My name is Everette Hatcher III. I am a businessman in Little Rock and have been living in Bryant since 1993. My wife Jill and I have four kids (Rett 24, Hunter 22, Murphey 16, and Wilson 14).
If you don’t want to spend two minutes to watch the video, all you need to know is that I’m worried that more redistribution will lead to more dependency and less work.
This is captured in this Wizard-of-Id parody, with the only difference being that UBI is a big handout for everything rather than a set of handouts for specific reasons (food stamps, welfare, housing subsidies, etc).
There’s already academic evidence against UBI, as I wrote in 2021 and 2022.
Now we have new evidence this year. Three European academics – Timo Verlaat, Federico Todeschini, and Xavier Ramos – produced a studyon the consequences of an experiment in Barcelona.
Here are their main findings, published by the Germany-based Institute of Labor Economics, all of which confirm that a basic income would be bad news.
…we aim to advance the literature on unconditional transfer programs by describing their employment effects in the context of an advanced welfare state. Our analysis uses data from a field experiment in Barcelona (Spain), trialing a generous and unconditional municipal cash transfer program. …we find strong evidence for sizeable negative labor supply effects. After two years, households assigned to the cash transfer were 14 percent less likely to have at least one member working compared to households assigned to the control group; main recipients were 20 percent less likely to work. …Another important finding concerns the persistence of effects. Employment rates in the treatment group remain lower even six months after the last transfer, indicating that households’ labor supply decisions may be hard to reverse.
I have to give credit to Matt Weidinger of the American Enterprise Institute. I did not know about this new study until I saw his article, which also merits a few excerpts.
That program is similar in many respects to universal basic income (UBI) programs proposed in Congress and being tested in multiple locations across the US. It also bears similarities to the unconditional expanded child tax credit payments temporarily made to tens of millions of households with children in 2021, which President Joe Biden’s latest proposed budget seeks to revive. Those similarities suggest American policymakers should take heed of the study’s findings… As Jon Baron, a longtime expert on evidence-based policy, recently described, the findings of the “high-quality” randomized control trial reflected in the study “suggest a need for caution in the design of anti-poverty programs, to avoid discouraging work effort.”
Since I’m a policy wonk rather than an academic, I don’t need qualifiers such as “a need for caution.” I can bluntly state that redistribution programs have a very negative impact on labor supply.
Instead of moving in the wrong direction, existing redistribution programs need to be scaled back. But that’s just part of the solution. The federal government should get out of the way.
P.S. Back in 2017, Joe Biden said some sensible things about work and dependency. Given what he’s now pushing, he obviously was not being sincere back then. Or maybe he doesn’t remember.
P.P.S. I can’t claim perfect memory. Regarding the Swiss referendum on basic income, I was wrong about the margin of victory (77 percent rather than 78 percent), wrong about the year (it was in 2016 not 2015), and the proposed handouts were even bigger than I remembered.
In the spirit of bipartisanship, I also applaud when Donald Trump does the same thing, and that part of what we’re going to discuss today.
First, some background: The ongoing battle over Donald Trump’s personal tax information has finally ended. If you’re curious, the New York Times has a detailed report on what Trump earned (or lost) in recent years.
And the NYT also tells us how much tax he paid during those years.
When I look at these numbers, my first thought is that Trump is not a very good businessman since he has a negative income most years.
My second thought is that I’m glad he paid a low tax rate of about 3 percent in 2018 and approximately 4 percent in 2019, the two years when his income was positive.
Why am I glad? Because money in private hands is far more likely to be utilized wisely than money that gets diverted to the IRS and then spent by the politicians in Washington.
That’s the first part of today’s column.
The second part of today’s column is to use Trump’s tax return to show why the tax system would be much better if we junked the internal revenue code and replaced it with a simple and fair flat tax.
A tax system based on equality also means radical simplicity. The hundreds of different tax forms in today’s tax code would get dumped in the garbage.
All that would be left is a simple tax form for households.
And a simple tax form for businesses.
What would this mean for Trump’s tax returns? I’m sure the implications would be enormous, but I want to focus on just two issues.
First, under the flat tax, business losses can not be used to lower taxes on household income (wages, salaries, and pensions). So that would probably mean a higher tax burden for Trump.
Second, the tax treatment of business changes in ways that would both help Trump and hurt Trump. The most important thing to realize is that the convoluted corporate income tax (as well as parts of the personal income tax such as Schedule C) are replaced by a very simple cash-flow system.
Here’s how Professors Robert Hall and Alvin Rabushka describe the business portion of the flat tax.
The business tax is a giant, comprehensive withholding tax on all types of income other than wages, salaries, and pensions. It is carefully designed to tax every bit of income outside of wages, but to tax it only once. The business tax does not have deductions for interest payments, dividends, or any other type of payment to the owners of the business. As a result, all income that people receive from business activity has already been taxed. …The resulting simplification and improvement in the tax system is enormous. …Eliminating the deduction for interest paid by businesses is a central part of our general plan to tax business income at the source.
One very important implication of this approach is there there no longer would be a bias for debt. This would not be good news for people like Trump who usually rely on debt to finance their businesses.
On the other hand, the net result would be a tax code more favorable to investment and entrepreneurship. So if Trump is a good businessman, he will benefit.
In this episode “How to Stay Free” Friedman makes the statement “What we need is widespread public recognition that the central government should be limited to its basic functions: defending the nation against foreign enemies, preserving order at home, and mediating our disputes. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problems than turning them over to the government.”
In this episode Milton Friedman makes the point, “There was no widespread public demand for Social Security programs… it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little.”
Pt 5
Lawrence E. Spivak: I know, I believe, I say I know, I think I know, but I’ll say I believe that you felt, you blame the government for the Great Depression of 1929 through 1933 and of course, you had to blame FDR for all he did, but most people feel that he saved this free economy of ours.
Friedman: Given the catastrophe of the Great Depression, there is no doubt in my mind that emergency government measures were necessary. The government had made a mess. Not FDR’s government, it was the government that preceded him. Although it was mainly the Federal Reserve System which really wasn’t subject to election. But once FDR came in he did two very different kinds of things.
Lawrence E. Spivak: Well, had the government made a mess by what it did or but by what it didn’t do.
Friedman: By what it did. By it’s monetary policies which forced and produced a sharp decline in the total quantity of money. It was a mismanagement of the monetary apparatus. If there had been no federal reserve system, in my opinion, there would not have been a Great Depression at that time. But given that the depression had occurred, and it was a catastrophe of almost unimaginable kind, I do not fault at all, indeed on the contrary I commend Roosevelt for some of emergency measures he took. They obviously weren’t of the best, but they were emergency measures and you had an emergency you had to deal with. And the emergency measure such as relief programs, even the WPA which was a make work program, these served a very important function. He also served a very important function by giving people confidence in themselves. His great speech about the only thing we have to fear is fear itself was certainly a very important element in restoring confidence to the public at large. But he went much beyond that, he also started to change, under public pressure, the kind of government system we had. If you go beyond the emergency measures to the, what he regarded as reform measures, things like NRA and AAA, which were declared unconstitutional, but then from there on to the Social Security system, to the …
Lawrence E. Spivak: Take the Social Security System for a minute. The people wanted that, they wanted that protection. They were frightened, they wanted welfare.
Friedman: Not at all.
Lawrence E. Spivak: When you said pressure, who, pressure from whom?
Friedman: Pressure from people who were expressing what they thought the public ought to have. There was no widespread public demand for Social Security programs. The demands…….
Lawrence E. Spivak: No demand for welfare with 13 million people …….
Friedman: There was a demand for welfare and assistance I was separating out the emergency measures from the permanent measures. Social Security in the first 10 years of its existence, helped almost no one. It only took in money. Very few people qualified for benefits. It wasn’t an emergency measure. It was a long term measure. And it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little. So that Social Security….
Lawrence E. Spivak: Would you now abolish Social Security?
Friedman: I would not go back on any of the commitments that the government has made. But I would certainly reform Social Security in a way that would end in its ultimate elimination.
Lawrence E. Spivak: If you’re not afraid then of the free market under any circumstances, where cooperation which you find necessary which you believe all to come, fails to come, where competition becomes so fierce and becomes very frequently corrupt and where, all where it becomes stupid. Take for example what’s happening in today’s market, the conglomerates. Which have been seizing up all sorts of, we happen to live in a hotel that’s run by a conglomerate. Why should ITT, for example, run a hotel and how are you going to stop that.
Friedman: Well in the first place, once again,
Lawrence E. Spivak: Without government, without…..
Friedman: Once again, it’s government measures that have promoted the conglomerates. The only major reason we have conglomerates is because they are a very effective way to get around a whole batch of tax legislation. Let me ask a different question. Who is more effected by government regulations, by government controls?
Lawrence E Spivak: I thought I was supposed to ask the questions. But I was warned that you might turn these on me.
Friedman: Well tell me, whose more effected the big fellow who can deal with it or that have a separated department to handle the red tape, or the poor fellow?
Lawrence E. Spivak: The big fellow can always take care of himself under any system.
Friedman: Right, and therefore he’ll want a system which gives the big fellow the least advantage. And the system under which he can get government to help him out, gives him the most advantage, not the least. You say am I afraid of greed, of lack of cooperation. Of course. But we always have to compare the real with the real. What are the real alternatives? And if we look at the record of history, if we go back to the 19th century which everybody always points to as the era of the robber baron who strode around the land and ground the poor under his heel, what do we find? The greatest outpouring of voluntary charitable activity in the history of the world. This University, this University of Chicago is an example. It was founded by contributions by John D. Rockefeller and other people. The colleges and universities throughout the Midwest. If you go back and ask when was the Red Cross founded, when was the Salvation Army founded, when were the Boy Scouts founded, you’ll discover all of that came during the 19th century in the era of unregulated rapacious capitalism.
Lawrence E. Spivak: I’d like to go back for a minute to the question of conglomerates. Granted that what you say that the government policies concentration on central government if you will, or whatever you want to call it, are responsible for the growth of conglomerates. What would we, what should we do about them now? Government try to undue them? Or should anybody try to undue them?
Friedman: No.
Lawrence E. Spivak: Or should you just let them fail?
Friedman: You should let them fail, of course. I am strongly opposed to government bailing any of them out. You should let them fail. The best things you can do in my opinion, are first to have complete free trade so you can have conglomerates in other countries compete with conglomerates in this country. We may have only two or three automobile companies, but there’s Toyota, there’s Volkswagen, competition from abroad is effective. But in the second place…
Lawrence E. Spivak: When do you say complete free trade you mean all over the world?
Friedman: No sir. I mean the U.S. all by itself unilaterally should eliminate all trade barriers. We would be better off if all the countries did the same.
Lawrence E. Spivak: What do you think would happen if we just did it though?
Friedman: I think we’d be very much better off and a lot others would then follow our example. That’s what happened in the 19th Century when Great Britain in 1846 completed removed, unilaterally, all trade barriers so that…..
Lawrence E. Spivak: You don’t think this country would be flooded with goods of all kinds from all over the world, maybe cheaper in that we wouldn’t have great unemployment in this country?
Friedman: What would the people who sold us goods do with their money? They’d get dollars, what would they do with the dollars? Eat them. If they want to send us goods and take dollars in return, we’re delighted to have them. No. That’s not a problem as long as you have a free exchange rate. Because we cannot export without importing, we cannot import without exporting. You would not have a reduction in employment, what you’d have would be a different pattern of employment. You’d have more employment in export industries and less employment in those industries that compete with import. But go back to conglomerates, Larry for a moment. I just want to ask a very different kind of a question. Conglomerates are not very attractive, I would much rather have a lot of small enterprises. But there’s all the difference in the world between a private conglomerate and a government conglomerate. In general, the government conglomerate can get money from you without your agreeing to give it to him. You and I pay for Amtrak and for the postal deficit whether we use the services of Amtrak or the postal deficit or not. I don’t pay your conglomerate unless I rent one of their apartments. I get something for my money. So bad as private conglomerates are, they’re less bad than one of the alternatives.
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In Part II, I compared Venezuela’s decline to the other Latin American nations, particularly the success story of Chile.
Initially, I planned on this being a two-part series. After all, what else needs to be said when a nation does so poorly that even other socialists try (and fail) to disavow its policies.
But I decided to add Part III because of a remarkable report in the New York Times.
Authored by Isayen Herrera and Frances Robles, it actually acknowledges that socialism has created massive problems. Here are some excerpts.
…a socialist revolution once promised equality and an end to the bourgeoisie. Venezuela’s economy imploded nearly a decade ago, prompting a huge outflow of migrants in one of worst crises in modern Latin American history.…Conditions remain dire for a huge portion of the population…prices still triple annually, among the worst rates in the world. …Half of the nation lives in poverty…one in three children across Venezuela was suffering from malnutrition as of May 2022… Up to seven million Venezuelans have simply given up and abandoned their homeland since 2015… Last year’s inflation rate of 234 percent ranks Venezuela second in the world, behind Sudan.
What makes this story especially noteworthy is that the Timeswrote another article about Venezuela’s dismal economy less than three years ago, yet that piece never once mentioned socialism.
So it’s a sign of progress that the paper now acknowledges that statist policies deserve the blame.
And I also think it’s remarkable that the article noted that socialism produces a grotesque version of inequality, with government insiders and other cronies getting rich while ordinary people suffer horrific deprivation..
Venezuela is increasingly a country of haves and have-nots, and one of the world’s most unequal societies… the wealthiest Venezuelans were 70 times richer than the poorest, putting the country on par with some countries in Africa that have the highest rates of inequality in the world.
The poster child for undeserved socialist wealth is Hugo Chavez’s daughter, who amassed more than $4 billion of ill-gotten gains.
P.S. In spite of the wretched state of the Venezuelan economy, some nutty leftists put together a “Happy Planet Index” that ranked Venezuela above the United States. I still haven’t figured out whether that was crazier than the Jeffrey Sachs’ index that put Cuba above America.
To be sure, it is not a good idea to have too much debt-financed spending. But it’s also not a good idea to have too much tax-financed spending. Or too much spending financed by printing money.
Other people, however, do fixate on budget deficits. And I get drawn into those debates.
For instance, I wrote back in July that Biden was spouting nonsense when he claimed credit for a lower 2022 deficit. But some people may have been skeptical since I cited numbers from Brian Riedl and he works at the right-of-Center Manhattan Institute.
So let’s revisit this issue by citing some data from the middle-of-the-road Committee for a Responsible Federal Budget (CRFB). They crunched the numbers and estimated the impact, between 2021 and 2031, of policies that Biden has implemented since becoming president.
The net result: $4.8 trillion of additional debt.
By the way, this is in addition to all the debt that will be incurred because of policies that already existed when Biden took office.
If you want to keep score, the Congressional Budget Office projects additional debt of more than $15 trillion over the 2021-2031 period, so Biden is approximately responsible for about 30 percent of the additional red ink.
Some readers may be wondering how Biden’s 10-year numbers are so bad when the deficit actually declined in 2022.
But we need to look at the impact of policies that already existed at the end of 2021 compared to policies that Biden implemented in 2022.
As I explained back in May, the 2022 deficit was dropping simply because of all the temporary pandemic spending. To be more specific, Trump and Biden used the coronavirus as an excuse to add several trillion dollars of spending in 2020 and 2021.
That one-time orgy of spending largely ended in 2021, so that makes the 2022 numbers seem good by comparison.
Sort of like an alcoholic looking responsible for “only” doing 7 shots of vodka on Monday after doing 15 shots of vodka every day over the weekend.
If that’s not your favorite type of analogy, here’s another chart from the CRFB showing the real reason for the lower 2022 deficit.
I’ll close by reminding everyone that the real problem is not the additional $4.8 trillion of debt Biden has created.
P.S. If you want to watch videos that address the growth-maximizing size of government, click here, here, here, here, and here.
P.P.S. Surprisingly, the case for smaller government is bolstered by research from generally left-leaning international bureaucracies such as the OECD, World Bank, ECB, and IMF.
Yesterday, the Congressional Budget Office released updated budget projections. The most important numbers in that report show what’s happening with the overall fiscal burden of government – measured by both taxes and spending.
As you can see, there’s a big one-time spike in coronavirus-related spending this year. That’s not good news, but more worrisome is the the longer-run trend of government spending gradually climbing as a share of economic output (and the numbers are significantly worse if you look at CBO’s 30-year projection).
Most reporters and fiscal wonks overlooked the spending data, however, and instead focused on the CBO’s projection for government debt.
That being said, Figure 3 from the CBO report shows that there’s also an upward-spike in federal debt.
And it is true (remember Greece) that high levels of debt can, by themselves, produce a crisis. This happens when investors suddenly stop buying government bonds because they think there’s a risk of default (which happens when a government is incapable or unwilling to make promised payments to lenders).
I think some nations are on the verge of having that kind of crisis, most notably Italy.
In other words, what nations are approaching a tipping point?
A new study from the European Central Bank may help answer these questions. Authored by Pablo Burriel, Cristina Checherita-Westphal, Pascal Jacquinot, Matthias Schön, and Nikolai Stähler, it uses several economic models to measure the downside risks of excessive debt.
The 2009 global financial and economic crisis left a legacy of historically high levels of public debt in advanced economies, at a scale unseen during modern peace time. …The coronavirus (COVID-19) pandemic is a different type of shock that has dramatically affected global economic activity… Fiscal positions are projected to be strongly hit by the crisis…once the crisis is over and the recovery firmly sets in, keeping public debt at high levels over the medium term is a source of vulnerability… The main objective of this paper is to contribute to the stabilisation vs. sustainability debate in the euro area by reviewing through the lens of large scale DSGE models the economic risks associated with regimes of high public debt.
Here’s what they found, none of which should be a surprise.
…we evaluate the economic consequences of high public debt using simulations with three DSGE models… Our DSGE simulations also suggest that high-debt economies…can lose more output in a crisis…have less scope for counter-cyclical fiscal policy and…are adversely affected in terms of potential (long-term) output, with a significant impairment in case of large sovereign risk premia reaction and use of most distortionary type of taxation to finance the additional public debt burden in the future.
Here’s a useful chart from the study. It shows some sort of shock on the left (2008 financial crisis or coronavirus being obvious examples), which then produces a recession (lower GDP) and rising debt.
That outcome isn’t good for nations with “low” levels of debt, but it can be really bad for nations with “high” debt burdens because they have to deal with much higher interest payments, much bigger tax increases, and much bigger reductions in economic output.
For what it’s worth, I don’t think the study actually gives us any way of determining which nations are near the tipping point. That’s because “low” and “high” are subjective. Japan has an enormous amount of debt, yet investors don’t think there’s any meaningful risk that Japan’s government will default, so it is a “low” debt nation for purposes of the above illustration.
By contrast, there’s a much lower level of debt in Argentina, but investors have almost no trust in that nation’s especially venal politicians, so it’s a “high” debt nation for purposes of this analysis.
The United States, in my humble opinion, is more like Japan. As I wrote last year, “We probably won’t even have a crisis in the next 10 years or 20 years.” And that’s still my view, even after all the spending and debt for coronavirus.
The study concludes with some common-sense advice about using spending restraint and pro-market reforms to create buffers (some people refer to this as “fiscal space“).
Overall, once the COVID-19 crisis is over and the economic recovery firmly re-established, further efforts to build fiscal buffers in good times and mitigate fiscal risks over the medium term are needed at the national level. Such efforts should be guided by risks to debt sustainability. High debt countries, in particular, should implement a mix of fiscal discipline and wide-ranging growth-enhancing reforms.
P.S. Here’s another chart from the ECB study that is worth sharing because it confirms that not all tax increases do the same amount of economic damage.
We see that consumption taxes (red line) are bad, but income taxes on workers (green line) are even worse.
P.P.P.S. There’s a related study from the IMF that shows how excessive spending is a major warning sign that nations will be vulnerable to fiscal crisis.
Back in 2017, I compared the welfare state vision of “positive rights” with the classical liberal vision of “negative rights.”
To elaborate, here’s a video from Learn Liberty that compares these visions.
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For what it’s worth, I don’t like the terms “positive rights” and “negative rights” for the simple reason that an uninformed person understandably might conclude that “positive” is good and “negative” is bad.
Needless to say, I don’t think it’s good for people to think they have a right to other people’s money.
That’s why I prefer Professor Skoble’s use of the terms “liberties” and “entitlements,” which we also find in this slide from Professor Imran Ahmad Sajid of the University of Pakistan.
As you might expect, there are plenty of politicians who try to buy votes with an agenda of “positive rights.” Bernie Sanders, for instance, constantly argued that people have a “right” to all sorts of goodies.
But he wasn’t the first to make the case for unlimited entitlements.
Let’s see what some other people have to say about this topic.
In his National Reviewcolumn, Kevin Williamson looks at the logical fallacy of positive rights.
Positive rights run into some pretty obvious problems if you think about them for a minute, which is why so much of our political discourse is dedicated to moralistic thundering specifically designed to prevent such thinking. Consider, in the American context, the notion that health care is a right. Declaring a right in a scarce good such as health care is intellectually void, because moral declarations about rights do not change material facts.If you have five children and three apples and then declare that every child has a right to an apple of his own, then you have five children and three apples and some meaningless posturing — i.e., nothing in reality has changed, and you have added only rhetoric instead of adding apples. In the United States, we have so many doctors, so many hospitals and clinics, so many MRI machines, etc. This imposes real constraints on the provision of health care. If my doctor works 40 hours a week, does my right to health care mean that a judge can order him to work extra hours to accommodate my rights? For free? If I have a right to health care, how can a clinic or a physician charge me for exercising my right? If doctors and hospitals have rights of their own — for example, property rights in their labor and facilities — how is it that my rights supersede those rights?
