What were the main proposals of Milton Friedman?

Stearns Speaks on House Floor in Support of Balanced Budget Amendment

Uploaded by on Nov 18, 2011

Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011

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Below are some of the main proposals of Milton Friedman. I highly respected his work.

David J. Theroux said this about Milton Friedman’s view concerning the Balanced Budget Amendment:

Balancing the Budget: Since deficit spending is simply a device for hiding tax increases, thereby lowering taxpayer resistance to government spending and impairing economic growth, all government spending should be handled according to the merits of each specific proposal in a pay-as-you-go basis. Fiscal policy should never be used to affect business cycles, and the Balanced Budget Amendment should be adopted.

Here is some more about Friedman’s life:

Milton Friedman (1912-2006)
By David J. Theroux  |  Posted: Sat. November 18, 2006

“Milton Friedman is a scholar of first rank whose original contributions to economic science have made him one of the greatest thinkers in modern history.”
President Ronald Reagan

“How grateful I have been over the years for the cogency of Friedman’s ideas which have influenced me. Cherishers of freedom will be indebted to him for generations to come.”
Alan Greenspan, former Chairman, Federal Reserve System

“Right at this moment there are people all over the land, I could put dots on the map, who are trying to prove Milton wrong. At some point, somebody else is trying to prove he’s right That’s what I call influence.”
Paul Samuelson, Nobel Laureate in Economic Science

“Friedman’s influence reaches far beyond the academic community and the world of economics. Rather than lock himself in an ivory tower, he has joined the fray to fight for the survival of this great country of ours.”
William E. Simon, former Secretary of the Treasury

“Milton Friedman is the most original social thinker of the era.”
John Kenneth Galbraith, former Professor of Economics, Harvard University

“There are various ways to describe Friedman’s influence. But one way is to ask, ‘Has he helped many people—poor people in the world?’ And I would just take India and China, 37% of the world’s population. Hundreds of millions of people in these two countries, who used to live on less than one dollar a day or two dollars a day, are now able to live at a much more decent standard of living as a result of the reform of their economic policies toward more free-market policies, less regulation, less government and the like. There was one person who they are more indebted to than anybody else for their great improvement in their situation. In my judgment, that person is Milton Friedman.”
Gary S. Becker, Nobel Laureate in Economic Science

Economist and former Newsweek columnist Henry Wallich has credited Milton Friedman with having “almost single-handedly” changed economic thinking on the subject of money.1 Indeed, Milton Friedman, the 1976 Nobel Laureate in Economic Science, was a world-renowned economist and an academician of the finest caliber. But he was much more. He was an articulate and persuasive advocate of individual freedom, and the private property, voluntary exchange economy, which is based upon and sustains that freedom. British Prime Minister Margaret Thatcher has stated, “Professor Friedman is usually referred to as a monetarist, but his basic belief is not in money. It’s in people’s inherent right and ability to choose how they will live.”

Among his proposals were the following:

Negative Income Tax: To eliminate the massive welfare system’s disincentives and enormous waste, abolish all welfare programs and replace them with a program of direct cash payments to those actually in need simply by adding a new income tax bracket (one for negative values of taxable income) to the tax code.

Educational Vouchers: To provide a competitive climate for public and private education, all parents of primary and secondary school children would be issued government vouchers to be spent at the school of their choice. Government’s only role would be to provide the vouchers; competition for clients would assure quality and innovation.

Flat Income Tax: To streamline the tax system and to lower its enormous direct costs to the general public and the indirect inefficiencies imposed on the economy, abolish the corporate income tax. In addition, tax individuals only at a non-progressive, low, flat rate, raising personal exemptions to some minimum income level, and ending all loopholes.

Stable Money Growth: To eliminate the recurring problems of inflation, unemployment, and decreased productivity, abolish the Federal Reserve System, legalize private monies, and peg the increase of the government money supply to the growth in GNP, perhaps 0 to 3 percent per year.

Floating Exchange Rates: To solve the nation’s balance-of-payments problems and to open the possibility of unilaterally eliminating anti-consumer protectionist measures, abolish exchange controls and let national and private currencies seek their own price levels in the market.

Balancing the Budget: Since deficit spending is simply a device for hiding tax increases, thereby lowering taxpayer resistance to government spending and impairing economic growth, all government spending should be handled according to the merits of each specific proposal in a pay-as-you-go basis. Fiscal policy should never be used to affect business cycles, and the Balanced Budget Amendment should be adopted.

Volunteer Army: To create a more efficient, better motivated, and morally tenable defense system, abolish the compulsory servitude of the draft and draft registration and maintain a voluntary system of enlistment based on competitive benefits and professional, career-oriented training.

No Victimless Crime Laws: To direct limited police and legal resources to the problems of violent crime, eliminate all laws creating “crimes with no victims.” More specifically, where consent is present between two or more adults no criminal injustice can be possible; hence, for Friedman government has no place in proscribing or regulating such areas as prostitution, profanity, pornography, drugs, and so forth. In this regard, Friedman was not condoning any such behavior, but instead noting that these and all non-invasive matters are best regulated by property owners via private-property agreements and institutions, as opposed to government command-and-control. Moreover, Friedman agreed with the late Harvard philosopher Robert Nozick’s position that such practices should be equally legal along with all “capitalist acts between consenting adults.”13

As a result of his devotion to individual freedom, Friedman was an early and vocal supporter of California’s Proposition 13 to reduce property taxes across-the-board, as well as President Ronald Reagan’s original proposal to cut individual and corporate income tax rates. He was opposed to price controls, farm subsidies, securities and exchange controls, tariffs, and, in fact, all government interventions into the peaceful pursuits of individuals. To Friedman, government’s role should be stringently restricted to defending the nation from foreign enemies, defending persons from force and fraud, providing a forum for decisions of the general rules determining property and similar rights, and providing a means to mediate disputes about the rules.

