FRIEDMAN: First of all, I have to look at what the figures mean in Britain. I have to look at the way __

JAY: First you ought to look at them.

FRIEDMAN: I have looked at them and you realize that in judging output in the government that’s judged in terms of cost not in terms of product. And what I really ought to look at is not the rate of growth of GNP as the statisticians measure it, but the consumption available to people in forms, as people value it, ultimate consumption, if I look at that I get a very different picture. Statistics are very, very, as you know very well, are very easy to use. They can be __ they can be used to throw light or they can be used to cast confusion.

JAY: Why don’t you look at facts.

FRIEDMAN: I agree with you. And facts __

JAY: The facts are that the amount of goods and services consumed by the government as a proportion of the national output are no higher in Britain than they are in the United States and haven’t been any time since the war.

FRIEDMAN: They have risen very sharply __

JAY: Which may be the explanation of the low rate of growth in the United States.

FRIEDMAN: They have risen very sharply. It has risen very sharply in the war, both __ since the war, in both countries. It is higher in Britain than it is in the Untied States, properly measured.

JAY: Both twenty-five percent in both cases.

FRIEDMAN: The proportion __ excuse me.

MCKENZIE: Well of goods and service.

FRIEDMAN: That again is a statistician’s nightmare. We have to look at total government spending.

JAY: You were the one who was talking about whether or not people have freedom to choose how their money is spent.

MCKENZIE: Yeah.

JAY: The transfers, which is pensions and other payments from government, leave the freedom as to how the money is spent in the hands of private individuals. It’s only the direct consumption of goods and services where the bureaucrats are making the decisions.

FRIEDMAN: It leaves the decision for freedom in the hands of the recipient, but not in the hand

MCKENZIE: Can we __ gentlemen, gentlemen__ I’m back in my Chairman’s role. Can we leave this statistical debate, fascinating I’m sure it is

(Laughter)

MCKENZIE: I want to make the point, Milton, it seems to me and I am not British, I’m Canadian, having lived a great deal in the U.K., it seems to me that you really have most unfairly used the U.K. as a whipping boy in the last third of your film, last third of your film. Because you say for much of the century the British are trying to use the law to impose equality. Now the Conservatives have been in office for sixty-five percent__

FRIEDMAN: I am not a partisan, I am not a partisan.

MCKENZIE: No, no, I now you’re not. But let me finish it. There have been three majority left governments in Britain. And it is not the case at all that unlike other parts of Europe, there has been consistent policies aimed at equality. Taxation is lower. There’s no wealth tax. There’s a wealth tax in eight other western European countries. Capital gains tax came in only, ten, fifteen years ago.

FRIEDMAN: But let me take your case. First of all, Conservative Labor, that’s not the issue. I have argued again and again, I do again __

MCKENZIE: Well, the Conservatives have not pursued equality.

FRIEDMAN: I do in a book which is associated with this series. I make the point that the policy of Britain in the past sixty or seventy years owes more to the philosophical idea of the Torres of the 19th century than it does to the ideas of Karl Marx. In the United States in the 1930s the Socialist Party never garnered more than a few percent of the vote, but it was the most influential political party in America because its policies were adopted by both the Republicans and the Democrats. In the same way, what you have to look at is not whether the Conservatives or the Labor Party is in power, but what were the basic philosophy and ideas? The ideas of Fabian Socialism, of Tory paternalism were being affected by both the Torres __

MCKENZIE: The Torres fought __ Milton, really.

FRIEDMAN: __ and the Labor.

JAY: There will be some very surprised Tory politicians an some very surprised voters to hear what you say. But let me give you another example of the way you’re playing fast and loose with the facts.

MCKENZIE: Yeah.

JAY: You talk about crime in Britain. I mean crime in Britain is a tiny fraction of what it is in the United States and has been throughout that period __

FRIEDMAN: That’s true.

JAY: __ when you say that we’re so egalitarian and you’re so free. You talk about able people being driven out of the country. More qualified people are living and working in Britain than at any time in the last 150 years of our history. Now this is largely because of the granting of independence to the colonies, the loss of empire, as you like, but in fact for example doctors which are endlessly talked about, more British-trained doctors are now working in Britain than at any time in our history.

MCKENZIE: And the final example, Milton __

FRIEDMAN: And it’s also true __ it’s also true that the physicians leaving Britain, emigrating from Britain __

JAY: Tiny, tiny minority.

FRIEDMAN: __ amount to one-third as many as the number of people graduating each year from your medical schools.

PIVEN: I think it’s a mistake to be arguing this.

MCKENZIE: Milton, I ought to take one __

JAY: Ones coming back.

PIVEN: It’s a distortion of the evidence to rest the argument for the free enterprise system by selectively using the example of England when you want to, the United States when you want to. The test of your argument about the free enterprise system and its capacity to produce both freedom and greater equality to relieve poverty, the test of that argument has to be made everywhere that the free enterprise system has been extended, has penetrated. The test of your argument is not only in what happens in England and the ostensible decline or not the decline of the English economy or what happened in the United States. The test of that argument has to look at what the free enterprise system has meant for the majority of people who do not live in England and who do not live in the United States, who do not live in the mother countries, but rather live in that part of the world where most people live and when __ where most people have had their lives disrupted. Peasants have lost their land, traumatic destruction occurs __

FRIEDMAN: Excuse me, excuse me. You’ve got to compare __

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