And here’s what he says about “negative rights.”
A negative right is a right to not be constrained. The right to free speech, for example, implies only non-interference. The right to freedom of the press doesn’t mean the government has to give you a press. The good of negative freedom is, in the economic sense, not rivalrous — your exercise of free speech doesn’t leave less freedom of speech out there for others to enjoy
And Larry Reed opines on the issue for the Foundation for Economic Education.
America is a nation founded on the notion of rights. …Despite the centrality of rights in American history, it’s readily apparent todaythat Americans are of widely different views on what a right is, how many we have, where rights come from, or why we have any in the first place. …if you need something, does that mean you have a right to it? If I require a kidney, do I have a right to one of yours? Is a right something that can or should be granted or denied by majority vote?
He helpfully provides a list of negative rights (a.k.a., liberties).
And he argues that positive rights (a.k.a., entitlements) are not real rights.
The bottom line, he explains, is that so-called positive rights impose obligations on other people.
Indeed, they can only be provided by coercion.
The first list comprises what are often called both “natural rights” and “negative rights”—natural because they derive from our essential nature as unique, sensate individuals and negative because they don’t impose obligations on others beyond a commitment to not violate them. The items in the second are called “positive rights” because others must give them to you or be coerced into doing so if they decline. …while I believe neither you nor I have a right to any of those disparate things in the second list, I hasten to add that we certainly have the right to seek them, to create them, to receive them as gifts from willing benefactors, or to trade for them. We just don’t have a right to compel anyone to give them to us or pay for them.
There’s not much I can add to this issue, given the wisdom contained in the video and in the articles by Williamson and Reed.
So I’ll close with the should-be-obvious point that a system based on entitlements only works if there are enough people pulling the wagon to support all the people riding in the wagon.
Which means, as Margaret Thatcher warned us, that positive rights can’t be provided when politicians run out of other people’s money.
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-_
Free-market economics meets free-market policies at The Heritage Foundation’s Tenth Anniversary dinner in 1983. Nobel Laureate Milton Friedman and his wife Rose with President Ronald Reagan and Heritage President Ed Feulner.
Since the passing of Milton Friedman who was my favorite economist, I have been reading the works of Daniel Mitchell and he quotes Milton Friedman a lot, and you can reach Dan’s website here.
Mitchell in February 2011.
Wikipedia noted concerning Dan:
Mitchell’s career as an economist began in the United States Senate, working for Oregon Senator Bob Packwood and the Senate Finance Committee. He also served on the transition team of President-Elect Bush and Vice President-Elect Quayle in 1988. In 1990, he began work at the Heritage Foundation. At Heritage, Mitchell worked on tax policy issues and began advocating for income tax reform.[1]
In 2007, Mitchell left the Heritage Foundation, and joined the Cato Institute as a Senior Fellow. Mitchell continues to work in tax policy, and deals with issues such as the flat tax and international tax competition.[2]
In addition to his Cato Institute responsibilities, Mitchell co-founded the Center for Freedom and Prosperity, an organization formed to protect international tax competition.[1]
January 29, 2020
President Biden, c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500
Dear Mr. President,
The FOUNDERS never intended the government to get into the welfare business!!!!
One is the growing welfare state. I have posted an article below about what the welfare state is doing to England because we need to learn from their mistakes.
Milton Friedman The Power of the Market 5-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 4-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 3-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 2-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 1-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Washington is lecturing us about eating too much when they are spending addicts!!!! Let’s Fix the Real Obesity Problem in Washington May 11, 2013 by Dan Mitchell Whenever someone proposes that we need more intervention from the federal government, I always go to the Constitution and check Article I, Section VIII. This is because I’m old fashioned and […]
You want a suggestion on how to cut the government then start at HUD. I would prefer to eliminate all of it. Here are Dan Mitchell’s thoughts below: Sequestration’s Impact on HUD: Just 358 More Days and Mission Accomplished March 12, 2013 by Dan Mitchell As part of my “Question of the Week” series, I had […]
Real Time with Bill Maher March 16 2012 – Alexandra Pelosi Interviews Welfare Recipients in NYC Published on Mar 18, 2012 by vclubscenedotcom Real Time with Bill Maher March 16 2012 – Alexandra Pelosi Interviews Welfare Recipients __________ President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I […]
Real Time with Bill Maher March 16 2012 – Alexandra Pelosi Interviews Welfare Recipients in NYC Published on Mar 18, 2012 by vclubscenedotcom Real Time with Bill Maher March 16 2012 – Alexandra Pelosi Interviews Welfare Recipients __________ Liberals like the idea of the welfare state while conservatives suggest charity through private organizations serve the […]
Washington Could Learn a Lot from a Drug Addict What kind of intervention does Congress need to get it to spend with its spending addiction? Back in 1982 Reagan was promised $3 in cuts for every $1 in tax increases but the cuts never came. In 1990 Bush was promised 2 for 1 but they […]
Senator Mark Pryor wants our ideas on how to cut federal spending. Take a look at this video clip below: Senator Pryor has asked us to send our ideas to him at cutspending@pryor.senate.gov and I have done so (at 4:04 pm CST on April 7th, 2011, and will continue to do so in the […]
However, there are too few rich people to finance a European-sized welfare state.
The above video is a segment from a recent presentation to the Money Show, in which I explained that lower-income and middle-class taxpayers are going to get hit by massive future tax increases.
There are two inescapable reasons for this conclusion.
First, entitlement spending is exploding and, second, there are not enough rich people to pick up the tab. As such, you can’t finance a large welfare state without pillaging ordinary people.
And that’s why I shared the charts in the video. The numbers clearly show that taxes on the rich will not suffice.
There are not enough rich people to finance the current level of government spending.
There are not enough rich people to finance future levels of government spending.
There are not enough rich people to finance the new spending Biden is proposing.
Perhaps the strongest evidence is that even Bernie Sanders recognizes this reality. He favors every possible class-warfare tax increase, but it’s very revealing that he also proposed a massive 11.5 percent payroll tax on the wages of everyone to finance his plan for “free” government-run healthcare.
By the way, let me add one very important point that I didn’t make in the video. I’m sure folks on the left will go for class-warfare tax increases before going after the rest of us.
Today, we’re going to expand on this list with the “most laughable” tweet of 2022. But this tweet from the Republican National Committee is a case of accidental humor rather than deliberate humor.
As you might expect, the RNC did not bother trying to prove its statement.
That’s because the Republican party generally does a terrible job. Donald Trump expanded government. George W. Bush expanded government. And George H.W. Bush expanded government.
You have to go all the way back to Ronald Reagan to find a Republican who actually was on the side of taxpayers (and before him, you have to go all the way back to Coolidge).
And that’s not because of the defense budget. Even when looking at just domestic spending, Republicans (other than Reagan) have a worse track record.
I have to wonder whether the folks at the RNC were doing hallucinogenic drugs when they sent out that tweet? Or was it a naive intern who heard a few speeches and was tricked into thinking the GOP actually cared about shrinking government.
The latter possibility is a good excuse to share this cartoon.
But let’s also look at some serious analysis.
Here are some excerpts from a column in the Wall Street Journal by Kimberley Strassel. She was motivated by a pork-filled handout to the tech industry this past summer, but then proceeded to list many other sins.
The GOP that is assisting in this quarter-trillion-dollar spendathon is the same GOP that last year provided the votes for a $1 trillion infrastructure boondoggle. The same GOP that in 2020 signed on to not one, not two, three or four, but five Covid “relief” bills, to the tune of some $3.5 trillion. The same GOP that…blew through discretionary spending caps. The same GOP that has unofficially re-embraced earmarks. The party occasionally takes a breather—say to gripe about the Democrats’ $1.9 trillion Covid bill in 2021—but then it’s right back to the spending grindstone. When was the last time anyone heard a Republican talk about the need to reform Social Security or Medicare? That disappeared with the election of Donald Trump (opposed to both)… Instead, a growing faction of the party sees a future in buying the votes of working- and middle-class voters with costly new entitlement proposals of their own, such as expanded child tax credits.
I don’t know whether to laugh or cry.
But since laughing is more fun, here’s a cartoon about earmarks (which recently were endorsed by Republican lawmakers).
I’ll close with a tiny bit of optimism.
I’ve dealt with hundreds of politicians over the years, most of whom were Republicans.
By and large, they usually understand that big government is bad for prosperity. But there are two things that have an impact on their voting behavior.
They are afraid of being rejected by voters who want freebies (especially the ones they already are receiving).
But they might be willing to cast courageous votes if there is a real chance of a long-run change in policy.
To elaborate on the second point, there have been three periods of spending restraint in my lifetime: 1) the Reagan years, 2) the Clinton years, and 3) the Tea Party years.
In all three cases, there was a critical mass of lawmakers who were willing to do the right thing in spite of the usual incentives in Washington to do the wrong thing.
Is there a 4th period in our future? That depends on whether the GOP returns to Reaganism.
————
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—
December 22, 2022
The Honorable t John Thune of Soth Dakota United States Senate Washington, D.C. 20510
We got to stop spending so much money and start paying off our national debt or the future of our children and grandchildren will be very sad indeed. Everyone knows that entitlement spending must be cut but it seems we are not brave enough to do it.
TRUE CONSERVATIVES are not the problem because they voted AGAINST THE OMNIBUS SPENDING BILL THAT DEMOCRATS AND RINO REPUBLICANS LIKE YOU IN THE SENATE HAVE VOTED FOR!!! Why did you betray your conservative supporters back home?
WASHINGTON – Sen. John Kennedy (R-La.) released the above statement after voting against the $1.7 trillion government appropriations package.
Key excerpts from the senator’s statement are below:
“Here’s the main reason I voted against the budget: Inflation. As I’ve said before, inflation is ravaging the American Dream. It’s a cancer on the American Dream, and we’re not going to get control of it until Congress stops spending so much money.”
“We’ve got to slow the rate of growth of spending and debt. Now, look, I’m not naive. There are many people here in Washington, not just on the Democratic side—there are many big-government Republicans as well—and their attitude is, ‘We can’t possibly spend enough money.’ If they ran out of money to spend and couldn’t borrow any more, they would think about taking out a reverse mortgage on Alaska to get the money. But there are enough Republicans on Capitol Hill for us to be able to slow the rate of growth and spending, and this bill didn’t do that.”
“The question becomes . . . What’s the best way to achieve the best budget? Do we sit down and do it now, or do we wait until we have a majority of Republicans in the House of Representatives? And I said all along, we should wait.”
“Here’s what it comes down to: Would you rather have Nancy Pelosi decide what the federal budget is going to be, or would you rather wait until he’s sworn in as Speaker of the House and have Kevin McCarthy? And that, to me, is a no brainer, and there was never any doubt in my mind that the prudent decision, in terms of controlling spending, was to wait for Kevin McCarthy [instead of] allowing Speaker Pelosi to make the decision.”
President Ronald Reagan once said, “I have only one thing to say to the tax increasers: Go ahead, make my day.” ____________ Here below is a list of those 66 brave Republicans that voted against the debt ceiling increase listed below in August of 2011. The ones in blue are the ones that I have […]
_________________ President Ronald Reagan wisely said: “The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution.” You would think that the Republicans who talk so much of cutting spending would try to get a plan that cuts spending 3 […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
(Emailed to White House on 12-21-12) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
The federal government has a spending problem and Milton Friedman came up with the negative income tax to help poor people get out of the welfare trap. It seems that the government screws up about everything. Then why is President Obama wanting more taxes? _______________ Milton Friedman – The Negative Income Tax Published on […]
I was sad to read that the Speaker John Boehner has been involved in punishing tea party republicans. Actually I have written letters to several of these same tea party heroes telling them that I have emailed Boehner encouraging him to listen to them. Rep. David Schweikert (R-AZ),Justin Amash (R-MI), and Tim Huelskamp (R-KS). have been contacted […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Some of the heroes are Mo Brooks, Martha Roby, Jeff Flake, Trent Franks, Duncan Hunter, Tom Mcclintock, Devin Nunes, Scott Tipton, Bill Posey, Steve Southerland and those others below in the following posts. THEY VOTED AGAINST THE DEBT CEILING INCREASE IN 2011 AND WE NEED THAT TYPE OF LEADERSHIP NOW SINCE PRESIDENT OBAMA HAS BEEN […]
I hated to see that Allen West may be on the way out. ABC News reported: Nov 7, 2012 7:20am What Happened to the Tea Party (and the Blue Dogs?) Some of the Republican Party‘s most controversial House members are clinging to narrow leads in races where only a few votes are left to count. […]
Rep Himes and Rep Schweikert Discuss the Debt and Budget Deal Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Here is a study done on the votes of the 87 incoming freshman republicans frm the Club for Growth. Freshman Vote Study In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say […]
Stimulating the economy comes from giving the private sector incentive to grow or in other words cutting taxes for job creators and not class warfare. Sadly we have had too many RINOS out there. The Tea Party is the answer for that. The liberal Arkansas Times blog runned by Max Brantley is upset that the Tea […]
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment: For decades now, we have spent too much money on ourselves and have intentionally allowed our […]
Rep. Quayle on Fox News with Neil Cavuto __________________ We have to get people realize that the most important issue is the debt!!! Recently I read a comment by Congressman Ben Quayle (R-AZ) made after voting against the amended Budget Control Act on August 1, 2011. He said it was important to compel “Congressional Democrats and […]
What future does our country have if we never even attempt to balance our budget. I read some wise words by Congressman Jeff Landry (R, LA-03) regarding the debt ceiling deal that was passed on August 1, 2011:”Throughout this debate, the American people have demanded a real cure to America’s spending addiction – a Balanced Budget […]
I read some wise comments by Idaho First District Congressman Raúl R. Labrador concerning the passage of the Budget Control Act on August 1, 2011 and I wanted to point them out: “The legislation lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation.” I just […]
Gun control arguments just don’t make any sense, but President Obama still supports gun control. Laughing at Obama’s Belly Flop on Gun Control April 23, 2013 by Dan Mitchell I’ve shared serious articles on gun control, featuring scholars such as John Lott and David Kopel. I also posted testimonials from gun experts and an honest liberal. […]
Gun Control explained Merry Christmas from the 2nd Amendment Buy a Shotgun Joe Biden Lying AR-15 Make your own Gun Free Zone PRK Arms on CBS 47 news, Fresno Suzanna Gratia Hupp explains meaning of 2nd Amendment! Penn and Teller – Gun Control and Columbine Somebody Picked the Wrong Girl 5 Facts About Guns, Schools, […]
I’ll start with the caveat that tax policy does not necessarily overlap with 10-year periods. But we can learn by examining significant tax policy changes that occurred (or, in the case of the 1950s, did not occur) during various eras.
For the 1960s, the key change was the Revenue Act of 1964, generally known as the Kennedy tax cuts (proposed by President Kennedy in 1963 and then adopted in 1964 after his assassination).
Here’s what Kennedy proposed, as explained by the JFK library.
Declaring that the absence of recession is not tantamount to economic growth, the president proposed in 1963 to cut income taxes from a range of 20-91% to 14-65% He also proposed a cut in the corporate tax rate from 52% to 47%. …arguing that “a rising tide lifts all boats” and that strong economic growth would not continue without lower taxes.
And here’s what was enacted, as summarized by Wikipedia.
The act cut federal income taxes by approximately twenty percent across the board, and the top federal income tax rate fell from 91 percent to 70 percent. The act also reduced the corporate tax from 52 percent to 48 percent and created a minimum standard deduction.
The good news is that the Kennedy tax cuts were the right kind of tax cuts. Marginal tax rates were reduced on work, saving, investment, and entrepreneurship.
The bad news is that the top tax rate was still confiscatory, though 70 percent obviously was not as bad as 91 percent. And a 48 percent corporate rate was not much of an improvement compared to 52 percent.
That being said, moving in the right direction produced good outcomes.
People often talk about the booming economy in the 1960s. And there is some evidence to support that view since inflation-adjusted economic output grew rapidly as the tax cuts were implemented – by 6.5 percent in 1965 and 6.5 percent in 1966.
But I’m cautious about drawing sweeping conclusions from short-run data, especially since we know many other policies also have an impact on economic performance.
So let’s focus instead on some tax-related variables. Here’s a chart that I shared back in 2015, showing that upper-income taxpayers paid more when tax rates were reduced (the same thing happened in the 1980s).
And here’s another chart from the same publication. This one shows that lower tax rates were associated with rising revenues. Especially as the changes were being implemented.
By the way, this does not mean that the tax cut was self-financing.
The core lesson of the Laffer Curve is not that tax cuts “pay for themselves.” That only happens in rare circumstances.
Instead, the lesson is that lower tax rates encourage more productive behavior, which means more taxable income. It then becomes an empirical question of how much of the revenue lost from lower rates is offset by the revenue gained from more taxable income.
And, in the 1960s, we know there was a big Laffer Curve response from upper-income taxpayers. Why? Because they have considerable control over the timing, level, and composition of this income.
Simply stated, the folks who oppose fixing entitlements – including so-called national conservatives and politicians such as Donald Trump– are in favor of giant tax increases on lower-income and middle-class Americans.
This process already is underway in the United Kingdom.
The Conservative Party became recklessly profligateunder Boris Johnson, causing a big bump in the country’s (already excessive) spending trajectory.
And bad spending policy is now leading to bad tax policy (the British pound no longer is the world’s reserve currency, so there’s not as much ability to finance ever-expanding spending by endlessly issuing new debt).
As explained in a Wall Street Journaleditorial from last November, Prime Minister Rishi Sunak and his Chancellor of the Exchequer Jeremy Hunt have a tax agenda somewhat akin to Joe Biden’s.
The Chancellor and his boss, Prime Minister Rishi Sunak, are making a particular tax grab at highly mobile workers, especially in financial services, by reducing the threshold for the top 45% income-tax rate to £125,000 from £150,000. The Treasury pretends this will rake in an additional £3.8 billion in revenue over six years…Mr. Hunt is increasing the top corporate tax rate to 25% from 19% and imposing a global minimum tax not even the European Union has managed to implement. …Mr. Sunak’s Conservative Party ditched Ms. Truss’s supply-side tax and regulatory reforms in favor of this plan to tax and spend Britain to prosperity. One of those strategies boasts a proven track record of success and the other has a history of failure. The Tories can explain their choice to voters at the next election.
In a column for CapX, Conor Holohan made similar points, while also pointing out the corporate tax hike won’t raise nearly as much money and Sunak and Hunt are hoping to collect.
Hunt is right to want to balance the books and avoid passing on huge levels of debt to future generations. But to raise corporation tax on such a scale risks turning away those businesses which will be central to the growth and investment we need to generate the receipts that will pay the nation’s bills…. But that static approach doesn’t..reflect the fact that businesses are being discouraged from investing in Britain because of the planned increase in corporation tax. …The TaxPayers’ Alliance (TPA) dynamic tax model..suggests the planned corporation tax rise could cost £30.2bn of lost GDP after a decade. This slower growth would see almost two thirds of the expected revenue from the rise to be lost through lower receipts. …By raising corporation tax on this scale, the Government will be eroding that tax base, and we will see more companies like AstraZeneca deciding that there are more competitive places to be investing.
Steve Entin of the Tax Foundation also did some economic analysis and is not impressed with the Sunak-Hunt tax-and-spend agenda.
…the Sunak-Hunt tax plan will raise labor costs and reduce hours worked. It will increase tax hurdles for new corporate investment, discouraging capital formation. With less labor and capital, real output and employment will fall, increasing the economic pain… The system phases out the untaxed personal allowance for incomes between £100,000 and £125,140, at a rate of £1 for every £2 of income over £100,000.This results in a de facto 60 percent tax band in the middle of the 40 percent band. …The Sunak-Hunt plan…leaves the pending rise in the corporation tax in place. It raises the windfall profits tax on oil and gas producers and imposes a new tax on electricity generation, which will drive up the cost of energy, prompting the government to promise more spending on energy grants to consumers. …The Sunak-Hunt tax plan…estimates another 6 million workers will be pushed onto the tax roles due to the freezes. …History is clear. Lowering budget deficits via spending restraint frees resources for additional private output and jobs. …It is folly to think deficit reduction by means of a corporation tax increase would lower interest rates enough to spur investment despite the direct damage from the tax
Let’s close with a few passages from another Wall Street Journal editorial, this one published just yesterday.
U.K. Prime Minister Rishi Sunak promised economic expertise… British businesses think he needs a refresher. Witness the brewing revolt against the mammoth tax increases Mr. Sunak cooked up with Chancellor Jeremy Hunt. …they want to raise the top corporate tax rate to 25% from 19%; reduce the threshold for the top 45% personal income-tax rate to £125,140 from £150,000; and soak the middle class by freezing tax brackets…The ruling Conservatives have convinced themselves that only a balanced budget can induce businesses to invest in Britain. But…James Dyson of vacuum cleaner fame wrote in the Telegraph in January that the Tory policy of tax hikes and overregulation is “short-sighted” and “stupid.” …Pharma giant AstraZeneca last month said it will build a £320 million factory in low-tax Ireland instead of the U.K. “because the [U.K.] tax rate was discouraging.” Shell is reevaluating $25 billion in oil and gas investments after Mr. Hunt cranked up a windfall-profits tax on top of the regular corporate rate. …The business revolt is a warning that the taxes will be fiscal duds. …That may leave the Tories defending a record of slow growth, high taxes and more deficits and debt at the next election. A party of the right that loses its low-tax, pro-growth economic credibility is headed for defeat.