Perhaps Friedman’s greatest success began in 1979 when he and his wife Rose authored the book, Free to Choose, based on the famous ten-part TV series for PBS by the same title. Both the TV program and the book were drawn from an earlier series of lectures presented by Friedman. Because it aired during a period of critical economic distress during the Carter Administration and in the aftermath of the Vietnam War, Watergate scandal, and Richard Nixon’s resignation as President, the program is widely regarded as being a major factor in shifting American public opinion toward appreciating the need to dismantle government largess. The series was shown in England, Japan, Italy, Australia, Germany, Canada, and many other countries, and the book was translated for distribution around the world, selling more than one million copies.

As a result of his impact on academic and public opinion, Friedman was an economic advisor to 1964 Republican presidential candidate Barry Goldwater; Presidents Ronald Reagan, Gerald Ford, and Richard Nixon; as well as British Prime Minister Margaret Thatcher. But throughout this time, he consistently turned down full-time positions in government, preferring to continue his scientific work and leave public activities to full-time policymakers.

In addition, Friedman’s ideas were critically influential in the economic liberalization reforms in such countries as Estonia, Chile, Ireland, China, New Zealand, Czech Republic, and India. In the process, he was accused of complicity in the repressive regimes of Chilean dictator Augusto Pinochet and in Communist China. However, Friedman maintained that in advising any government, in no way was he supporting any policies that run counter to the principles of individual liberty. Indeed, he indicated that he instead sought to end all policies of oppression.

In short, Friedman believed that government’s sole functions should be to provide civil policing and justice plus national defense. For the latter however, he went further than merely supporting the protection of national borders from invaders. In the aftermath of World War II, Friedman became a supporter of the Cold War and the Wilsonian legacy of U.S. military interventionism around the world. This led him to support the Vietnam War and other overt and covert U.S. policies. However, in the process, he noted that, “I’m anti-interventionist, but I’m not an isolationist,”14 and upon reading the 1987 landmark book by Independent Institute Senior Fellow Robert Higgs, Crisis and Leviathan, which shows that war “crises” are the major engine of the very neo-mercantilism and Big Government he long opposed, Friedman became an increasing critic of “wars of choice,” including the war in Iraq.

The Friedman’s were married for 68 years and had two children: David, who teaches law and economics at Santa Clara University, and Janet, who practices law in California.

To recognize the enormous contributions of this man, I had the distinct pleasure and privilege to organize the gala National Dinner to Honor Milton Friedman on October 4, 1983, at the Fairmont Hotel in San Francisco, at which then struggling actor Arnold Schwarzenegger, who had been inspired by the “Free to Choose” TV series, first met Friedman in person.

In addition to the Nobel Prize, Friedman was the recipient of the Grand Cordon of the First Class Order of the Sacred Treasure of Japan (1987), National Medal of Science (1988), and Presidential Medal of Freedom (1988), and he was a member of the American Philosophical Society and the National Academy of Sciences.

In 1998, Milton and Rose Friedman penned their autobiography, Two Lucky People: Memoirs, which traces their remarkable personal journey and life experiences, and they both spent recent years working together pursuing their dream of educational choice for all parents throughout the U.S.

Milton Friedman died on November 16, 2006, from heart failure, in San Francisco. Unlike any other intellectual figure of the twentieth century, he transformed public debate away from the suicidal path of command economies and toward economies based on individual choice, free markets, and personal responsibility. Friedman was brilliant, creative, resilient, and effective. In his career, including the thirty years that I had the pleasure of knowing him, he was a champion who sought to facilitate greater opportunity for all, especially those most in need. In economics, education, finance, business, civil liberties, welfare, and a host of other areas, he has left a powerful legacy for the benefit of humanity.

Notes

1. John Davenport. “The Radical Economics of Milton Friedman,” Fortune, 1 June 1967, p. 131.

2. “Milton Friedman,” Current Biography 1969 (Bronx, NY: H.W. Wilson Company), p. 151.

3. “Milton Friedman,” Les Prix Nobel en 1976 (Stockholm: The Nobel Foundation, 1977), p. 239.

4. Karl Brunner. “The 1976 Nobel Prize in Economics,” Science 194 (November 5, 1976), p. 595.

5. Current Biography, p. 152.

6. Les Prix Nobel en 1976, pp. 240-41.

7. Current Biography, p. 152.

8. Les Prix Nobel en 1976, p. 241.

9. Ibid.

10. Current Biography, p. 152.

11. Milton Friedman. “He Has Set a Standard.” Wall Street Journal (June 31, 2006).

12. Milton Friedman. “Introduction.” New Individualist Review (Indianapolis: Liberty Press, 1981), pp. ix-xiv.

13. “Portrait: Milton Friedman,” Challenge (May-June 1978), p. 69; Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962); and Milton and Rose Friedman, Free to Choose (New York: Harcourt Brace Jovanovich, 1980).

14. “Best of Both Worlds: Milton Friedman reminisces about his career as an economist and his lifetime ‘avocation’ as a spokesman for freedom,” Reason (June 1995).


David J. Theroux is the Founder, President and Chief Executive Officer of The Independent Institute and Publisher of The Independent Review.
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