Some readers may not care about fiscal policy in the United Kingdom.
But today’s column is a warning sign about what will happen in the United States if Republicans surrenderon spending and entitlement programs are left on autopilot.
Today, we’re going to expand on this list with the “most laughable” tweet of 2022. But this tweet from the Republican National Committee is a case of accidental humor rather than deliberate humor.
As you might expect, the RNC did not bother trying to prove its statement.
That’s because the Republican party generally does a terrible job. Donald Trump expanded government. George W. Bush expanded government. And George H.W. Bush expanded government.
You have to go all the way back to Ronald Reagan to find a Republican who actually was on the side of taxpayers (and before him, you have to go all the way back to Coolidge).
And that’s not because of the defense budget. Even when looking at just domestic spending, Republicans (other than Reagan) have a worse track record.
I have to wonder whether the folks at the RNC were doing hallucinogenic drugs when they sent out that tweet? Or was it a naive intern who heard a few speeches and was tricked into thinking the GOP actually cared about shrinking government.
The latter possibility is a good excuse to share this cartoon.
But let’s also look at some serious analysis.
Here are some excerpts from a column in the Wall Street Journal by Kimberley Strassel. She was motivated by a pork-filled handout to the tech industry this past summer, but then proceeded to list many other sins.
The GOP that is assisting in this quarter-trillion-dollar spendathon is the same GOP that last year provided the votes for a $1 trillion infrastructure boondoggle. The same GOP that in 2020 signed on to not one, not two, three or four, but five Covid “relief” bills, to the tune of some $3.5 trillion. The same GOP that…blew through discretionary spending caps. The same GOP that has unofficially re-embraced earmarks. The party occasionally takes a breather—say to gripe about the Democrats’ $1.9 trillion Covid bill in 2021—but then it’s right back to the spending grindstone. When was the last time anyone heard a Republican talk about the need to reform Social Security or Medicare? That disappeared with the election of Donald Trump (opposed to both)… Instead, a growing faction of the party sees a future in buying the votes of working- and middle-class voters with costly new entitlement proposals of their own, such as expanded child tax credits.
I don’t know whether to laugh or cry.
But since laughing is more fun, here’s a cartoon about earmarks (which recently were endorsed by Republican lawmakers).
I’ll close with a tiny bit of optimism.
I’ve dealt with hundreds of politicians over the years, most of whom were Republicans.
By and large, they usually understand that big government is bad for prosperity. But there are two things that have an impact on their voting behavior.
They are afraid of being rejected by voters who want freebies (especially the ones they already are receiving).
But they might be willing to cast courageous votes if there is a real chance of a long-run change in policy.
To elaborate on the second point, there have been three periods of spending restraint in my lifetime: 1) the Reagan years, 2) the Clinton years, and 3) the Tea Party years.
In all three cases, there was a critical mass of lawmakers who were willing to do the right thing in spite of the usual incentives in Washington to do the wrong thing.
Is there a 4th period in our future? That depends on whether the GOP returns to Reaganism.
————
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December 22, 2022
The Honorable t John Thune of Soth Dakota United States Senate Washington, D.C. 20510
We got to stop spending so much money and start paying off our national debt or the future of our children and grandchildren will be very sad indeed. Everyone knows that entitlement spending must be cut but it seems we are not brave enough to do it.
TRUE CONSERVATIVES are not the problem because they voted AGAINST THE OMNIBUS SPENDING BILL THAT DEMOCRATS AND RINO REPUBLICANS LIKE YOU IN THE SENATE HAVE VOTED FOR!!! Why did you betray your conservative supporters back home?
WASHINGTON – Sen. John Kennedy (R-La.) released the above statement after voting against the $1.7 trillion government appropriations package.
Key excerpts from the senator’s statement are below:
“Here’s the main reason I voted against the budget: Inflation. As I’ve said before, inflation is ravaging the American Dream. It’s a cancer on the American Dream, and we’re not going to get control of it until Congress stops spending so much money.”
“We’ve got to slow the rate of growth of spending and debt. Now, look, I’m not naive. There are many people here in Washington, not just on the Democratic side—there are many big-government Republicans as well—and their attitude is, ‘We can’t possibly spend enough money.’ If they ran out of money to spend and couldn’t borrow any more, they would think about taking out a reverse mortgage on Alaska to get the money. But there are enough Republicans on Capitol Hill for us to be able to slow the rate of growth and spending, and this bill didn’t do that.”
“The question becomes . . . What’s the best way to achieve the best budget? Do we sit down and do it now, or do we wait until we have a majority of Republicans in the House of Representatives? And I said all along, we should wait.”
“Here’s what it comes down to: Would you rather have Nancy Pelosi decide what the federal budget is going to be, or would you rather wait until he’s sworn in as Speaker of the House and have Kevin McCarthy? And that, to me, is a no brainer, and there was never any doubt in my mind that the prudent decision, in terms of controlling spending, was to wait for Kevin McCarthy [instead of] allowing Speaker Pelosi to make the decision.”
President Ronald Reagan once said, “I have only one thing to say to the tax increasers: Go ahead, make my day.” ____________ Here below is a list of those 66 brave Republicans that voted against the debt ceiling increase listed below in August of 2011. The ones in blue are the ones that I have […]
_________________ President Ronald Reagan wisely said: “The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution.” You would think that the Republicans who talk so much of cutting spending would try to get a plan that cuts spending 3 […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
(Emailed to White House on 12-21-12) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
The federal government has a spending problem and Milton Friedman came up with the negative income tax to help poor people get out of the welfare trap. It seems that the government screws up about everything. Then why is President Obama wanting more taxes? _______________ Milton Friedman – The Negative Income Tax Published on […]
I was sad to read that the Speaker John Boehner has been involved in punishing tea party republicans. Actually I have written letters to several of these same tea party heroes telling them that I have emailed Boehner encouraging him to listen to them. Rep. David Schweikert (R-AZ),Justin Amash (R-MI), and Tim Huelskamp (R-KS). have been contacted […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Some of the heroes are Mo Brooks, Martha Roby, Jeff Flake, Trent Franks, Duncan Hunter, Tom Mcclintock, Devin Nunes, Scott Tipton, Bill Posey, Steve Southerland and those others below in the following posts. THEY VOTED AGAINST THE DEBT CEILING INCREASE IN 2011 AND WE NEED THAT TYPE OF LEADERSHIP NOW SINCE PRESIDENT OBAMA HAS BEEN […]
I hated to see that Allen West may be on the way out. ABC News reported: Nov 7, 2012 7:20am What Happened to the Tea Party (and the Blue Dogs?) Some of the Republican Party‘s most controversial House members are clinging to narrow leads in races where only a few votes are left to count. […]
Rep Himes and Rep Schweikert Discuss the Debt and Budget Deal Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Here is a study done on the votes of the 87 incoming freshman republicans frm the Club for Growth. Freshman Vote Study In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say […]
Stimulating the economy comes from giving the private sector incentive to grow or in other words cutting taxes for job creators and not class warfare. Sadly we have had too many RINOS out there. The Tea Party is the answer for that. The liberal Arkansas Times blog runned by Max Brantley is upset that the Tea […]
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment: For decades now, we have spent too much money on ourselves and have intentionally allowed our […]
Rep. Quayle on Fox News with Neil Cavuto __________________ We have to get people realize that the most important issue is the debt!!! Recently I read a comment by Congressman Ben Quayle (R-AZ) made after voting against the amended Budget Control Act on August 1, 2011. He said it was important to compel “Congressional Democrats and […]
What future does our country have if we never even attempt to balance our budget. I read some wise words by Congressman Jeff Landry (R, LA-03) regarding the debt ceiling deal that was passed on August 1, 2011:”Throughout this debate, the American people have demanded a real cure to America’s spending addiction – a Balanced Budget […]
I read some wise comments by Idaho First District Congressman Raúl R. Labrador concerning the passage of the Budget Control Act on August 1, 2011 and I wanted to point them out: “The legislation lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation.” I just […]
Gun control arguments just don’t make any sense, but President Obama still supports gun control. Laughing at Obama’s Belly Flop on Gun Control April 23, 2013 by Dan Mitchell I’ve shared serious articles on gun control, featuring scholars such as John Lott and David Kopel. I also posted testimonials from gun experts and an honest liberal. […]
Gun Control explained Merry Christmas from the 2nd Amendment Buy a Shotgun Joe Biden Lying AR-15 Make your own Gun Free Zone PRK Arms on CBS 47 news, Fresno Suzanna Gratia Hupp explains meaning of 2nd Amendment! Penn and Teller – Gun Control and Columbine Somebody Picked the Wrong Girl 5 Facts About Guns, Schools, […]
Interestingly, many folks on the left also recognize that the NHS has problems. But they claim that long waiting lines and needless deaths are the result of too little money.
For example, in a column for the New York Times, Allyson Pollock and Peter Roderick complain that their country’s government-run health system is being starved of funding.
…you don’t have to work in a hospital to know that Britain’s N.H.S. is in the most serious crisis of its history; you just have to be injured, or ill. Thousands of people are estimated to have died in the last year because of overwhelmed ambulance and emergency services. There are 7.2 million people in England, more than 10 percent of the population,on waiting lists for treatments… That the flagship health care service of one of the wealthiest countries in the world is in such a state is shocking, but not without explanation. Decades of marketization, 10 years of Conservative austerity and a pandemic have hollowed out the N.H.S… A government-commissioned report released last year called the years between 2010 and 2020 the N.H.S.’s “decade of neglect.” …The N.H.S. as Britons have known it — accessible, free at the point of use, cherished — is becoming something else. But as long as there are still people willing to fight for it, it’s not too late to save it.
If you read the full column, you might notice something very odd.
The authors share lots of data about the poor performance of the U.K.’s government-run system. And they share some good data about patient dissatisfaction.
But when they complain about how this is the fault of austerity, they don’t share any numbers.
So I want to the website for the U.K. Office of National Statistics and found the data showing the breakdown of annual government spending and I looked at the numbers for health expenditures.
Lo and behold, there was no austerity.
If you look closely, there was a very brief slowdown in the rate of growth starting in about 2010, but there were never budget cuts.
Indeed, the burden of NHS spending grew by an average of more than 6.7 percent over the past 25 years – much faster than inflation over the same period.
The moral of the story is that the NHS is doing a lousy job, but it’s not because of a shrinking budget.
P.S. I mentioned at the start of the column that I don’t like the current health system in America and that I also don’t like the idea of a British-style system. If you want to know the better approach, click here, here, here, here, here, here, and here.
Senate Majority Leader Chuck Schumer, D-N.Y., exults at a news conference after Senate passage of the Inflation Reduction Act at the Capitol on Sunday after a marathon session. The entirely party-line vote was 51-50, with the tie-breaking vote being cast by Vice President Kamala Harris. (Photo: Drew Angerer/Getty Images)
As Senate Democrats achieve their goal of jamming through the so-called Inflation Reduction Act, reality is becoming clear: The bill will likely increase near-term inflation, depress household incomes, and produce the long-term deficits that fuel long-term inflation.
Using the Congressional Budget Office’s latest scoring, estimates of the most recent changes, and accounting for very expensive gimmicks, it’s likely that the bill will produce deficits.
The cumulative deficit would be around $52.5 billion over the next four years, at least $110 billion through fiscal year 2031, and more beyond. That would mean adding to near-term and long-term inflationary pressures, in contrast to what proponents such as Sen. Joe Manchin, D-W.Va., claim.
In short, the bill is about as far away from a genuine Inflation Reduction Act as possible. Though it would be harmful under any circumstances, signing it into law during a period of stagflation would be the worst possible timing.
The Inflation Reduction Act utilizes three major sets of common congressional gimmicks to mask its true costs: cherry-picked expiration dates, ignoring net interest costs, and indirect tax burdens.
As one very costly example, the bill would extend for three more years “temporary” Obamacare subsidies that were supposed to expire this year. That brings to mind the wisdom of the late economist Milton Friedman, who once observed, “Nothing is so permanent as a temporary government program.”
Despite the Obamacare subsidies being peddled as temporary, extending them was among the first provisions of the Inflation Reduction Act that Senate Democrats committed to voting for. It just goes to prove something the everyone knows: There are certain taxpayer-funded handouts and giveaways that seem to always get extended in perpetuity.
To keep the reported cost of the provision down, a three-year expansion was chosen because it is what they could afford on paper. However, accounting for political reality, these subsidies will likely cost at least $146.5 billion more than what is being reported through fiscal year 2031.
That would be further compounded by Congress yet again delaying implementation of the Trump-era Medicare rebate rule, a move that shifts federal costs further into the future and arbitrarily reduces the portion of the costs included in the budgetary window. While the future costs would remain real, they would conveniently slip under the radar of the formal score.
Yet another overestimation of savings presented by the bill’s authors is a claim to $204 billion in increased revenues from cracking down on tax fraud.
While increased enforcement activity might result in higher revenue collections, estimates are highly speculative. Because the actual results are so uncertain, such revenues are not included in official cost estimates under the bipartisan scorekeeping guidelines.
The deficits created by the bill, and the fact that they are front-loaded, would increase federal net interest costs by more than $14 billion—a fact that is not reflected in the formal CBO estimates.
In total, the bill would add at least $110 billion to the federal deficit through fiscal 2031.
To put that level of spending in perspective, $110 billion is roughly four-and-a-half times NASA’s annual budget, or nearly the cost of the ships in six U.S. Carrier Strike Groups. In this case, however, the $110 billion will be used to buy more inflation.
When the federal government runs a deficit, it eventually must be paid back. That’s either done through job- and wage-killing taxes or by way of the Federal Reserve printing new money to finance the deficits.
During the height of the COVID-19 pandemic, the Fed financed 56% of new federal debt with trillions upon trillions of newly created dollars. Those dollars devalued paychecks and Americans’ lifetime savings.
When the federal government attempts to print its way out of fiscal irresponsibility, it does so by imposing an inflation tax on every American household.
With that precedent, no one can be certain of how much the federal government will use new taxes or new money creation to cover deficits. The expectation of future money printing causes immediate inflationary pressures as people act now to mitigate such future possibilities.
As such, the deficits created by the Inflation Reduction Act would simply be the newest addition to the current inflation tax.
To add insult to injury, almost every provision of the bill will bleed the bank accounts of American families. Tragically, the deficit- and inflation-increasing aspects of the Inflation Reduction Act are only the beginning of its burdens.
In these provisions we find the third set of gimmicks; namely, indirect tax burdens. Despite President Joe Biden’s assurances, the tax and price-control burdens of the Inflation Reduction Act will fall squarely on families trying to make ends meet.
Companies are combinations of workers, tools, and institutional knowledge that when brought together can produce the goods and services we need and enjoy. As such, companies can’t absorb a tax. They only direct how American households will feel it.
The bill’s business-tax hike will leave companies with no choice but to cut wages, increase consumer prices, or cut future investments in a growing and prosperous economy. The bill’s requirement that the government get a deal on drug prices will simply mean that drug prices will go up for families and that research budgets for new lifesaving drugs will be slashed.
In reality, this bill is a litany of policies aimed at scoring political points that has been recklessly and hurriedly slapped together. If it’s signed into law as expected, long after the press conferences and congressional pats on the back have faded into distant memory, it’s inflationary, tax, and other burdens will continue to haunt every American household.
Have an opinion about this article? To sound off, please email letters@DailySignal.com and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.
Milton Friedman’s FREE TO CHOOSE “How to Stay Free,” Transcript and Video (60 Minutes)
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “The Anatomy of a Crisis” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, and – Power of the Market. In this episode “How to Stay Free” Friedman makes the statement “What we need is widespread public recognition that the central government should be limited to its basic functions: defending the nation against foreign enemies, preserving order at home, and mediating our disputes. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problems than turning them over to the government.”
— On Mon, 12/6/10, Everette Hatcher <lowcostsqueegees@yahoo.com>wrote:
From: Everette Hatcher <lowcostsqueegees@yahoo.com>
Subject: Vol 10 How to stay Free,Videos and Transcript Free to Choose
To:
Date: Monday, December 6, 2010, 8:50 AM
The Great Depression of the 1930s changed the public philosophy regarding the appropriate role of government in American life. Before the Depression, government was not assumed to have special responsibilities for individual or business welfare. The severity of the economic tragedy of the 1930s resulted in a dramatic change in public attitudes. Many believed the Depression represented a “failure of capitalism.” Because of this alleged failure, government has ever since been expanding its power and the scope of its control. Government growth has resulted in waste, inefficiency, and a loss of personal freedom. Intended to serve the interests of the people, many governmental programs have been revealed to serve primarily the interests of the bureaucrats. Many government programs serve at cross purposes. For example, different agencies attempt, on the one hand, to discourage use of tobacco as potentially dangerous to good health and, on the other hand, to encourage production of tobacco through subsidies to tobacco farmers. The list of government inconsistencies and inefficiencies goes on and on. Dr. Friedman, however, says that there is reason for optimism. Today, he notes, the public is better informed about these matters and is increasingly willing to take a stand against further unnecessary expansion of government services. He suggests the most fruitful approach is to remove discretionary budget power from the government. Friedman favors passage of a Constitutional amendment limiting the government’s budget and forcing government to work within that budget. But this is only the first step. As Dr. Friedman points out, “What we need is widespread public recognition that the central government should be limited to its basic functions: defending the nation against foreign enemies, preserving order at home, and mediating our disputes. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problems than turning them over to the government.”
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Milton Friedman makes the point: “If power were really concentrated in monolithic in a few hands, it would be hopeless to reform the system. But because it’s fragmented, because it’s split up, we can see how much waste there is, we can see how inefficient it is, how the left hand seldom knows what the right hand is doing.” IN OTHER WORDS A DICTATOR IS NOT RUNNING THE GOVERNMENT WE HAVE A CHANCE TO CHANGE WHAT IS GOING ON!!!
Volume 10 – How to Stay Free
Transcript:
Friedman: Every day hundreds of people flock to the capital in Washington, D.C. attracted only by power. That power has accumulated here over the past 50 years at the seat of government of the most powerful nation on Earth.
Worker: How do you do? Glad to meet you. How are you? How’s it going? What are you talking about? Guns?
Warren Richardson: Hello, this is Warren Richardson. Oh Mary, yes, what’s on your mind?
Friedman: Warren Richardson makes his living by knowing who has power and influence to trade.
Warren Richardson: I’ll be waiting for you.
Friedman: He’s a lobbyist.
Warren Richardson: Thanks a lot. Bye.
Unidentified Member of the House: The official administration position on this bill, however, is that its consideration would be premature in view of the President’s….
Friedman: He trades with people like these. Members of the House Committee on Agriculture. They make some of the laws and regulations that among other things, control the food we eat. They are elected officials who have the power to spend billions of dollars of our tax money.
Mr. Baldus: It’s all of page two. It takes all of page three.
Friedman: Naturally, lots of people would like to get their hands on that money.
Mr. Baldus: That’s the kind of stuff that ought never go into the statute books. And I think anybody who’s practicing justice court knows it.
Unidentified Member of the House: Bill, the way you get common sense administration is by having common sense administrators. And it seems like there’s more common sense administration in agriculture.
Michael Masterson (Congressional Aide): Access is all important and how you gain access. It used to be there were only a few hundred lobbyists in this town, now we record up to 15,000 lobbyists plus ancillary personnel, secretaries, receptionists and typists and the researchers that go with that. They are calling upon all the law firms imaginable. So there is a tremendous support base out there for the lobbying effort.
Friedman: You don’t have to walk these corridors for very long before you begin to realize that the concentration of power in the hands of a few people, however well intentioned, is a real threat to the freedom of the individual. Of course, Warren Richardson doesn’t see it that way. Over the years he’s successfully lobbied for special interest groups in energy, environment, wages and prices. Today he’s arguing the case for another special interest. The National Action Committee on Labor Law Reform, hoping to swing influence his way.
Warren Richardson: When the bill goes overboard in terms…much, much too far.
Friedman:There’s hardly a time when the corridors of Congressional Office buildings are not peppered with people waiting for their chance to see and influence the elected man at the center of power.
Unidentified Member of the House: Within that legislation for funds for communities of 50,000 and under, the goals of the existing law and certain statutory paperwork requirements are often very unrealistic for smaller communities.
Friedman: The deals made here effect all of us and sometimes in ways we don’t like. But don’t blame the people making the deals. They’re just pursuing their own self-interest which may be as narrow as making a buck or as broad as trying to reform the world. We, the citizens, are to blame because we’ve handed over much of our lives of personal decision making to government. And we now find that was government does severely limits our freedom.
The leather and wood paneled official offices of a Congressman in Washington, D.C. It’s the mecca of those who try for behind the scenes influence. Weaving his way between special interest groups can be tough for a politician. To stay in office he needs votes. To get votes he often has to make deals.
Unidentified Politician: The chances of our party regaining the White House. Republicans. If the President sends the policies to the public …..
Friedman: It’s frequently a frustrating business.
Michael Masterson: When you have people who are coming in not for purposes of debate and dialogue and discussion on something, but merely they demand their special interest or their single issue concern. That’s where it becomes extremely difficult because there might be an equal number on the opposite side of the coin.
Friedman: Every time I come to Washington I’m impressed all over again with how much power is concentrated in this city. But we must understand the character of that power. It is not monolithic power in a few hands like the way it is in countries like the Soviet Union or Red China. It is fragmented into lots of little bits and pieces and with every special group around the country trying to get its hand on whatever bits and pieces it can. The result is that there’s hardly an issue in which you won’t find government on both sides. For example, in one of these massive buildings spread, scattering all through this town filled to the bursting with government employees, so of them are sitting around trying to figure out how to spend our money to discourage us from smoking cigarettes. In another of the massive building, maybe far away from the first, some other employees, equally dedicated, equally hardworking, are sitting around figuring out how to spend our money to subsidize farmers to grow more tobacco. In one building they’re figuring out how to hold down prices, in another building they’ve got schemes for raising prices. The prices the farmers receive or import prices or keeping out cheap foreign goods. We set up an enormous Department of Energy with 20,000 employees to encourage us to save energy. We set up an enormous Department of Environmental Protection to figure out ways to get cleaner air involving our using more energy.
Now, many of these effects cancel out but that doesn’t mean that these programs don’t do a great deal of harm and that there aren’t some very bad things about it. One thing you can be sure of, the costs don’t cancel out, they add together. Each of these programs spends money taken from our pockets that we could be using to buy goods and services to meet our separate needs. All of these programs use very able, very skilled people who could be doing productive things. They, all of them, grind out rules, regulations, red tape, forms to fill-in. I doubt that there’s a person in this country who doesn’t violate one or another of those rules or regulations or laws everyday. Not because he wants to or intends to, but simply because it’s impossible for anybody to know what they all are. Those are the bad things. But there’s something good about this fragmentation of power too. And that is, that it enables us to do something about it.
If power were really concentrated in monolithic in a few hands, it would be hopeless to reform the system. But because it’s fragmented, because it’s split up, we can see how much waste there is, we can see how inefficient it is, how the left hand seldom knows what the right hand is doing.
It wasn’t always like this. The armies of bureaucrats administering our lives making our decisions spending our money, all supposedly for our good. Our nation was founded with something fundamentally different in mind.
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In this episode Milton Friedman makes the point, “From regarding government as a threat to our freedom, we have come more and more to regard government as a benefactor from which all good things flow. We have assigned increasing tasks of great importance to government. We have turned over to government a larger and larger fraction of our income to be spent on our behalf and the results are plain for all the same they are disappointing.”
Pt 2
Almost 200 years ago a remarkable group of men gathered in this room to write a Constitution for the new nation that they had helped to create a few years earlier. They were a wise and learned group of people. They had learned the lesson of history. The great danger to freedom is the concentration of power, especially in the hands of a government. They were determined to protect the citizens of the new United States of America from that danger. And they crafted their Constitution with that in mind. That Constitution has served us well. It has enabled us to preserve our freedom for close on to 200 years. But in the past 50 years, we have been forgetting the lesson that these wise men knew so well. From regarding government as a threat to our freedom, we have come more and more to regard government as a benefactor from which all good things flow. We have assigned increasing tasks of great importance to government. We have turned over to government a larger and larger fraction of our income to be spent on our behalf and the results are plain for all the same they are disappointing. The great expectations have not been achieved and our freedoms have suffered in the process.
Where did it all go wrong? Government began to take an increasing part in our personal affairs nearly 50 years ago. It was 1933, at the lowest point of the worst depression in history. The idea took root that capitalism had failed and that failure was responsible for the human and economic tragedy. In the early 30’s, Franklin Delano Roosevelt and his advisors met here to devise programs to meet the problems of the depression. Their answer was to give central government more power. Out of that beginning came today’s welfare state.
This Empire State Plaza in Albany, NY is a fine example of the difference between public political power and private economic power. It was constructed while Nelson Rockefeller was Governor of the state of New York. The Rockefeller family has spent millions of its private money on good causes. It has endowed universities like my own, at the University of Chicago, financed medical research, reconstructed Williamsburg, yet not all the private money of the Rockefeller family gave them anything like the amount of power that Nelson Rockefeller was able to have as Governor of the State of New York. He constructed monuments like this all over the state, using every expedient he could think of to finance them. When he left office, taxes per persons in New York State were higher than in any other state in the country excepting only Alaska. And there was a monumental debt besides. So much so, that his successor, who had the reputation as a Democratic congressman of being a big spender, had to use his inaugural speech to preach the virtues of austerity and to say the time of wine and roses is over.
Look at this skyline. It’s Chicago and I think it’s very beautiful. Much of it is less than 20 years old. Those tall buildings were built by private enterprise for use by private enterprise. Not by government for use by government bureaucrats. These are productive monuments, not a burden on the taxpayer, a burden that has almost bankrupted New York City. The irony is that for the most part it was good intentions that led us to where we are today, a nation governed by bureaucratic empires. I wonder whether when they built this building, they realized that it was going to come out looking like a fortress. From modest beginnings in 1953, the Department of Health, Education and Welfare has grown into a veritable empire. Only a small part of its total staff is housed in this headquarters building, a mere 2,000 bureaucrats. Its budget is the third largest budget in the whole world exceeded only by the entire budget of the United States and of the Soviet Union. It employs directly 150,000 full time people and the empire it rules employs another million. More than one out of every 100 people in the U.S. works in the HEW empire.
As we have seen in this series, the Department of Health, Education and Welfare is spending increasing amounts of our money each year on health. One effect is simply to raise the fees and prices for medical and hospital services without a corresponding improvement in the quality of medical care that we receive. It is controlling more and more of the food and drugs we buy. In the process, discouraging the development and preventing the marketing of new drugs that could be saving tens of thousands of lives a year. In the field of education the sums being spent are skyrocketing. Yet by common consent, the quality of education is declining. More and more money is being spent and increasingly rigid controls imposed to promote racial integration. Yet our society is becoming more fragmented. In the field of welfare, billions of dollars are being spent each year, yet at a time when the standard of life of the average American is higher than it has ever been in history, the number of people on welfare roles is growing. Social Security, the budget is colossal, yet it is in deep financial trouble. The young complain and with considerable justice about the high taxes they must pay and those taxes are needed to finance the benefits that are going to the old, yet the old complain and also with justice that it is difficult for them to maintain the standard of life that they were led to expect. A system that was enacted to make sure that the old never became objects of charity sees an increasing number of our older folk on the welfare roles. By its own accounting, HEW in one year lost through fraud, abuse and waste and amount of money that would have built well over 100,000 houses costing $50,000 a piece. Little wondered that those initials are increasing coming to stand for “How to encourage waste.”
Martin Anderson: We found in some cities that upwards of 20_25% of all the people currently receiving welfare are either totally ineligible for welfare or are receiving more than they should be receiving. And it appears in looking into this that the main reason for this is not the welfare laws themselves, but the way they are administered. They are administered in a very lax and loose manner. One of the most famous cases, in fact it just happened last week, they arrested a woman in southern California, they referred to her as the Welfare Queen. And over the past six or seven years she has received $300,000 in welfare payments. Which of course is on an after tax basis, so if you put her on a before tax basis, it might be equivalent to over a million dollars in before tax income. And, she and her husband were living in a nice $170,000 home, nice cars, and she used a very simple technique. She just used alias, used false names, and signed up to get countless different welfare agencies and departments and drove around and collected her checks.
Friedman: Something had to be done about this scandalous state of affairs. What better bureaucratic decision than to set up a special department crammed with computers and civil servants all dedicated to tracking down waste using taxpayers money, of course, in the process. $27.5 million in the first year.
When there is a high rate of taxation then you have people cheating on their taxes and you can see that in England today.
Pt 3
As Adam Smith wrote over 200 years ago, in the economic market people who intend to serve only their own private interests are led by an invisible hand to serve public interests where there was no part of their intention to promote. In the political market, there is an invisible hand operating as well. But unfortunately it operates in the opposite direction. People who intend only to serve the public interest are led by an invisible hand to serve private interests that was not part of their intention to promote. The reason is simple, as we have seen in case after case, the general interest is diffused among millions and millions of people with special interest its concentrated. When reformers get a measure through they go on to their next crusade leaving no one behind to protect the public interest. But they do leave behind some money and some power and the special interests that can benefit from that money and from that power are quick to gain it at the expense of most of the rest of us. By now, after 50 years of experience, it is clear that it doesn’t really matter who lives in that house. Government will continue to grow so long as the rest of us believe that the way to solve our problems is to turn them over to government.
Yet there are many people who want to solve their own problems, who want to use their own skills and energy and resources. We found such a person here in southern California.
John McCalm, a fireman, was planning his retirement. He decided to fulfill his life’s ambition, he built his own house with his own hands. He bought a site with a magnificent view, cleared the ground and realized that he was the first man who ever cultivated this land. It made him feel good. He pulled a trailer on to the edge of his plot and moved in with his wife to live there while they worked on the house. He made his own adobe bricks, he planted avocado trees, learned about carpentry and plumbing. It was going well when one day a local official arrived with a warning. It was alright to build a house he said, but it was against regulations to live in the trailer any longer. The McCalms thought that the rules were bureaucratic and foolish and they resented them. They decided to leave the trailer exactly where it was and defy the authorities.
Pat Brennan became something of a celebrity in 1978 because she was delivering mail in competition with the United States Post Office. With her husband she set up business in a basement in Rochester, NY. Soon it was thriving. They charged less than the post office and they guaranteed delivery the same day of parcels and letters in downtown Rochester. There is no doubt now that they were breaking the law as it stood. The post office took them to court. The case against them was simply that they should not be handling letters. The Brennan’s decided to fight and local businessmen provided the financial backing.
Pat Brennan: I think there’s going to be a quiet revolt and perhaps we’re the beginning of it. That you see people bucking the bureaucrats where years ago you wouldn’t dream of doing that because you’d be squelched. Now, with tax revolts and with what we’re doing, people are deciding that their fates are their own and not up to somebody in Washington who has no interest in them whatsoever. So, it’s not a question of anarchy, but it’s a questions of people rethinking the power of the bureaucrats and rejecting it.
Friedman: The Brennan customers were clear about one thing. After all, the Brennan’s service was cheaper than the regular mail.
Thomas O’Donaghue (storekeeper): We’re not sure that they have done anything illegal and I’d like to know more about this and I hope that this gets further into the courts than it has already. And someone will listen to their appeal because when we use the Brennan’s we know for a fact that same day delivery is going to be happening day after day after day, whereas with the other guy, you’re not sure and you’re sure what kind of shape it’s going to get there in. So I am behind the Brennan’s 100% and anything I can do to help them, I will.
Pat Brennan: Well, the questions of freedom comes up in any kind of a business. Whether you have the right to pursue it and the right to decide what you are going to do. There is also the question of the freedom of the consumers to utilize the service that they find is inexpensive and far superior. And according to the federal government and the body of laws called the Private Express Statutes, I don’t have a freedom to start a business and the consumer does not have the freedom to use it. Which seems very strange in a country like this that the entire context of the country is based on freedom and free enterprise.
Friedman: The post office won the case. It went all the way to the State Supreme Court and the Brennan’s were closed down. Put out of the business of delivering mail.
What we’ve been looking at is a natural human reaction to the attempt by other people to control your life when you think it’s none of their business. The first reaction is resentment. The second is to attempt to get around it. And finally there comes a decline in respect for law in general. There’s nothing especially American about this. It happens all over the world whenever some people try to control other people. For example, take a look at what’s happening to the British.
For most of the past century Britain was known throughout the world for the respect which its citizens gave to the law, but no longer. Graham Turner (Author “Business in Britain) Nothing is perfect that we have become in the course of the last ten or fifteen years, a nation of fiddlers. How do they do it? They do it in a colossal variety of ways. Lets take it right at the lowest level. Take a small grocer in a country area, say Devon. Very small turnover. How does he make money? He finds out that by buying through regular wholesalers he’s always got to use invoices. But if he goes to the cash and carry and buys his goods from there, and the profit margin on those goods can be untaxed because the tax inspector simply don’t know he’s had those goods. That’s the way he does it. Then if you take it to the top end, if you take a company director, well there’s all kinds of ways they can do it. They buy their food through the company, they have their holidays on the company, the put their wives as company directors even though they never visit the factory. They build their houses on the company by a very simple device of building a factory at the same time as a house, it goes absolutely right through the range from the ordinary person, the ordinary working class person, doing quite menial jobs right to the top end, businessmen, senior politicians, members of the Cabinet, members of the Shadow Cabinet, they all do it. I think almost everybody now feels the tax system is basically unfair. And, everybody who can tries to find a way around that tax system. Now, once that happens, once there is a consensus that the tax system is unfair, the country in effect becomes a kind of conspiracy. And everybody helps each other to fiddle. You’ve no difficulty fiddling in this country because other people actually want to help you. Now 15 years ago that would have been quite different. People would have said, hey, you know, this is not quite as it should be. So that’s the first reason. A very high level of taxation. But I think personally there’s another fact that comes into it. And that is that over the years we’ve had a huge growth in bureaucracy, government expenditure, cotton wool, if you like, to protect people from the slings and arrow of ordinary life, you know, health service, all kinds of benefits of one sort or another. And I think this comes into the consciousness of people almost a sort of new factor feeling that things don’t quite have the value that they did that money is not a thing of value, if your short you get it from some government body or other
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In this episode Milton Friedman makes the point:
“It will be no easy task to cut government down to size. Today in country after country the strongest special interest has become the entrenched bureaucracy. Whether at the national or at the local level. In addition, each of us gets special benefits from one or another governmental program. The temptation is to try to cut down government at someone else’s expense while retaining our own special privileges. That was a stalemate.”
Ep. 10 – How to Stay Free [4/7]. Milton Friedman’s Free to Choose (1980)
Friedman: Criminal tax evasion in Britain, laws and regulations defied in the U.S. It’s nothing to celebrate. The hopeful thing is that throughout the free world the public is coming to recognize the dangers of big government and is taking steps to control it. But it will be no easy task to cut government down to size. Today in country after country the strongest special interest has become the entrenched bureaucracy. Whether at the national or at the local level. In addition, each of us gets special benefits from one or another governmental program. The temptation is to try to cut down government at someone else’s expense while retaining our own special privileges. That was a stalemate. The right approach is to tackle head on the explosive growth in government spending. Lets give the government a budget the way each of us has a budget. A movement in this direction is already underway in the U.S. with the many proposals for Constitutional Amendments limiting government spending. Several states have already adopted such an amendment. There is strong pressure for a similar amendment at the federal level. Those amendments would force government to operate within a strict budget. Each special interest would have to compete with other special interests for a larger share of a fixed pie instead of all of them being able to join forces at the expense of the taxpayer.
This is an important step, but it is only a first step. No piece of paper by itself can solve our problems for us.
What we need is widespread public recognition that the central government should be limited to its basic functions. Defending the nation against foreign enemies. Preserving order at home. Mediating our dispute. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problem than turning them over to the government.
This is where much of the future strength of the United States lies. In places like Utuma, Iowa where ordinary hardworking American people live. People of all economic levels live in Utuma, but there are no extremes of either wealth or poverty. All are part of a community. Each part of which depends on the others for a stable and happy life worth living. This is a kind of community that formed the character of democratic America.
We began this series by stressing two ideas, the idea of human freedom as embodied in Thomas Jefferson’s Declaration of Independence, the idea of economic freedom as embodied in Adam Smith’s Wealth of Nations. Those two ideas working together, came to their greatest fruition here in the heartland of America. But the basic character of the society that they created has been changing as a result of the rise of another set of ideas.
We have forgotten the basic truth that the founders of this country knew so well. That the greatest threat to human freedom is a concentration of power whether in the hands of government or anyone else. Throughout the Western world, more and more of us are coming to recognize the dangers of an over-governed society. But it will take more than a recognition of danger. Freedom is not the natural state of mankind. It is a rare and wonderful achievement. It will take an understanding of what freedom is, of where the dangers to freedom come from. It will take the courage to act on that understanding if we are not only to preserve the freedoms that we have, but to realize the full potential of a truly free society.
Lawrence E. Spivak: Milton, all through your discussions, you hammer away at two things, the theories of Adam Smith on the free market and of Thomas Jefferson on central power. One thing that troubled me a little bit about your discussions is that it seemed to me that you are little bit the way psychoanalysts used to talk about Freud. That you believe they had given us the word and that even thought 200 years have gone by, it was still in the world, that circumstances had not changed the meaning anyway. Are you that fixed about their ideas?
Friedman: There’s a great difference between principles and the application of principles. The application of a principle has to take account of circumstances. But the principles that explain how it is that an automobile operates, are no different from the principles that explain how a horse and buggy operated or how a bow and arrow operated. The principles that Adam Smith enunciated, the philosophy that Thomas Jefferson enunciated, are every bit as valid today as they were then. But the circumstances are different and therefore the applications in many cases are very different. In addition, there has been a great deal of work and study and scholarly activity that has gone on since then. We know a great deal more about the way in which an economy works than Adam Smith knew. He was wrong in many individual details of his theory but his overall vision, his conception of how it was that without any central body planning it, millions of people could coordinate their activities in a way that was mutually beneficial to all of them. That central concept is every bit as valid today as it was then, and indeed, we have more reason to be confident in it now than he had because we’ve had 200 years more experience to observe how it works.
Lawrence E. Spivak: Let’s go back to Jefferson. You say cut the functions of central government to the basic functions advocated by Jefferson which was what? Defense against foreign enemies, preserve order at home, and mediate our disputes. Now, can we do that in the complicated, the complex world we live in today, without getting into very serious trouble.
Friedman: Suppose we look at the activities of government in the complex world of today. And ask to what extent has the growth of government arisen because of those complexities? And the answer is, very little indeed. What is the area of government that has grown most rapidly? The taking of money from some people and the giving of it to others. The transfer area. HEW, a budget 1_1/2 times as large as a whole defense budget. That’s the area where government has grown. Now, in that area, the way in which technology has entered has not been by making certain functions of government necessary, but by making it possible for government to do things they couldn’t have done before. Without the modern computers, without modern methods of communication and transportation, it would be utterly impossible to administer the kind of big government we have now. So I would say that the relation between technology and government has been that technology has made possible big government in many areas, but it’s not required it.
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In this episode Milton Friedman makes the point, “There was no widespread public demand for Social Security programs… it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little.”
Pt 5
Lawrence E. Spivak: I know, I believe, I say I know, I think I know, but I’ll say I believe that you felt, you blame the government for the Great Depression of 1929 through 1933 and of course, you had to blame FDR for all he did, but most people feel that he saved this free economy of ours.
Friedman: Given the catastrophe of the Great Depression, there is no doubt in my mind that emergency government measures were necessary. The government had made a mess. Not FDR’s government, it was the government that preceded him. Although it was mainly the Federal Reserve System which really wasn’t subject to election. But once FDR came in he did two very different kinds of things.
Lawrence E. Spivak: Well, had the government made a mess by what it did or but by what it didn’t do.
Friedman: By what it did. By it’s monetary policies which forced and produced a sharp decline in the total quantity of money. It was a mismanagement of the monetary apparatus. If there had been no federal reserve system, in my opinion, there would not have been a Great Depression at that time. But given that the depression had occurred, and it was a catastrophe of almost unimaginable kind, I do not fault at all, indeed on the contrary I commend Roosevelt for some of emergency measures he took. They obviously weren’t of the best, but they were emergency measures and you had an emergency you had to deal with. And the emergency measure such as relief programs, even the WPA which was a make work program, these served a very important function. He also served a very important function by giving people confidence in themselves. His great speech about the only thing we have to fear is fear itself was certainly a very important element in restoring confidence to the public at large. But he went much beyond that, he also started to change, under public pressure, the kind of government system we had. If you go beyond the emergency measures to the, what he regarded as reform measures, things like NRA and AAA, which were declared unconstitutional, but then from there on to the Social Security system, to the …
Lawrence E. Spivak: Take the Social Security System for a minute. The people wanted that, they wanted that protection. They were frightened, they wanted welfare.
Friedman: Not at all.
Lawrence E. Spivak: When you said pressure, who, pressure from whom?
Friedman: Pressure from people who were expressing what they thought the public ought to have. There was no widespread public demand for Social Security programs. The demands…….
Lawrence E. Spivak: No demand for welfare with 13 million people …….
Friedman: There was a demand for welfare and assistance I was separating out the emergency measures from the permanent measures. Social Security in the first 10 years of its existence, helped almost no one. It only took in money. Very few people qualified for benefits. It wasn’t an emergency measure. It was a long term measure. And it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little. So that Social Security….
Lawrence E. Spivak: Would you now abolish Social Security?
Friedman: I would not go back on any of the commitments that the government has made. But I would certainly reform Social Security in a way that would end in its ultimate elimination.
Lawrence E. Spivak: If you’re not afraid then of the free market under any circumstances, where cooperation which you find necessary which you believe all to come, fails to come, where competition becomes so fierce and becomes very frequently corrupt and where, all where it becomes stupid. Take for example what’s happening in today’s market, the conglomerates. Which have been seizing up all sorts of, we happen to live in a hotel that’s run by a conglomerate. Why should ITT, for example, run a hotel and how are you going to stop that.
Friedman: Well in the first place, once again,
Lawrence E. Spivak: Without government, without…..
Friedman: Once again, it’s government measures that have promoted the conglomerates. The only major reason we have conglomerates is because they are a very effective way to get around a whole batch of tax legislation. Let me ask a different question. Who is more effected by government regulations, by government controls?
Lawrence E Spivak: I thought I was supposed to ask the questions. But I was warned that you might turn these on me.
Friedman: Well tell me, whose more effected the big fellow who can deal with it or that have a separated department to handle the red tape, or the poor fellow?
Lawrence E. Spivak: The big fellow can always take care of himself under any system.
Friedman: Right, and therefore he’ll want a system which gives the big fellow the least advantage. And the system under which he can get government to help him out, gives him the most advantage, not the least. You say am I afraid of greed, of lack of cooperation. Of course. But we always have to compare the real with the real. What are the real alternatives? And if we look at the record of history, if we go back to the 19th century which everybody always points to as the era of the robber baron who strode around the land and ground the poor under his heel, what do we find? The greatest outpouring of voluntary charitable activity in the history of the world. This University, this University of Chicago is an example. It was founded by contributions by John D. Rockefeller and other people. The colleges and universities throughout the Midwest. If you go back and ask when was the Red Cross founded, when was the Salvation Army founded, when were the Boy Scouts founded, you’ll discover all of that came during the 19th century in the era of unregulated rapacious capitalism.
Lawrence E. Spivak: I’d like to go back for a minute to the question of conglomerates. Granted that what you say that the government policies concentration on central government if you will, or whatever you want to call it, are responsible for the growth of conglomerates. What would we, what should we do about them now? Government try to undue them? Or should anybody try to undue them?
Friedman: No.
Lawrence E. Spivak: Or should you just let them fail?
Friedman: You should let them fail, of course. I am strongly opposed to government bailing any of them out. You should let them fail. The best things you can do in my opinion, are first to have complete free trade so you can have conglomerates in other countries compete with conglomerates in this country. We may have only two or three automobile companies, but there’s Toyota, there’s Volkswagen, competition from abroad is effective. But in the second place…
Lawrence E. Spivak: When do you say complete free trade you mean all over the world?
Friedman: No sir. I mean the U.S. all by itself unilaterally should eliminate all trade barriers. We would be better off if all the countries did the same.
Lawrence E. Spivak: What do you think would happen if we just did it though?
Friedman: I think we’d be very much better off and a lot others would then follow our example. That’s what happened in the 19th Century when Great Britain in 1846 completed removed, unilaterally, all trade barriers so that…..
Lawrence E. Spivak: You don’t think this country would be flooded with goods of all kinds from all over the world, maybe cheaper in that we wouldn’t have great unemployment in this country?
Friedman: What would the people who sold us goods do with their money? They’d get dollars, what would they do with the dollars? Eat them. If they want to send us goods and take dollars in return, we’re delighted to have them. No. That’s not a problem as long as you have a free exchange rate. Because we cannot export without importing, we cannot import without exporting. You would not have a reduction in employment, what you’d have would be a different pattern of employment. You’d have more employment in export industries and less employment in those industries that compete with import. But go back to conglomerates, Larry for a moment. I just want to ask a very different kind of a question. Conglomerates are not very attractive, I would much rather have a lot of small enterprises. But there’s all the difference in the world between a private conglomerate and a government conglomerate. In general, the government conglomerate can get money from you without your agreeing to give it to him. You and I pay for Amtrak and for the postal deficit whether we use the services of Amtrak or the postal deficit or not. I don’t pay your conglomerate unless I rent one of their apartments. I get something for my money. So bad as private conglomerates are, they’re less bad than one of the alternatives.
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Milton Friedman in this episode makes this point, ” If you compare the conditions of people in a place like Singapore with the conditions of people in a place like Red China, or for that matter, Indonesia, you will see that the economic freedom is a very important component of total freedom”
Pt 6
Lawrence E. Spivak: Milton, suppose I agree with almost everything you say and say it would be wonderful if we … starting from scratch
Friedman:….If you agree with everything I say, you are a unique human being.
Lawrence E. Spivak: I don’t say I do agree, but I said suppose I agree for the sake of argument. We can’t start from scratch. How do we undo what we have done? How would you undo it, not me?
Friedman: That’s the hardest problem and I agree that is the real question. How do we get from where we are to where we want to go? And we can’t get there overnight, we cannot get there by simply eliminating the things that should not have been done. As in the case of Social Security, we have it. And we’ve got to live up to our obligations. So we do have to develop a series of policies which will enable us gradually to move from where we are to where we want to be. The first and most important step in my opinion, is to stop moving in the wrong direction.
Lawrence E. Spivak: Milton, you said a few minutes ago that throughout the free world, the public is coming to recognize the danger of big government and is taking steps to control it. But how with the example of what freedom does before them, how do you explain the new countries that have been coming up, all going in the direction of dictatorship?
Friedman: The climate, the intellectual climate of opinion has an enormous influence on what happens and the popular intellectual attitude within the free countries for the poor countries has been that they have to have centralized government. And that has served the interests of small elite groups within those countries. In one backward country after another what has happened is they’ve gotten their freedom supposedly from colonial rule, you’ve had a small elite take over and they have run that country for their own benefit and at the expense of the poor. It’s a tragedy of the modern era. Change the climate of opinion in the major countries. As the climate of opinion is changing, as the philosophy, the attitude what’s being taught at the universities is different, and you will see that these other countries, these backward countries will follow it and there are, there is some evidence that way. If you look at the countries where the backward countries which are doing best for themselves, they are places like Hong Kong, like Singapore, like Taiwan, like Korea, they’re not free countries in our sense of the term but they have much larger elements of freedom. Much greater scope for individual initiative. Many other countries of the world which have gone much further in the Communist centralized controlled direction.
Lawrence E. Spivak: How, for example, Singapore in Taiwan, have had you say very free economies. Now how do there economies, remain free but their politics and their human freedom is still curtailed. And as I understand in many cases, rather severely curtailed. They don’t have any of the freedoms we have. Press, religion,
Friedman: Economic freedom is a necessary condition for a human, all humans, but it is not a sufficient condition. You can have an economy that is largely free with large elements of restrictions. For example, let me take the American experience before the Civil War. We had a mixture of a largely free economy, with a segment of the population, the slaves, held in the condition of involuntary servitude. But even where you don’t have complete political freedom in the case of a Singapore or a Taiwan, human beings are much freer than they are in those societies where there is no economic freedom either. If you compare the conditions of people in a place like Singapore with the conditions of people in a place like Red China, or for that matter, Indonesia, you will see that the economic freedom is a very important component of total freedom. It’s not something different, it’s not something separate. Economic freedom is part of total freedom and for most people it’s the most important part. Freedom doesn’t mean very much to a starving man. And if a free society could not help the starving man, it would be very difficult for, to remain free very long. That’s why the ability of a free society to improve the lot of the ordinary person is a very, very necessary condition for its remaining free but it’s not the fundamental reason why I want a free society. I want a free society for the human and ethically and moral values that you stressed as pertaining to freedom. Freedom really rests, the value of freedom.
Lawrence E. Spivak: But suppose the moral values mean a lot to me. But, again, as I say, they mean nothing to the man who is hungry. It means absolutely nothing to him. What are you going to…. well do you think it does mean something to him.
Friedman: No. At first I think it means something to many of them. Of course, many men have died for their moral values, have put those moral values much above life itself. But I, you and I are citizens of a free society, will not stand the sight of…
Lawrence E. Spivak: … Well let me put it a different way, suppose you turn and you made a speech to all the people on welfare and you said to them, look there are, freedom is much more important than the welfare money that you are getting. Their ethical concepts, their spiritual things about the, men have died for this things. What if you told them all that and then said and we’re going to withdraw welfare now. What do you think would happen now?
Friedman: Would tell them something else. I would tell them.
Lawrence E. Spivak: I know also what you’d do.
Friedman: I tell them both what I would do and what I would tell them. I would tell them welfare has been corrupting you. Look at what it is doing to you. Look at what it’s doing to your children. You would be far better off in every respect….
Lawrence E. Spivak: But suppose they said to you, I don’t see that at all. Without that welfare we’d be in an awful mess.
Friedman: Your wrong, you wouldn’t be in an awful mess, but I understand your feeling and I do not propose to withdraw assistance from you like that all at once. I think it would be intolerable to throw the millions of people who are now depending on welfare on to the streets. We’ve got to go gradually from here to there. That’s why I proposed a negative income tax as a transitional device. That it would enable us to give help to people who really need help while not at the same time having the kind of mess we have now where most of the benefits go to people who are not but look at the way in which the welfare system has been corrupting the very fabric of our society. We have put people in a trap which is of no part of your own making. I don’t blame them, but they’ve been put in a trap where we are inducing them to become dependents, to become children, not to become independent human beings. The virtue and the desire of freedom is for what people can do with their freedom. Freedom is not an individual value, it’s a social value. A Robinson Caruso on an island, freedom is a meaningless concept to him.
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Milton Friedman says this in the following episode:
I believe that there is a strong enough component of freedom in our society that we will be able to preserve it, that we’re going to turn this trend back, that we are going to cut government down to size, we’re going to lay the ground work for a resurgence for a, a flowering, of that diversity which has been the real product of our free society.
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Pt 7
Lawrence E. Spivak: Milton, how bad is the state of freedom in this country today?
Friedman: It’s a mixed bag. In some areas we have more freedom than we’ve ever had before. In some other areas our freedom has been drastically reduced. Our freedom to spend our own money as we want has been cut sharply. Our freedom to go into whatever occupation we want has been reduced sharply. Our freedom to have various businesses has been reduced sharply. And these restrictions in our economic freedoms have carried over to restrictions on the freedom with which we speak and we talk, the activities we carry on, our attitudes toward governmental officials and all the rest. In those areas, our freedoms have been very seriously restricted.
Lawrence E. Spivak: What about your yourself? You as an individual and we really have to do with, deal with millions of hundreds, two hundred million, two hundred twenty million individuals. What about you? What freedom do you think you’ve lost?
Friedman: Well, I have been a very fortunate individual. I always have…
Lawrence E. Spivak: That sounds like a cop out.
Friedman: No, it’s not a cop out because I’m going to add to it. I’ve always said about the only people who have effective freedom of speech these days in the United States are tenured professors at private universities who are on the verge of retirement or have retired. And that’s been my situation in these recent years. Consider the freedom of, for example, a professor of medicine at any one of our great institutions. He’s almost certainly having his research financed by the Federal Government. Don’t you suppose he’d think two or three times before he gave a lecture on the evils of socialized medicine? Or consider one of my colleagues at the University who happens to be getting grants of money from the National Science Foundation. Do you think he really feels free to speak out on the issue of whether government ought to be financing such research. Of course, you ought not to have freedom without costs. But the costs ought to be reasonable. They ought not to be disproportionate, there’s no businessmen in this country today who can speak out. Why is it, why is it that the businessmen today are so mealy-mouthed in what they say? There are very few of them who are willing to come out and say openly what they believe. Why?
Lawrence E. Spivak: About what?
Friedman: About anything. Take for example the recent attempts by President Carter to impose voluntary wage and price controls. There’s hardly a businessman in this country who doesn’t think it’s terrible. There are only about two or three businessmen who have had the courage to stand up and say something about that. But again, as I say, go to my academic colleagues. Many of them feel as I do that government is devoting altogether too much money. That there’s been altogether too much subsidization of state universities and colleges all along the line. Yet very few of them are willing to speak out.
Lawrence E. Spivak: What about the generation that doesn’t know what freedom is as you knew it, and therefore, doesn’t mind so much what has happened. Just takes for granted what he’s living under now.
Friedman: I think that’s a very real problem. I think we’re living on our inheritance. We have inherited a philosophy and a set of attitudes and they tend to be eroded. People get accustomed to what they know. There’s an enormous tear in the status quote and most people, most of the time, accept the circumstances that are around them. There’s a natural human drive for freedom which always expresses itself. But, its stronger or weaker and I think a great danger in continuing along the path that we’ve been going on is that we will lose still more of our inheritance, still more of our basic values of our basic beliefs in freedom and that we will have still less protest as more and more freedoms are taken away. The real value of freedom is that it provides diversity and diversity is in turn the real protection of freedom. People who like to live in small cities, can live in small cities. People who like the impersonality of the metropolis can live in a metropolis. We have loyalties to our churches, we have loyalties to our universities, to our schools, to our clubs, to our cities, to our states. It’s this diversity. That fact that there isn’t a monolithic conformity imposed on us, that is, the source of protection for our freedom and also the fruit of freedom. It’s because freedom protects diversity, allows, you will remember the phrase when Mao said he was going to allow a 100 flowers to bloom. But of course he didn’t. As soon as people spoke out and 100 flowers bloomed, he cut them off. But it’s the blooming of many flowers, the fact that you have all of these different expressions of people’s individuality and produces the great achievements of civilization and that provides the great hope a protection of our freedom.
Lawrence E. Spivak: Why are you saying that there are pockets of freedom still existing in the countries?
Friedman: As I said before, the picture’s a mixed bag. In certain respects we have more freedom than we’ve ever had, but in other respects we’ve had very much less freedom. Of course there are great pockets of freedom, this is predominantly still a free country. We must not confuse the trend with the situation. We have been moving away from freedom. Our freedom is in jeopardy but by no means has been completely destroyed. I believe that there is a strong enough component of freedom in our society that we will be able to preserve it, that we’re going to turn this trend back, that we are going to cut government down to size, we’re going to lay the ground work for a resurgence for a, a flowering, of that diversity which has been the real product of our free society.
Milton Friedman The Power of the Market 1-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]
Worse still, America’s depression was to become worldwide because of what lies behind these doors. This is the vault of the Federal Reserve Bank of New York. Inside is the largest horde of gold in the world. Because the world was on a gold standard in 1929, these vaults, where the U.S. gold was stored, […]
George Eccles: Well, then we called all our employees together. And we told them to be at the bank at their place at 8:00 a.m. and just act as if nothing was happening, just have a smile on their face, if they could, and me too. And we have four savings windows and we […]
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1 FREE TO CHOOSE: Anatomy of Crisis Friedman Delancy Street in New York’s lower east side, hardly one of the city’s best known sites, yet what happened in this street nearly 50 years ago continues to effect all of us today. […]
Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video) Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 3 of 6. Volume 6 – What’s Wrong with our Schools Transcript: If it […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 2 of 6. Volume 6 – What’s Wrong with our Schools Transcript: Groups of concerned parents and teachers decided to do something about it. They used private funds to take over empty stores and they […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 1 of 6. Volume 6 – What’s Wrong with our Schools Transcript: Friedman: These youngsters are beginning another day at one of America’s public schools, Hyde Park High School in Boston. What happens when […]
Friedman Friday” Free to Choose by Milton Friedman: Episode “Created Equal” (Part 3 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 […]
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 […]
Milton Friedman and Ronald Reagan Liberals like President Obama (and John Brummett) 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. […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. PART 3 OF 7 Worse still, America’s depression was to become worldwide because of what lies behind these doors. This is the vault of the Federal Reserve Bank of New York. Inside […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. For the past 7 years Maureen Ramsey has had to buy food and clothes for her family out of a government handout. For the whole of that time, her husband, Steve, hasn’t […]
Friedman Friday:(“Free to Choose” episode 4 – From Cradle to Grave, Part 1 of 7) Volume 4 – From Cradle to Grave Abstract: Since the Depression years of the 1930s, there has been almost continuous expansion of governmental efforts to provide for people’s welfare. First, there was a tremendous expansion of public works. The Social Security Act […]
_________________________ Pt3 Nowadays there’s a considerable amount of traffic at this border. People cross a little more freely than they use to. Many people from Hong Kong trade in China and the market has helped bring the two countries closer together, but the barriers between them are still very real. On this side […]
Aside from its harbor, the only other important resource of Hong Kong is people __ over 4_ million of them. Like America a century ago, Hong Kong in the past few decades has been a haven for people who sought the freedom to make the most of their own abilities. Many of them are […]
“FREE TO CHOOSE” 1: The Power of the Market (Milton Friedman) Free to Choose ^ | 1980 | Milton Friedman Posted on Monday, July 17, 2006 4:20:46 PM by Choose Ye This Day FREE TO CHOOSE: The Power of the Market Friedman: Once all of this was a swamp, covered with forest. The Canarce Indians […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]
Back in 2012, I wrote a column for the Wall Street Journal to highlight the success of Switzerland’s spending cap (also known as the “debt brake”).
Swiss voters voted for this spending cap in 2001 and ever since it took effect in 2003, government spending has increased by an average of 2.2 percent annually, only about half as fast as it was growing in the decades before the cap was imposed.
To show the ongoing success of the debt brake, here’s a map comparing changes in the burden of spending in Switzerland and its four major neighbors (France, Germany, Italy, and Austria). As you can see, IMF data reveals that Switzerland has been more responsible.
I even calculated changes in national spending burdens since the start of the pandemic.
You can see that all governments used the virus as an excuse for more spending, but the fiscal damage was most contained in Switzerland.
Professors Steve Hanke and Barry Poulson presumably agree. They have a column in National Review arguing in favor of a similar spending cap for the United States.
President Biden’s budget proposal for 2024 makes it clear that the U.S. needs a budget straitjacket sooner rather than later. …Switzerland has been arguably the most successful country in reining in budget deficits and its debt burden. …The Swiss debt brake requires that expenditures be brought into balance with revenues.A cap is imposed on spending based on expected revenue, and revenue is projected based on long-term trends in the real growth of national income. Expenditures may exceed the cap in response to extraordinary events such as war, but if that’s the case, eventually, revenues from budget surpluses must be generated and set aside to offset this excess expenditure. We propose a debt brake for the U.S. that would initially be more stringent than the Swiss debt brake…a spending limit (read: cap) be calculated each year, and that the cap be reduced by 1 percent.
Interestingly, they want a spending cap that is stricter than the Swiss version.
That would be ideal (the tighter the cap, the greater the progress), but I’d settle for the Swiss approach. Why? Because here’s the data comparing US profligacy and Swiss prudence.
When I contemplate these numbers, my disdain for Bush, Obama, Trump, and Biden becomes even more intense.
P.P.S. There’s plenty of academic evidence for Switzerland’s debt brake. But what’s more surprising are that pro-spending cap studies from the International Monetary Fund (here and here), the Organization for Economic Cooperation and Development (here and here) and the European Central Bank (here and here).
Open letter to President Obama (Part 704)
(Emailed to White House on 6-25-13.)
President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500
Remember the debt? That $17 trillion problem? Some in Washington seem to think it’s gone away.
The Washington Post reported that “the national debt is no longer growing out of control.” Lawmakers and liberal inside-the-Beltway organizations are floating the notion that it’s not a high priority any more.
We beg to differ, so we came up with 17 reasons that $17 trillion in debt is still a big, bad deal.
Some families and businesses won’t be able to borrow money because of high interest rates on mortgages, car loans, and more – the dream of starting a business could be out of reach.
5.High debt and high spending won’t help the economy.
8. Jeopardizes the stability of Medicare, Social Security, and Medicaid.
Millions of people depend on Medicare, Medicaid, and Social Security, but these programs are also the main drivers of the growing debt. Congress has yet to take the steps needed to make these programs affordable and sustainable to preserve benefits for those who need them the most.
9. Washington collects a lot, and then spends a ton. Where are your tax dollars going?
In 2012, Washington collected $2.4 trillion in taxes—more than $20,000 per household. But it wasn’t enough for Washington’s spending habits. The federal government actually spent $3.5 trillion.
College students from all over the country got together in February at a “Millennial Meetup” to talk about how the national debt impacts their generation.
14. Makes us more vulnerable to the next economic crisis.
According to the Congressional Budget Office’s 2012 Long-Term Budget Outlook, “growing federal debt also would increase the probability of a sudden fiscal crisis.”
15. Washington racked up $300 billion in more debt in less than four months.
Read the Morning Bell and more en español every day at Heritage Libertad.
_____________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!! Washington Could Learn a Lot from a Drug Addict Just spend more, don’t know how to cut!!! Really!!! That is not […]
We got to stop all the red ink. New Video Is a Strong Indictment of Obama’s Dismal Record on Spending August 13, 2012 by Dan Mitchell The burden of federal spending in the United States was down to 18.2 percent of gross domestic product when Bill Clinton left office. But this progress didn’t last long. Thanks […]
In One Year, Spending on Interest on the National Debt Is Greater Than Funding for Most Programs Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. In 2010, the U.S. spent more on interest on the national debt than […]
National Debt Set to Skyrocket Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. In the past, wars and the Great Depression contributed to rapid but temporary increases in the national debt. Over the next few decades, runaway spending […]
Each American’s Share of National Debt Is Growing Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels […]
I have been writing President Obama letters and have not received a personal response yet. (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on May 9, 2012. I don’t know which letter of mine generated this response so I have […]
Uploaded by PBS on Jan 4, 2008 Thousands of media outlets descended on Iowa, erecting a powerful wall of TV cameras and reporters between the voters and candidates. Bill Moyers talks with Ron Paul who knows well the power of the press to set expectations and transform the agenda. ____________________________ We should not be running […]
Liam Fox Issues a Warning to America Uploaded by HeritageFoundation on Feb 28, 2012 Britain’s Liam Fox has a warning for America: Fix the debt problem now or suffer the consequences of less power on the world stage. The former U.K. secretary of state for defense visited Heritage to explain why the America’s debt is […]
Liam Fox Issues a Warning to America Uploaded by HeritageFoundation on Feb 28, 2012 Britain’s Liam Fox has a warning for America: Fix the debt problem now or suffer the consequences of less power on the world stage. The former U.K. secretary of state for defense visited Heritage to explain why the America’s debt is […]
Each American’s Share of National Debt Is Growing Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels […]
I wrote last week about President Macron’s very modest effort to slow down the growth of the welfare state and started with a chart showing that France has the highest overall burden of government spending in the developed world.
The good news (relatively speaking) is that France is in third place, based on this chart from the OECD, when looking at the burden of government-provided retirement benefits.
To be sure, having the third-highest burden of retirement spending is hardly something to celebrate. And it is not exactly a big achievement to be slightly less worse than Greece and Italy.
This is why President Macron is pushing to increase the retirement age from 62 to 64.
But French voters and French lawmakers have an entitlement mentality and Macron’s initiative was faltering. So the government used executive authority to unilaterally impose the law.
Needless to say, this has triggered a lot of outrage. Here are some details from an article by Rich Noack in the Washington Post.
The French government used its executive powers Thursday to raise the retirement age to 64 and avoid a vote on an unpopular bill, outraging lawmakers who could retaliate with a no-confidence motion… Two-thirds of the French public have opposed the plans, and within minutes of Borne announcing the law’s adoption, demonstrators assembled near Parliament for their ninth day of mobilization, with some of them clashing with authorities. …Macron has been pushing for changes to the country’s pension system since he was elected in 2017… France has a lower minimum retirement age than many of its European neighbors… Germany, for instance, is preparing for an increase in the retirement age from 65 to 67, and lawmakers there have faced little public backlash. …Macron and his allies argue that the retirement age needs to reflect that increase if the country wants to preserve a welfare system that relies on a sufficiently large base of working-age contributors.
Here’s a chart from the article to show the excesses of the French system.
The Wall Street Journalopined this morning on the controversy.
The political difficulty of reforming pensions in Western democracies has been on display in France, with strikes and mass protests against Emmanuel Macron’s modest pension reform. …Give Mr. Macron credit for persistence—and political brass. …Thursday Prime Minister Elisabeth Borne invoked Article 49 of the French constitution, which enabled the Macron government to strong-arm a bill through the National Assembly without a vote.The National Assembly’s remaining recourse to block reform is to pass a motion of no confidence. That would block the legislation, oust Ms. Borne, and dissolve the government. …The opponents are on the populist left and right, including his presidential opponent in 2022, Marine Le Pen, who accused Mr. Macron of choosing “to govern with brutality” and called for Ms. Borne’s ouster. The cold reality is that France needs reform because its pay-as-you-go pension system is unsustainable. The retirement age is 62, one of the youngest in Europe, and Mr. Macron would stretch it only to 64 with some exceptions. The worker-to-retiree ratio has shrunk to 1.7 to 1 from 3 to 1 in 1970. French pensions already consume 14% of the economy.
The second-to-last sentence of the above excerpt deserves some emphasis.
Back in 1970, there were three workers (taxpayers) for every retiree. Now the ratio if 1.7 workers to every retiree, and that situation is going to get much worseover the next few decades (the same problem of demographic change exists in the United States).
So the real-world choice is reform or bankruptcy (especially since taxes already are maxed out).
P.S. Macron’s reform is better than the status quo, but it would be far better to shift to personal retirement accounts – which is something that has happened in dozens of nations.
January 31, 2021
President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500
Remember the debt? That $17 trillion problem? Some in Washington seem to think it’s gone away.
The Washington Post reported that “the national debt is no longer growing out of control.” Lawmakers and liberal inside-the-Beltway organizations are floating the notion that it’s not a high priority any more.
We beg to differ, so we came up with 17 reasons that $17 trillion in debt is still a big, bad deal.
Some families and businesses won’t be able to borrow money because of high interest rates on mortgages, car loans, and more – the dream of starting a business could be out of reach.
5.High debt and high spending won’t help the economy.
8. Jeopardizes the stability of Medicare, Social Security, and Medicaid.
Millions of people depend on Medicare, Medicaid, and Social Security, but these programs are also the main drivers of the growing debt. Congress has yet to take the steps needed to make these programs affordable and sustainable to preserve benefits for those who need them the most.
9. Washington collects a lot, and then spends a ton. Where are your tax dollars going?
In 2012, Washington collected $2.4 trillion in taxes—more than $20,000 per household. But it wasn’t enough for Washington’s spending habits. The federal government actually spent $3.5 trillion.
College students from all over the country got together in February at a “Millennial Meetup” to talk about how the national debt impacts their generation.
14. Makes us more vulnerable to the next economic crisis.
According to the Congressional Budget Office’s 2012 Long-Term Budget Outlook, “growing federal debt also would increase the probability of a sudden fiscal crisis.”
15. Washington racked up $300 billion in more debt in less than four months.
Read the Morning Bell and more en español every day at Heritage Libertad.
_____________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733,
Related posts:
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1
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We got to stop all the red ink. New Video Is a Strong Indictment of Obama’s Dismal Record on Spending August 13, 2012 by Dan Mitchell The burden of federal spending in the United States was down to 18.2 percent of gross domestic product when Bill Clinton left office. But this progress didn’t last long. Thanks […]
In One Year, Spending on Interest on the National Debt Is Greater Than Funding for Most Programs Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. In 2010, the U.S. spent more on interest on the national debt than […]
National Debt Set to Skyrocket Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. In the past, wars and the Great Depression contributed to rapid but temporary increases in the national debt. Over the next few decades, runaway spending […]
Each American’s Share of National Debt Is Growing Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels […]
I have been writing President Obama letters and have not received a personal response yet. (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on May 9, 2012. I don’t know which letter of mine generated this response so I have […]
Uploaded by PBS on Jan 4, 2008 Thousands of media outlets descended on Iowa, erecting a powerful wall of TV cameras and reporters between the voters and candidates. Bill Moyers talks with Ron Paul who knows well the power of the press to set expectations and transform the agenda. ____________________________ We should not be running […]
Liam Fox Issues a Warning to America Uploaded by HeritageFoundation on Feb 28, 2012 Britain’s Liam Fox has a warning for America: Fix the debt problem now or suffer the consequences of less power on the world stage. The former U.K. secretary of state for defense visited Heritage to explain why the America’s debt is […]
Liam Fox Issues a Warning to America Uploaded by HeritageFoundation on Feb 28, 2012 Britain’s Liam Fox has a warning for America: Fix the debt problem now or suffer the consequences of less power on the world stage. The former U.K. secretary of state for defense visited Heritage to explain why the America’s debt is […]
Each American’s Share of National Debt Is Growing Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels […]
Last week, I wrote about Biden’s proposed budget, focusing on the aggregate increase in the fiscal burden.
Today, let’s take a closer look at his class-warfare tax proposals. Consider this Part VI in a series (Parts I-V can be found here, here, here, here, and here), and we’ll use data from the folks at the Tax Foundation.
We’ll start with this map, which shows each state’s top marginal tax rate on household income if Biden’s budget is enacted.
The main takeaway is that five state would have combined top tax rates of greater than 50 percent if Biden is successful in pushing the top federal rate from 37 percent to 39.6 percent.
While it is a very bad idea to have high marginal tax rates, it’s also important to look at whether the government is taxing some types of income more than one time.
That’s already a pervasive problem.
Yet the Tax Foundation shows that Biden wants to make the problem worse. Much worse.
His proposed increase in the corporate tax rate is awful, but his proposal to nearly double the tax burden on capital gains is incomprehensiblyfoolish.
I guess we should be happy that Biden didn’t propose to also increase the 40 percent rate imposed by the death tax.
But that’s not much solace considering what Biden would do to American competitiveness. Here’s our final visual for today.
I’ll close by observing that some of my leftist friends defend these taxes since they target the “evil rich.”
I have a moral disagreement with their view that people should be punished simply because they are successful investors, entrepreneurs, or business owners.
President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President,
Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.
“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!
Washington Could Learn a Lot from a Drug Addict
Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?
Making more dependent on government is not the way to go!!
Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.
Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.
Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.
Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.
It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.
______________
Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”
How sad it is that liberals just don’t get this reality.
While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”
Alexander Fraser Tytler, Lord Woodhouselee(15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”
[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor.— TGW]
To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.
[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]
_______
Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.
_____________
_________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733
We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]
We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with everyone else that keeps spending our money. I am glad that at least […]
Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]
Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]
Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]
Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]
Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]
Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]
Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]
I have been writing President Obama letters and have not received a personal response yet. (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]
Because the central bank’s easy-money policycreated artificially low interest rates, but those policies also produced high inflation, and now interest rates are going up as the Fed tries to undo its mistake.
By the way, the center box (higher prices) also includes asset bubble since bad monetary policy sometimes leads to financial bubbles instead of (or in addition to) higher consumer prices.
And higher interest rates can occur for two reasons. Most people focus on the Federal Reserve tightening monetary policy as it tries to reverse its original mistake of easy money. But don’t forget that interest rates also rise once lenders feel the pinch of inflation and insist on higher rates to compensate for the falling value of the dollar.
But let’s not digress too much. The focus of today’s column is that the Fed goofed by creating too much money in 2020 and 2021. That’s what set the stage for big price increases in 2022 and now economic instability in 2023.
Joakim Book of Reason shares my perspective. Here are excerpts from his article.
The Federal Reserve is in the unenviable position of achieving its mandate by crashing the economy. …it’s something that happens as an unavoidable outcome of slowing down an economy littered with excess money and inflation. …This hiking cycle, the fastest that the Fed has embarked upon in a generation, was always likely to break something. And break something they did over the weekend…Silicon Valley Bank (SVB), which faced the second-largest bank run in U.S. history. …this pushes the Fed into a very delicate position: risk systemic bank runs, or roll back the hikes and quantitative tightening that caused this mess, printing money for an even hotter inflation.
The Wall Street Journal also has the right perspective, editorializing that the current mess was largely caused by bad monetary policy.
Cracks in the financial system emerge whenever interest rates rise quickly after an easy-credit mania, and the surprise is that it took so long. …This week’s bank failures are another painful lesson in the costs of a credit mania fed by bad monetary policy. The reckoning always arrives when the Fed has to correct its mistakes. …We saw the first signs of panic in last year’s crypto crash and the liquidity squeeze at British pension funds. …nobody, least of all central bank oracles, should be surprised that there are now bodies washing up on shore as the tide goes out.
Finally, I can’t resist sharing some excerpts from Tyler Cowen’s Bloombergcolumn. He pointed out last November that the Austrian School has some insights with regards to the current mess.
The Austrian theory…works something like this: Investors expected that very low real interest rates would hold. They committed resources accordingly, and now forthcoming rates are likely to be much higher. That means the economy is stuck with malinvestment and will need to reconfigure in a painful manner.…The basic story here fits with the work of two economists from Austria, Ludwig Mises and Nobel laureate Friedrich von Hayek, and thus it is called the Austrian theory of the business cycle. The Austrian theory stresses how mistaken expectations about interest rates, brought on by changes in the rate of inflation, will lead to bad and abandoned investment projects. The Austrian theory has often been attacked by Keynesians, but in one form or another it continues to resurface in the economic data.
Senate Majority Leader Chuck Schumer, D-N.Y., exults at a news conference after Senate passage of the Inflation Reduction Act at the Capitol on Sunday after a marathon session. The entirely party-line vote was 51-50, with the tie-breaking vote being cast by Vice President Kamala Harris. (Photo: Drew Angerer/Getty Images)
As Senate Democrats achieve their goal of jamming through the so-called Inflation Reduction Act, reality is becoming clear: The bill will likely increase near-term inflation, depress household incomes, and produce the long-term deficits that fuel long-term inflation.
Using the Congressional Budget Office’s latest scoring, estimates of the most recent changes, and accounting for very expensive gimmicks, it’s likely that the bill will produce deficits.
The cumulative deficit would be around $52.5 billion over the next four years, at least $110 billion through fiscal year 2031, and more beyond. That would mean adding to near-term and long-term inflationary pressures, in contrast to what proponents such as Sen. Joe Manchin, D-W.Va., claim.
In short, the bill is about as far away from a genuine Inflation Reduction Act as possible. Though it would be harmful under any circumstances, signing it into law during a period of stagflation would be the worst possible timing.
The Inflation Reduction Act utilizes three major sets of common congressional gimmicks to mask its true costs: cherry-picked expiration dates, ignoring net interest costs, and indirect tax burdens.
As one very costly example, the bill would extend for three more years “temporary” Obamacare subsidies that were supposed to expire this year. That brings to mind the wisdom of the late economist Milton Friedman, who once observed, “Nothing is so permanent as a temporary government program.”
Despite the Obamacare subsidies being peddled as temporary, extending them was among the first provisions of the Inflation Reduction Act that Senate Democrats committed to voting for. It just goes to prove something the everyone knows: There are certain taxpayer-funded handouts and giveaways that seem to always get extended in perpetuity.
To keep the reported cost of the provision down, a three-year expansion was chosen because it is what they could afford on paper. However, accounting for political reality, these subsidies will likely cost at least $146.5 billion more than what is being reported through fiscal year 2031.
That would be further compounded by Congress yet again delaying implementation of the Trump-era Medicare rebate rule, a move that shifts federal costs further into the future and arbitrarily reduces the portion of the costs included in the budgetary window. While the future costs would remain real, they would conveniently slip under the radar of the formal score.
Yet another overestimation of savings presented by the bill’s authors is a claim to $204 billion in increased revenues from cracking down on tax fraud.
While increased enforcement activity might result in higher revenue collections, estimates are highly speculative. Because the actual results are so uncertain, such revenues are not included in official cost estimates under the bipartisan scorekeeping guidelines.
The deficits created by the bill, and the fact that they are front-loaded, would increase federal net interest costs by more than $14 billion—a fact that is not reflected in the formal CBO estimates.
In total, the bill would add at least $110 billion to the federal deficit through fiscal 2031.
To put that level of spending in perspective, $110 billion is roughly four-and-a-half times NASA’s annual budget, or nearly the cost of the ships in six U.S. Carrier Strike Groups. In this case, however, the $110 billion will be used to buy more inflation.
When the federal government runs a deficit, it eventually must be paid back. That’s either done through job- and wage-killing taxes or by way of the Federal Reserve printing new money to finance the deficits.
During the height of the COVID-19 pandemic, the Fed financed 56% of new federal debt with trillions upon trillions of newly created dollars. Those dollars devalued paychecks and Americans’ lifetime savings.
When the federal government attempts to print its way out of fiscal irresponsibility, it does so by imposing an inflation tax on every American household.
With that precedent, no one can be certain of how much the federal government will use new taxes or new money creation to cover deficits. The expectation of future money printing causes immediate inflationary pressures as people act now to mitigate such future possibilities.
As such, the deficits created by the Inflation Reduction Act would simply be the newest addition to the current inflation tax.
To add insult to injury, almost every provision of the bill will bleed the bank accounts of American families. Tragically, the deficit- and inflation-increasing aspects of the Inflation Reduction Act are only the beginning of its burdens.
In these provisions we find the third set of gimmicks; namely, indirect tax burdens. Despite President Joe Biden’s assurances, the tax and price-control burdens of the Inflation Reduction Act will fall squarely on families trying to make ends meet.
Companies are combinations of workers, tools, and institutional knowledge that when brought together can produce the goods and services we need and enjoy. As such, companies can’t absorb a tax. They only direct how American households will feel it.
The bill’s business-tax hike will leave companies with no choice but to cut wages, increase consumer prices, or cut future investments in a growing and prosperous economy. The bill’s requirement that the government get a deal on drug prices will simply mean that drug prices will go up for families and that research budgets for new lifesaving drugs will be slashed.
In reality, this bill is a litany of policies aimed at scoring political points that has been recklessly and hurriedly slapped together. If it’s signed into law as expected, long after the press conferences and congressional pats on the back have faded into distant memory, it’s inflationary, tax, and other burdens will continue to haunt every American household.
Have an opinion about this article? To sound off, please email letters@DailySignal.com and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.
Milton Friedman’s FREE TO CHOOSE “How to Stay Free,” Transcript and Video (60 Minutes)
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “The Anatomy of a Crisis” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, and – Power of the Market. In this episode “How to Stay Free” Friedman makes the statement “What we need is widespread public recognition that the central government should be limited to its basic functions: defending the nation against foreign enemies, preserving order at home, and mediating our disputes. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problems than turning them over to the government.”
— On Mon, 12/6/10, Everette Hatcher <lowcostsqueegees@yahoo.com>wrote:
From: Everette Hatcher <lowcostsqueegees@yahoo.com>
Subject: Vol 10 How to stay Free,Videos and Transcript Free to Choose
To:
Date: Monday, December 6, 2010, 8:50 AM
The Great Depression of the 1930s changed the public philosophy regarding the appropriate role of government in American life. Before the Depression, government was not assumed to have special responsibilities for individual or business welfare. The severity of the economic tragedy of the 1930s resulted in a dramatic change in public attitudes. Many believed the Depression represented a “failure of capitalism.” Because of this alleged failure, government has ever since been expanding its power and the scope of its control. Government growth has resulted in waste, inefficiency, and a loss of personal freedom. Intended to serve the interests of the people, many governmental programs have been revealed to serve primarily the interests of the bureaucrats. Many government programs serve at cross purposes. For example, different agencies attempt, on the one hand, to discourage use of tobacco as potentially dangerous to good health and, on the other hand, to encourage production of tobacco through subsidies to tobacco farmers. The list of government inconsistencies and inefficiencies goes on and on. Dr. Friedman, however, says that there is reason for optimism. Today, he notes, the public is better informed about these matters and is increasingly willing to take a stand against further unnecessary expansion of government services. He suggests the most fruitful approach is to remove discretionary budget power from the government. Friedman favors passage of a Constitutional amendment limiting the government’s budget and forcing government to work within that budget. But this is only the first step. As Dr. Friedman points out, “What we need is widespread public recognition that the central government should be limited to its basic functions: defending the nation against foreign enemies, preserving order at home, and mediating our disputes. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problems than turning them over to the government.”
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Milton Friedman makes the point: “If power were really concentrated in monolithic in a few hands, it would be hopeless to reform the system. But because it’s fragmented, because it’s split up, we can see how much waste there is, we can see how inefficient it is, how the left hand seldom knows what the right hand is doing.” IN OTHER WORDS A DICTATOR IS NOT RUNNING THE GOVERNMENT WE HAVE A CHANCE TO CHANGE WHAT IS GOING ON!!!
Volume 10 – How to Stay Free
Transcript:
Friedman: Every day hundreds of people flock to the capital in Washington, D.C. attracted only by power. That power has accumulated here over the past 50 years at the seat of government of the most powerful nation on Earth.
Worker: How do you do? Glad to meet you. How are you? How’s it going? What are you talking about? Guns?
Warren Richardson: Hello, this is Warren Richardson. Oh Mary, yes, what’s on your mind?
Friedman: Warren Richardson makes his living by knowing who has power and influence to trade.
Warren Richardson: I’ll be waiting for you.
Friedman: He’s a lobbyist.
Warren Richardson: Thanks a lot. Bye.
Unidentified Member of the House: The official administration position on this bill, however, is that its consideration would be premature in view of the President’s….
Friedman: He trades with people like these. Members of the House Committee on Agriculture. They make some of the laws and regulations that among other things, control the food we eat. They are elected officials who have the power to spend billions of dollars of our tax money.
Mr. Baldus: It’s all of page two. It takes all of page three.
Friedman: Naturally, lots of people would like to get their hands on that money.
Mr. Baldus: That’s the kind of stuff that ought never go into the statute books. And I think anybody who’s practicing justice court knows it.
Unidentified Member of the House: Bill, the way you get common sense administration is by having common sense administrators. And it seems like there’s more common sense administration in agriculture.
Michael Masterson (Congressional Aide): Access is all important and how you gain access. It used to be there were only a few hundred lobbyists in this town, now we record up to 15,000 lobbyists plus ancillary personnel, secretaries, receptionists and typists and the researchers that go with that. They are calling upon all the law firms imaginable. So there is a tremendous support base out there for the lobbying effort.
Friedman: You don’t have to walk these corridors for very long before you begin to realize that the concentration of power in the hands of a few people, however well intentioned, is a real threat to the freedom of the individual. Of course, Warren Richardson doesn’t see it that way. Over the years he’s successfully lobbied for special interest groups in energy, environment, wages and prices. Today he’s arguing the case for another special interest. The National Action Committee on Labor Law Reform, hoping to swing influence his way.
Warren Richardson: When the bill goes overboard in terms…much, much too far.
Friedman:There’s hardly a time when the corridors of Congressional Office buildings are not peppered with people waiting for their chance to see and influence the elected man at the center of power.
Unidentified Member of the House: Within that legislation for funds for communities of 50,000 and under, the goals of the existing law and certain statutory paperwork requirements are often very unrealistic for smaller communities.
Friedman: The deals made here effect all of us and sometimes in ways we don’t like. But don’t blame the people making the deals. They’re just pursuing their own self-interest which may be as narrow as making a buck or as broad as trying to reform the world. We, the citizens, are to blame because we’ve handed over much of our lives of personal decision making to government. And we now find that was government does severely limits our freedom.
The leather and wood paneled official offices of a Congressman in Washington, D.C. It’s the mecca of those who try for behind the scenes influence. Weaving his way between special interest groups can be tough for a politician. To stay in office he needs votes. To get votes he often has to make deals.
Unidentified Politician: The chances of our party regaining the White House. Republicans. If the President sends the policies to the public …..
Friedman: It’s frequently a frustrating business.
Michael Masterson: When you have people who are coming in not for purposes of debate and dialogue and discussion on something, but merely they demand their special interest or their single issue concern. That’s where it becomes extremely difficult because there might be an equal number on the opposite side of the coin.
Friedman: Every time I come to Washington I’m impressed all over again with how much power is concentrated in this city. But we must understand the character of that power. It is not monolithic power in a few hands like the way it is in countries like the Soviet Union or Red China. It is fragmented into lots of little bits and pieces and with every special group around the country trying to get its hand on whatever bits and pieces it can. The result is that there’s hardly an issue in which you won’t find government on both sides. For example, in one of these massive buildings spread, scattering all through this town filled to the bursting with government employees, so of them are sitting around trying to figure out how to spend our money to discourage us from smoking cigarettes. In another of the massive building, maybe far away from the first, some other employees, equally dedicated, equally hardworking, are sitting around figuring out how to spend our money to subsidize farmers to grow more tobacco. In one building they’re figuring out how to hold down prices, in another building they’ve got schemes for raising prices. The prices the farmers receive or import prices or keeping out cheap foreign goods. We set up an enormous Department of Energy with 20,000 employees to encourage us to save energy. We set up an enormous Department of Environmental Protection to figure out ways to get cleaner air involving our using more energy.
Now, many of these effects cancel out but that doesn’t mean that these programs don’t do a great deal of harm and that there aren’t some very bad things about it. One thing you can be sure of, the costs don’t cancel out, they add together. Each of these programs spends money taken from our pockets that we could be using to buy goods and services to meet our separate needs. All of these programs use very able, very skilled people who could be doing productive things. They, all of them, grind out rules, regulations, red tape, forms to fill-in. I doubt that there’s a person in this country who doesn’t violate one or another of those rules or regulations or laws everyday. Not because he wants to or intends to, but simply because it’s impossible for anybody to know what they all are. Those are the bad things. But there’s something good about this fragmentation of power too. And that is, that it enables us to do something about it.
If power were really concentrated in monolithic in a few hands, it would be hopeless to reform the system. But because it’s fragmented, because it’s split up, we can see how much waste there is, we can see how inefficient it is, how the left hand seldom knows what the right hand is doing.
It wasn’t always like this. The armies of bureaucrats administering our lives making our decisions spending our money, all supposedly for our good. Our nation was founded with something fundamentally different in mind.
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In this episode Milton Friedman makes the point, “From regarding government as a threat to our freedom, we have come more and more to regard government as a benefactor from which all good things flow. We have assigned increasing tasks of great importance to government. We have turned over to government a larger and larger fraction of our income to be spent on our behalf and the results are plain for all the same they are disappointing.”
Pt 2
Almost 200 years ago a remarkable group of men gathered in this room to write a Constitution for the new nation that they had helped to create a few years earlier. They were a wise and learned group of people. They had learned the lesson of history. The great danger to freedom is the concentration of power, especially in the hands of a government. They were determined to protect the citizens of the new United States of America from that danger. And they crafted their Constitution with that in mind. That Constitution has served us well. It has enabled us to preserve our freedom for close on to 200 years. But in the past 50 years, we have been forgetting the lesson that these wise men knew so well. From regarding government as a threat to our freedom, we have come more and more to regard government as a benefactor from which all good things flow. We have assigned increasing tasks of great importance to government. We have turned over to government a larger and larger fraction of our income to be spent on our behalf and the results are plain for all the same they are disappointing. The great expectations have not been achieved and our freedoms have suffered in the process.
Where did it all go wrong? Government began to take an increasing part in our personal affairs nearly 50 years ago. It was 1933, at the lowest point of the worst depression in history. The idea took root that capitalism had failed and that failure was responsible for the human and economic tragedy. In the early 30’s, Franklin Delano Roosevelt and his advisors met here to devise programs to meet the problems of the depression. Their answer was to give central government more power. Out of that beginning came today’s welfare state.
This Empire State Plaza in Albany, NY is a fine example of the difference between public political power and private economic power. It was constructed while Nelson Rockefeller was Governor of the state of New York. The Rockefeller family has spent millions of its private money on good causes. It has endowed universities like my own, at the University of Chicago, financed medical research, reconstructed Williamsburg, yet not all the private money of the Rockefeller family gave them anything like the amount of power that Nelson Rockefeller was able to have as Governor of the State of New York. He constructed monuments like this all over the state, using every expedient he could think of to finance them. When he left office, taxes per persons in New York State were higher than in any other state in the country excepting only Alaska. And there was a monumental debt besides. So much so, that his successor, who had the reputation as a Democratic congressman of being a big spender, had to use his inaugural speech to preach the virtues of austerity and to say the time of wine and roses is over.
Look at this skyline. It’s Chicago and I think it’s very beautiful. Much of it is less than 20 years old. Those tall buildings were built by private enterprise for use by private enterprise. Not by government for use by government bureaucrats. These are productive monuments, not a burden on the taxpayer, a burden that has almost bankrupted New York City. The irony is that for the most part it was good intentions that led us to where we are today, a nation governed by bureaucratic empires. I wonder whether when they built this building, they realized that it was going to come out looking like a fortress. From modest beginnings in 1953, the Department of Health, Education and Welfare has grown into a veritable empire. Only a small part of its total staff is housed in this headquarters building, a mere 2,000 bureaucrats. Its budget is the third largest budget in the whole world exceeded only by the entire budget of the United States and of the Soviet Union. It employs directly 150,000 full time people and the empire it rules employs another million. More than one out of every 100 people in the U.S. works in the HEW empire.
As we have seen in this series, the Department of Health, Education and Welfare is spending increasing amounts of our money each year on health. One effect is simply to raise the fees and prices for medical and hospital services without a corresponding improvement in the quality of medical care that we receive. It is controlling more and more of the food and drugs we buy. In the process, discouraging the development and preventing the marketing of new drugs that could be saving tens of thousands of lives a year. In the field of education the sums being spent are skyrocketing. Yet by common consent, the quality of education is declining. More and more money is being spent and increasingly rigid controls imposed to promote racial integration. Yet our society is becoming more fragmented. In the field of welfare, billions of dollars are being spent each year, yet at a time when the standard of life of the average American is higher than it has ever been in history, the number of people on welfare roles is growing. Social Security, the budget is colossal, yet it is in deep financial trouble. The young complain and with considerable justice about the high taxes they must pay and those taxes are needed to finance the benefits that are going to the old, yet the old complain and also with justice that it is difficult for them to maintain the standard of life that they were led to expect. A system that was enacted to make sure that the old never became objects of charity sees an increasing number of our older folk on the welfare roles. By its own accounting, HEW in one year lost through fraud, abuse and waste and amount of money that would have built well over 100,000 houses costing $50,000 a piece. Little wondered that those initials are increasing coming to stand for “How to encourage waste.”
Martin Anderson: We found in some cities that upwards of 20_25% of all the people currently receiving welfare are either totally ineligible for welfare or are receiving more than they should be receiving. And it appears in looking into this that the main reason for this is not the welfare laws themselves, but the way they are administered. They are administered in a very lax and loose manner. One of the most famous cases, in fact it just happened last week, they arrested a woman in southern California, they referred to her as the Welfare Queen. And over the past six or seven years she has received $300,000 in welfare payments. Which of course is on an after tax basis, so if you put her on a before tax basis, it might be equivalent to over a million dollars in before tax income. And, she and her husband were living in a nice $170,000 home, nice cars, and she used a very simple technique. She just used alias, used false names, and signed up to get countless different welfare agencies and departments and drove around and collected her checks.
Friedman: Something had to be done about this scandalous state of affairs. What better bureaucratic decision than to set up a special department crammed with computers and civil servants all dedicated to tracking down waste using taxpayers money, of course, in the process. $27.5 million in the first year.
When there is a high rate of taxation then you have people cheating on their taxes and you can see that in England today.
Pt 3
As Adam Smith wrote over 200 years ago, in the economic market people who intend to serve only their own private interests are led by an invisible hand to serve public interests where there was no part of their intention to promote. In the political market, there is an invisible hand operating as well. But unfortunately it operates in the opposite direction. People who intend only to serve the public interest are led by an invisible hand to serve private interests that was not part of their intention to promote. The reason is simple, as we have seen in case after case, the general interest is diffused among millions and millions of people with special interest its concentrated. When reformers get a measure through they go on to their next crusade leaving no one behind to protect the public interest. But they do leave behind some money and some power and the special interests that can benefit from that money and from that power are quick to gain it at the expense of most of the rest of us. By now, after 50 years of experience, it is clear that it doesn’t really matter who lives in that house. Government will continue to grow so long as the rest of us believe that the way to solve our problems is to turn them over to government.
Yet there are many people who want to solve their own problems, who want to use their own skills and energy and resources. We found such a person here in southern California.
John McCalm, a fireman, was planning his retirement. He decided to fulfill his life’s ambition, he built his own house with his own hands. He bought a site with a magnificent view, cleared the ground and realized that he was the first man who ever cultivated this land. It made him feel good. He pulled a trailer on to the edge of his plot and moved in with his wife to live there while they worked on the house. He made his own adobe bricks, he planted avocado trees, learned about carpentry and plumbing. It was going well when one day a local official arrived with a warning. It was alright to build a house he said, but it was against regulations to live in the trailer any longer. The McCalms thought that the rules were bureaucratic and foolish and they resented them. They decided to leave the trailer exactly where it was and defy the authorities.
Pat Brennan became something of a celebrity in 1978 because she was delivering mail in competition with the United States Post Office. With her husband she set up business in a basement in Rochester, NY. Soon it was thriving. They charged less than the post office and they guaranteed delivery the same day of parcels and letters in downtown Rochester. There is no doubt now that they were breaking the law as it stood. The post office took them to court. The case against them was simply that they should not be handling letters. The Brennan’s decided to fight and local businessmen provided the financial backing.
Pat Brennan: I think there’s going to be a quiet revolt and perhaps we’re the beginning of it. That you see people bucking the bureaucrats where years ago you wouldn’t dream of doing that because you’d be squelched. Now, with tax revolts and with what we’re doing, people are deciding that their fates are their own and not up to somebody in Washington who has no interest in them whatsoever. So, it’s not a question of anarchy, but it’s a questions of people rethinking the power of the bureaucrats and rejecting it.
Friedman: The Brennan customers were clear about one thing. After all, the Brennan’s service was cheaper than the regular mail.
Thomas O’Donaghue (storekeeper): We’re not sure that they have done anything illegal and I’d like to know more about this and I hope that this gets further into the courts than it has already. And someone will listen to their appeal because when we use the Brennan’s we know for a fact that same day delivery is going to be happening day after day after day, whereas with the other guy, you’re not sure and you’re sure what kind of shape it’s going to get there in. So I am behind the Brennan’s 100% and anything I can do to help them, I will.
Pat Brennan: Well, the questions of freedom comes up in any kind of a business. Whether you have the right to pursue it and the right to decide what you are going to do. There is also the question of the freedom of the consumers to utilize the service that they find is inexpensive and far superior. And according to the federal government and the body of laws called the Private Express Statutes, I don’t have a freedom to start a business and the consumer does not have the freedom to use it. Which seems very strange in a country like this that the entire context of the country is based on freedom and free enterprise.
Friedman: The post office won the case. It went all the way to the State Supreme Court and the Brennan’s were closed down. Put out of the business of delivering mail.
What we’ve been looking at is a natural human reaction to the attempt by other people to control your life when you think it’s none of their business. The first reaction is resentment. The second is to attempt to get around it. And finally there comes a decline in respect for law in general. There’s nothing especially American about this. It happens all over the world whenever some people try to control other people. For example, take a look at what’s happening to the British.
For most of the past century Britain was known throughout the world for the respect which its citizens gave to the law, but no longer. Graham Turner (Author “Business in Britain) Nothing is perfect that we have become in the course of the last ten or fifteen years, a nation of fiddlers. How do they do it? They do it in a colossal variety of ways. Lets take it right at the lowest level. Take a small grocer in a country area, say Devon. Very small turnover. How does he make money? He finds out that by buying through regular wholesalers he’s always got to use invoices. But if he goes to the cash and carry and buys his goods from there, and the profit margin on those goods can be untaxed because the tax inspector simply don’t know he’s had those goods. That’s the way he does it. Then if you take it to the top end, if you take a company director, well there’s all kinds of ways they can do it. They buy their food through the company, they have their holidays on the company, the put their wives as company directors even though they never visit the factory. They build their houses on the company by a very simple device of building a factory at the same time as a house, it goes absolutely right through the range from the ordinary person, the ordinary working class person, doing quite menial jobs right to the top end, businessmen, senior politicians, members of the Cabinet, members of the Shadow Cabinet, they all do it. I think almost everybody now feels the tax system is basically unfair. And, everybody who can tries to find a way around that tax system. Now, once that happens, once there is a consensus that the tax system is unfair, the country in effect becomes a kind of conspiracy. And everybody helps each other to fiddle. You’ve no difficulty fiddling in this country because other people actually want to help you. Now 15 years ago that would have been quite different. People would have said, hey, you know, this is not quite as it should be. So that’s the first reason. A very high level of taxation. But I think personally there’s another fact that comes into it. And that is that over the years we’ve had a huge growth in bureaucracy, government expenditure, cotton wool, if you like, to protect people from the slings and arrow of ordinary life, you know, health service, all kinds of benefits of one sort or another. And I think this comes into the consciousness of people almost a sort of new factor feeling that things don’t quite have the value that they did that money is not a thing of value, if your short you get it from some government body or other
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In this episode Milton Friedman makes the point:
“It will be no easy task to cut government down to size. Today in country after country the strongest special interest has become the entrenched bureaucracy. Whether at the national or at the local level. In addition, each of us gets special benefits from one or another governmental program. The temptation is to try to cut down government at someone else’s expense while retaining our own special privileges. That was a stalemate.”
Ep. 10 – How to Stay Free [4/7]. Milton Friedman’s Free to Choose (1980)
Friedman: Criminal tax evasion in Britain, laws and regulations defied in the U.S. It’s nothing to celebrate. The hopeful thing is that throughout the free world the public is coming to recognize the dangers of big government and is taking steps to control it. But it will be no easy task to cut government down to size. Today in country after country the strongest special interest has become the entrenched bureaucracy. Whether at the national or at the local level. In addition, each of us gets special benefits from one or another governmental program. The temptation is to try to cut down government at someone else’s expense while retaining our own special privileges. That was a stalemate. The right approach is to tackle head on the explosive growth in government spending. Lets give the government a budget the way each of us has a budget. A movement in this direction is already underway in the U.S. with the many proposals for Constitutional Amendments limiting government spending. Several states have already adopted such an amendment. There is strong pressure for a similar amendment at the federal level. Those amendments would force government to operate within a strict budget. Each special interest would have to compete with other special interests for a larger share of a fixed pie instead of all of them being able to join forces at the expense of the taxpayer.
This is an important step, but it is only a first step. No piece of paper by itself can solve our problems for us.
What we need is widespread public recognition that the central government should be limited to its basic functions. Defending the nation against foreign enemies. Preserving order at home. Mediating our dispute. We must come to recognize that voluntary cooperation through the market and in other ways is a far better way to solve our problem than turning them over to the government.
This is where much of the future strength of the United States lies. In places like Utuma, Iowa where ordinary hardworking American people live. People of all economic levels live in Utuma, but there are no extremes of either wealth or poverty. All are part of a community. Each part of which depends on the others for a stable and happy life worth living. This is a kind of community that formed the character of democratic America.
We began this series by stressing two ideas, the idea of human freedom as embodied in Thomas Jefferson’s Declaration of Independence, the idea of economic freedom as embodied in Adam Smith’s Wealth of Nations. Those two ideas working together, came to their greatest fruition here in the heartland of America. But the basic character of the society that they created has been changing as a result of the rise of another set of ideas.
We have forgotten the basic truth that the founders of this country knew so well. That the greatest threat to human freedom is a concentration of power whether in the hands of government or anyone else. Throughout the Western world, more and more of us are coming to recognize the dangers of an over-governed society. But it will take more than a recognition of danger. Freedom is not the natural state of mankind. It is a rare and wonderful achievement. It will take an understanding of what freedom is, of where the dangers to freedom come from. It will take the courage to act on that understanding if we are not only to preserve the freedoms that we have, but to realize the full potential of a truly free society.
Lawrence E. Spivak: Milton, all through your discussions, you hammer away at two things, the theories of Adam Smith on the free market and of Thomas Jefferson on central power. One thing that troubled me a little bit about your discussions is that it seemed to me that you are little bit the way psychoanalysts used to talk about Freud. That you believe they had given us the word and that even thought 200 years have gone by, it was still in the world, that circumstances had not changed the meaning anyway. Are you that fixed about their ideas?
Friedman: There’s a great difference between principles and the application of principles. The application of a principle has to take account of circumstances. But the principles that explain how it is that an automobile operates, are no different from the principles that explain how a horse and buggy operated or how a bow and arrow operated. The principles that Adam Smith enunciated, the philosophy that Thomas Jefferson enunciated, are every bit as valid today as they were then. But the circumstances are different and therefore the applications in many cases are very different. In addition, there has been a great deal of work and study and scholarly activity that has gone on since then. We know a great deal more about the way in which an economy works than Adam Smith knew. He was wrong in many individual details of his theory but his overall vision, his conception of how it was that without any central body planning it, millions of people could coordinate their activities in a way that was mutually beneficial to all of them. That central concept is every bit as valid today as it was then, and indeed, we have more reason to be confident in it now than he had because we’ve had 200 years more experience to observe how it works.
Lawrence E. Spivak: Let’s go back to Jefferson. You say cut the functions of central government to the basic functions advocated by Jefferson which was what? Defense against foreign enemies, preserve order at home, and mediate our disputes. Now, can we do that in the complicated, the complex world we live in today, without getting into very serious trouble.
Friedman: Suppose we look at the activities of government in the complex world of today. And ask to what extent has the growth of government arisen because of those complexities? And the answer is, very little indeed. What is the area of government that has grown most rapidly? The taking of money from some people and the giving of it to others. The transfer area. HEW, a budget 1_1/2 times as large as a whole defense budget. That’s the area where government has grown. Now, in that area, the way in which technology has entered has not been by making certain functions of government necessary, but by making it possible for government to do things they couldn’t have done before. Without the modern computers, without modern methods of communication and transportation, it would be utterly impossible to administer the kind of big government we have now. So I would say that the relation between technology and government has been that technology has made possible big government in many areas, but it’s not required it.
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In this episode Milton Friedman makes the point, “There was no widespread public demand for Social Security programs… it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little.”
Pt 5
Lawrence E. Spivak: I know, I believe, I say I know, I think I know, but I’ll say I believe that you felt, you blame the government for the Great Depression of 1929 through 1933 and of course, you had to blame FDR for all he did, but most people feel that he saved this free economy of ours.
Friedman: Given the catastrophe of the Great Depression, there is no doubt in my mind that emergency government measures were necessary. The government had made a mess. Not FDR’s government, it was the government that preceded him. Although it was mainly the Federal Reserve System which really wasn’t subject to election. But once FDR came in he did two very different kinds of things.
Lawrence E. Spivak: Well, had the government made a mess by what it did or but by what it didn’t do.
Friedman: By what it did. By it’s monetary policies which forced and produced a sharp decline in the total quantity of money. It was a mismanagement of the monetary apparatus. If there had been no federal reserve system, in my opinion, there would not have been a Great Depression at that time. But given that the depression had occurred, and it was a catastrophe of almost unimaginable kind, I do not fault at all, indeed on the contrary I commend Roosevelt for some of emergency measures he took. They obviously weren’t of the best, but they were emergency measures and you had an emergency you had to deal with. And the emergency measure such as relief programs, even the WPA which was a make work program, these served a very important function. He also served a very important function by giving people confidence in themselves. His great speech about the only thing we have to fear is fear itself was certainly a very important element in restoring confidence to the public at large. But he went much beyond that, he also started to change, under public pressure, the kind of government system we had. If you go beyond the emergency measures to the, what he regarded as reform measures, things like NRA and AAA, which were declared unconstitutional, but then from there on to the Social Security system, to the …
Lawrence E. Spivak: Take the Social Security System for a minute. The people wanted that, they wanted that protection. They were frightened, they wanted welfare.
Friedman: Not at all.
Lawrence E. Spivak: When you said pressure, who, pressure from whom?
Friedman: Pressure from people who were expressing what they thought the public ought to have. There was no widespread public demand for Social Security programs. The demands…….
Lawrence E. Spivak: No demand for welfare with 13 million people …….
Friedman: There was a demand for welfare and assistance I was separating out the emergency measures from the permanent measures. Social Security in the first 10 years of its existence, helped almost no one. It only took in money. Very few people qualified for benefits. It wasn’t an emergency measure. It was a long term measure. And it had to be sold to the American people primarily by the group of reformers, intellectuals, new dealers, the people associated with FDR. The Social Security is one of the most misleading programs. It has been sold as an insurance program. It’s not an insurance program. It’s a program which combines a bad tax, a flat tax on wages up to a maximum with a very inequitable and uneven system of giving benefits under which some people get much, some people get little. So that Social Security….
Lawrence E. Spivak: Would you now abolish Social Security?
Friedman: I would not go back on any of the commitments that the government has made. But I would certainly reform Social Security in a way that would end in its ultimate elimination.
Lawrence E. Spivak: If you’re not afraid then of the free market under any circumstances, where cooperation which you find necessary which you believe all to come, fails to come, where competition becomes so fierce and becomes very frequently corrupt and where, all where it becomes stupid. Take for example what’s happening in today’s market, the conglomerates. Which have been seizing up all sorts of, we happen to live in a hotel that’s run by a conglomerate. Why should ITT, for example, run a hotel and how are you going to stop that.
Friedman: Well in the first place, once again,
Lawrence E. Spivak: Without government, without…..
Friedman: Once again, it’s government measures that have promoted the conglomerates. The only major reason we have conglomerates is because they are a very effective way to get around a whole batch of tax legislation. Let me ask a different question. Who is more effected by government regulations, by government controls?
Lawrence E Spivak: I thought I was supposed to ask the questions. But I was warned that you might turn these on me.
Friedman: Well tell me, whose more effected the big fellow who can deal with it or that have a separated department to handle the red tape, or the poor fellow?
Lawrence E. Spivak: The big fellow can always take care of himself under any system.
Friedman: Right, and therefore he’ll want a system which gives the big fellow the least advantage. And the system under which he can get government to help him out, gives him the most advantage, not the least. You say am I afraid of greed, of lack of cooperation. Of course. But we always have to compare the real with the real. What are the real alternatives? And if we look at the record of history, if we go back to the 19th century which everybody always points to as the era of the robber baron who strode around the land and ground the poor under his heel, what do we find? The greatest outpouring of voluntary charitable activity in the history of the world. This University, this University of Chicago is an example. It was founded by contributions by John D. Rockefeller and other people. The colleges and universities throughout the Midwest. If you go back and ask when was the Red Cross founded, when was the Salvation Army founded, when were the Boy Scouts founded, you’ll discover all of that came during the 19th century in the era of unregulated rapacious capitalism.
Lawrence E. Spivak: I’d like to go back for a minute to the question of conglomerates. Granted that what you say that the government policies concentration on central government if you will, or whatever you want to call it, are responsible for the growth of conglomerates. What would we, what should we do about them now? Government try to undue them? Or should anybody try to undue them?
Friedman: No.
Lawrence E. Spivak: Or should you just let them fail?
Friedman: You should let them fail, of course. I am strongly opposed to government bailing any of them out. You should let them fail. The best things you can do in my opinion, are first to have complete free trade so you can have conglomerates in other countries compete with conglomerates in this country. We may have only two or three automobile companies, but there’s Toyota, there’s Volkswagen, competition from abroad is effective. But in the second place…
Lawrence E. Spivak: When do you say complete free trade you mean all over the world?
Friedman: No sir. I mean the U.S. all by itself unilaterally should eliminate all trade barriers. We would be better off if all the countries did the same.
Lawrence E. Spivak: What do you think would happen if we just did it though?
Friedman: I think we’d be very much better off and a lot others would then follow our example. That’s what happened in the 19th Century when Great Britain in 1846 completed removed, unilaterally, all trade barriers so that…..
Lawrence E. Spivak: You don’t think this country would be flooded with goods of all kinds from all over the world, maybe cheaper in that we wouldn’t have great unemployment in this country?
Friedman: What would the people who sold us goods do with their money? They’d get dollars, what would they do with the dollars? Eat them. If they want to send us goods and take dollars in return, we’re delighted to have them. No. That’s not a problem as long as you have a free exchange rate. Because we cannot export without importing, we cannot import without exporting. You would not have a reduction in employment, what you’d have would be a different pattern of employment. You’d have more employment in export industries and less employment in those industries that compete with import. But go back to conglomerates, Larry for a moment. I just want to ask a very different kind of a question. Conglomerates are not very attractive, I would much rather have a lot of small enterprises. But there’s all the difference in the world between a private conglomerate and a government conglomerate. In general, the government conglomerate can get money from you without your agreeing to give it to him. You and I pay for Amtrak and for the postal deficit whether we use the services of Amtrak or the postal deficit or not. I don’t pay your conglomerate unless I rent one of their apartments. I get something for my money. So bad as private conglomerates are, they’re less bad than one of the alternatives.
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Milton Friedman in this episode makes this point, ” If you compare the conditions of people in a place like Singapore with the conditions of people in a place like Red China, or for that matter, Indonesia, you will see that the economic freedom is a very important component of total freedom”
Pt 6
Lawrence E. Spivak: Milton, suppose I agree with almost everything you say and say it would be wonderful if we … starting from scratch
Friedman:….If you agree with everything I say, you are a unique human being.
Lawrence E. Spivak: I don’t say I do agree, but I said suppose I agree for the sake of argument. We can’t start from scratch. How do we undo what we have done? How would you undo it, not me?
Friedman: That’s the hardest problem and I agree that is the real question. How do we get from where we are to where we want to go? And we can’t get there overnight, we cannot get there by simply eliminating the things that should not have been done. As in the case of Social Security, we have it. And we’ve got to live up to our obligations. So we do have to develop a series of policies which will enable us gradually to move from where we are to where we want to be. The first and most important step in my opinion, is to stop moving in the wrong direction.
Lawrence E. Spivak: Milton, you said a few minutes ago that throughout the free world, the public is coming to recognize the danger of big government and is taking steps to control it. But how with the example of what freedom does before them, how do you explain the new countries that have been coming up, all going in the direction of dictatorship?
Friedman: The climate, the intellectual climate of opinion has an enormous influence on what happens and the popular intellectual attitude within the free countries for the poor countries has been that they have to have centralized government. And that has served the interests of small elite groups within those countries. In one backward country after another what has happened is they’ve gotten their freedom supposedly from colonial rule, you’ve had a small elite take over and they have run that country for their own benefit and at the expense of the poor. It’s a tragedy of the modern era. Change the climate of opinion in the major countries. As the climate of opinion is changing, as the philosophy, the attitude what’s being taught at the universities is different, and you will see that these other countries, these backward countries will follow it and there are, there is some evidence that way. If you look at the countries where the backward countries which are doing best for themselves, they are places like Hong Kong, like Singapore, like Taiwan, like Korea, they’re not free countries in our sense of the term but they have much larger elements of freedom. Much greater scope for individual initiative. Many other countries of the world which have gone much further in the Communist centralized controlled direction.
Lawrence E. Spivak: How, for example, Singapore in Taiwan, have had you say very free economies. Now how do there economies, remain free but their politics and their human freedom is still curtailed. And as I understand in many cases, rather severely curtailed. They don’t have any of the freedoms we have. Press, religion,
Friedman: Economic freedom is a necessary condition for a human, all humans, but it is not a sufficient condition. You can have an economy that is largely free with large elements of restrictions. For example, let me take the American experience before the Civil War. We had a mixture of a largely free economy, with a segment of the population, the slaves, held in the condition of involuntary servitude. But even where you don’t have complete political freedom in the case of a Singapore or a Taiwan, human beings are much freer than they are in those societies where there is no economic freedom either. If you compare the conditions of people in a place like Singapore with the conditions of people in a place like Red China, or for that matter, Indonesia, you will see that the economic freedom is a very important component of total freedom. It’s not something different, it’s not something separate. Economic freedom is part of total freedom and for most people it’s the most important part. Freedom doesn’t mean very much to a starving man. And if a free society could not help the starving man, it would be very difficult for, to remain free very long. That’s why the ability of a free society to improve the lot of the ordinary person is a very, very necessary condition for its remaining free but it’s not the fundamental reason why I want a free society. I want a free society for the human and ethically and moral values that you stressed as pertaining to freedom. Freedom really rests, the value of freedom.
Lawrence E. Spivak: But suppose the moral values mean a lot to me. But, again, as I say, they mean nothing to the man who is hungry. It means absolutely nothing to him. What are you going to…. well do you think it does mean something to him.
Friedman: No. At first I think it means something to many of them. Of course, many men have died for their moral values, have put those moral values much above life itself. But I, you and I are citizens of a free society, will not stand the sight of…
Lawrence E. Spivak: … Well let me put it a different way, suppose you turn and you made a speech to all the people on welfare and you said to them, look there are, freedom is much more important than the welfare money that you are getting. Their ethical concepts, their spiritual things about the, men have died for this things. What if you told them all that and then said and we’re going to withdraw welfare now. What do you think would happen now?
Friedman: Would tell them something else. I would tell them.
Lawrence E. Spivak: I know also what you’d do.
Friedman: I tell them both what I would do and what I would tell them. I would tell them welfare has been corrupting you. Look at what it is doing to you. Look at what it’s doing to your children. You would be far better off in every respect….
Lawrence E. Spivak: But suppose they said to you, I don’t see that at all. Without that welfare we’d be in an awful mess.
Friedman: Your wrong, you wouldn’t be in an awful mess, but I understand your feeling and I do not propose to withdraw assistance from you like that all at once. I think it would be intolerable to throw the millions of people who are now depending on welfare on to the streets. We’ve got to go gradually from here to there. That’s why I proposed a negative income tax as a transitional device. That it would enable us to give help to people who really need help while not at the same time having the kind of mess we have now where most of the benefits go to people who are not but look at the way in which the welfare system has been corrupting the very fabric of our society. We have put people in a trap which is of no part of your own making. I don’t blame them, but they’ve been put in a trap where we are inducing them to become dependents, to become children, not to become independent human beings. The virtue and the desire of freedom is for what people can do with their freedom. Freedom is not an individual value, it’s a social value. A Robinson Caruso on an island, freedom is a meaningless concept to him.
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Milton Friedman says this in the following episode:
I believe that there is a strong enough component of freedom in our society that we will be able to preserve it, that we’re going to turn this trend back, that we are going to cut government down to size, we’re going to lay the ground work for a resurgence for a, a flowering, of that diversity which has been the real product of our free society.
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Pt 7
Lawrence E. Spivak: Milton, how bad is the state of freedom in this country today?
Friedman: It’s a mixed bag. In some areas we have more freedom than we’ve ever had before. In some other areas our freedom has been drastically reduced. Our freedom to spend our own money as we want has been cut sharply. Our freedom to go into whatever occupation we want has been reduced sharply. Our freedom to have various businesses has been reduced sharply. And these restrictions in our economic freedoms have carried over to restrictions on the freedom with which we speak and we talk, the activities we carry on, our attitudes toward governmental officials and all the rest. In those areas, our freedoms have been very seriously restricted.
Lawrence E. Spivak: What about your yourself? You as an individual and we really have to do with, deal with millions of hundreds, two hundred million, two hundred twenty million individuals. What about you? What freedom do you think you’ve lost?
Friedman: Well, I have been a very fortunate individual. I always have…
Lawrence E. Spivak: That sounds like a cop out.
Friedman: No, it’s not a cop out because I’m going to add to it. I’ve always said about the only people who have effective freedom of speech these days in the United States are tenured professors at private universities who are on the verge of retirement or have retired. And that’s been my situation in these recent years. Consider the freedom of, for example, a professor of medicine at any one of our great institutions. He’s almost certainly having his research financed by the Federal Government. Don’t you suppose he’d think two or three times before he gave a lecture on the evils of socialized medicine? Or consider one of my colleagues at the University who happens to be getting grants of money from the National Science Foundation. Do you think he really feels free to speak out on the issue of whether government ought to be financing such research. Of course, you ought not to have freedom without costs. But the costs ought to be reasonable. They ought not to be disproportionate, there’s no businessmen in this country today who can speak out. Why is it, why is it that the businessmen today are so mealy-mouthed in what they say? There are very few of them who are willing to come out and say openly what they believe. Why?
Lawrence E. Spivak: About what?
Friedman: About anything. Take for example the recent attempts by President Carter to impose voluntary wage and price controls. There’s hardly a businessman in this country who doesn’t think it’s terrible. There are only about two or three businessmen who have had the courage to stand up and say something about that. But again, as I say, go to my academic colleagues. Many of them feel as I do that government is devoting altogether too much money. That there’s been altogether too much subsidization of state universities and colleges all along the line. Yet very few of them are willing to speak out.
Lawrence E. Spivak: What about the generation that doesn’t know what freedom is as you knew it, and therefore, doesn’t mind so much what has happened. Just takes for granted what he’s living under now.
Friedman: I think that’s a very real problem. I think we’re living on our inheritance. We have inherited a philosophy and a set of attitudes and they tend to be eroded. People get accustomed to what they know. There’s an enormous tear in the status quote and most people, most of the time, accept the circumstances that are around them. There’s a natural human drive for freedom which always expresses itself. But, its stronger or weaker and I think a great danger in continuing along the path that we’ve been going on is that we will lose still more of our inheritance, still more of our basic values of our basic beliefs in freedom and that we will have still less protest as more and more freedoms are taken away. The real value of freedom is that it provides diversity and diversity is in turn the real protection of freedom. People who like to live in small cities, can live in small cities. People who like the impersonality of the metropolis can live in a metropolis. We have loyalties to our churches, we have loyalties to our universities, to our schools, to our clubs, to our cities, to our states. It’s this diversity. That fact that there isn’t a monolithic conformity imposed on us, that is, the source of protection for our freedom and also the fruit of freedom. It’s because freedom protects diversity, allows, you will remember the phrase when Mao said he was going to allow a 100 flowers to bloom. But of course he didn’t. As soon as people spoke out and 100 flowers bloomed, he cut them off. But it’s the blooming of many flowers, the fact that you have all of these different expressions of people’s individuality and produces the great achievements of civilization and that provides the great hope a protection of our freedom.
Lawrence E. Spivak: Why are you saying that there are pockets of freedom still existing in the countries?
Friedman: As I said before, the picture’s a mixed bag. In certain respects we have more freedom than we’ve ever had, but in other respects we’ve had very much less freedom. Of course there are great pockets of freedom, this is predominantly still a free country. We must not confuse the trend with the situation. We have been moving away from freedom. Our freedom is in jeopardy but by no means has been completely destroyed. I believe that there is a strong enough component of freedom in our society that we will be able to preserve it, that we’re going to turn this trend back, that we are going to cut government down to size, we’re going to lay the ground work for a resurgence for a, a flowering, of that diversity which has been the real product of our free society.
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George Eccles: Well, then we called all our employees together. And we told them to be at the bank at their place at 8:00 a.m. and just act as if nothing was happening, just have a smile on their face, if they could, and me too. And we have four savings windows and we […]
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Milton Friedman and Ronald Reagan Liberals like President Obama (and John Brummett) 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. […]
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Today’s soaring federal deficits are a looming disaster and were sadly avoidable. If policymakers had held spending to the same level relative to gross domestic product (GDP) as under President Bill Clinton, this year’s budget would be balanced. Instead, presidents and congresses over the past two decades have failed to reform elderly entitlement programs, while also jacking up spending on many other activities.
The federal budget was balanced the last four years of the Clinton administration from 1998 to 2001, but it has not been balanced since. The imbalance has grown over time, and today’s policymakers seem to shrug off the huge irresponsibility of adding more than a trillion dollars to accumulated debt every year.
The figure shows that federal spending has risen from 17.7 percent of GDP in 2000 to 24.2 percent estimated for 2023. If policymakers had instead held spending to the 2000 level of 17.7 percent of GDP, then the budget would be balanced this year since revenues are expected to be at least that high. The OMB baseline has revenues at 17.7 percent this year, while the CBO baseline has them at 18.3 percent.
Put another way, if policymakers had restrained spending growth over 23 years to the annual average nominal GDP growth rate of 4.2 percent, then today’s budget would be balanced. Unfortunately, actual federal spending grew at an annual average rate of 5.7 percent between 2000 and 2023.
The figure also shows that all three components of federal spending—Health and Human Services (HHS), Social Security, and all other—have grown substantially since 2000. HHS spending includes Medicare, Medicaid, and other programs. People often say that health care and Social Security are breaking the budget, but other spending has grown rapidly as well.
The table further details spending growth since 2000. The rows are federal departments, except that IRS and net interest spending have been broken out from the Treasury Department. The rows are in order of increased spending over the period. Aside from HHS and Social Security, there have been substantial spending increases relative to GDP on veterans, education, the IRS, net interest, homeland security, agriculture, and defense. The rise in IRS spending mainly reflects the growth in refundable tax credits, and the rise in agriculture spending mainly reflects growth in food subsidy programs.
A long‐term perspective on federal spending is here, and proposals to cut spending are here and here.
Notes: Spending data for the figure and table are mainly from budget table 4.1 here. Spending is outlays, and data are for fiscal years.
Simply stated, the folks who oppose fixing entitlements – including so-called national conservatives and politicians such as Donald Trump– are in favor of giant tax increases on lower-income and middle-class Americans.
This process already is underway in the United Kingdom.
The Conservative Party became recklessly profligateunder Boris Johnson, causing a big bump in the country’s (already excessive) spending trajectory.
And bad spending policy is now leading to bad tax policy (the British pound no longer is the world’s reserve currency, so there’s not as much ability to finance ever-expanding spending by endlessly issuing new debt).
As explained in a Wall Street Journaleditorial from last November, Prime Minister Rishi Sunak and his Chancellor of the Exchequer Jeremy Hunt have a tax agenda somewhat akin to Joe Biden’s.
The Chancellor and his boss, Prime Minister Rishi Sunak, are making a particular tax grab at highly mobile workers, especially in financial services, by reducing the threshold for the top 45% income-tax rate to £125,000 from £150,000. The Treasury pretends this will rake in an additional £3.8 billion in revenue over six years…Mr. Hunt is increasing the top corporate tax rate to 25% from 19% and imposing a global minimum tax not even the European Union has managed to implement. …Mr. Sunak’s Conservative Party ditched Ms. Truss’s supply-side tax and regulatory reforms in favor of this plan to tax and spend Britain to prosperity. One of those strategies boasts a proven track record of success and the other has a history of failure. The Tories can explain their choice to voters at the next election.
In a column for CapX, Conor Holohan made similar points, while also pointing out the corporate tax hike won’t raise nearly as much money and Sunak and Hunt are hoping to collect.
Hunt is right to want to balance the books and avoid passing on huge levels of debt to future generations. But to raise corporation tax on such a scale risks turning away those businesses which will be central to the growth and investment we need to generate the receipts that will pay the nation’s bills…. But that static approach doesn’t..reflect the fact that businesses are being discouraged from investing in Britain because of the planned increase in corporation tax. …The TaxPayers’ Alliance (TPA) dynamic tax model..suggests the planned corporation tax rise could cost £30.2bn of lost GDP after a decade. This slower growth would see almost two thirds of the expected revenue from the rise to be lost through lower receipts. …By raising corporation tax on this scale, the Government will be eroding that tax base, and we will see more companies like AstraZeneca deciding that there are more competitive places to be investing.
Steve Entin of the Tax Foundation also did some economic analysis and is not impressed with the Sunak-Hunt tax-and-spend agenda.
…the Sunak-Hunt tax plan will raise labor costs and reduce hours worked. It will increase tax hurdles for new corporate investment, discouraging capital formation. With less labor and capital, real output and employment will fall, increasing the economic pain… The system phases out the untaxed personal allowance for incomes between £100,000 and £125,140, at a rate of £1 for every £2 of income over £100,000.This results in a de facto 60 percent tax band in the middle of the 40 percent band. …The Sunak-Hunt plan…leaves the pending rise in the corporation tax in place. It raises the windfall profits tax on oil and gas producers and imposes a new tax on electricity generation, which will drive up the cost of energy, prompting the government to promise more spending on energy grants to consumers. …The Sunak-Hunt tax plan…estimates another 6 million workers will be pushed onto the tax roles due to the freezes. …History is clear. Lowering budget deficits via spending restraint frees resources for additional private output and jobs. …It is folly to think deficit reduction by means of a corporation tax increase would lower interest rates enough to spur investment despite the direct damage from the tax
Let’s close with a few passages from another Wall Street Journal editorial, this one published just yesterday.
U.K. Prime Minister Rishi Sunak promised economic expertise… British businesses think he needs a refresher. Witness the brewing revolt against the mammoth tax increases Mr. Sunak cooked up with Chancellor Jeremy Hunt. …they want to raise the top corporate tax rate to 25% from 19%; reduce the threshold for the top 45% personal income-tax rate to £125,140 from £150,000; and soak the middle class by freezing tax brackets…The ruling Conservatives have convinced themselves that only a balanced budget can induce businesses to invest in Britain. But…James Dyson of vacuum cleaner fame wrote in the Telegraph in January that the Tory policy of tax hikes and overregulation is “short-sighted” and “stupid.” …Pharma giant AstraZeneca last month said it will build a £320 million factory in low-tax Ireland instead of the U.K. “because the [U.K.] tax rate was discouraging.” Shell is reevaluating $25 billion in oil and gas investments after Mr. Hunt cranked up a windfall-profits tax on top of the regular corporate rate. …The business revolt is a warning that the taxes will be fiscal duds. …That may leave the Tories defending a record of slow growth, high taxes and more deficits and debt at the next election. A party of the right that loses its low-tax, pro-growth economic credibility is headed for defeat.
Some readers may not care about fiscal policy in the United Kingdom.
But today’s column is a warning sign about what will happen in the United States if Republicans surrenderon spending and entitlement programs are left on autopilot.
Today, we’re going to expand on this list with the “most laughable” tweet of 2022. But this tweet from the Republican National Committee is a case of accidental humor rather than deliberate humor.
As you might expect, the RNC did not bother trying to prove its statement.
That’s because the Republican party generally does a terrible job. Donald Trump expanded government. George W. Bush expanded government. And George H.W. Bush expanded government.
You have to go all the way back to Ronald Reagan to find a Republican who actually was on the side of taxpayers (and before him, you have to go all the way back to Coolidge).
And that’s not because of the defense budget. Even when looking at just domestic spending, Republicans (other than Reagan) have a worse track record.
I have to wonder whether the folks at the RNC were doing hallucinogenic drugs when they sent out that tweet? Or was it a naive intern who heard a few speeches and was tricked into thinking the GOP actually cared about shrinking government.
The latter possibility is a good excuse to share this cartoon.
But let’s also look at some serious analysis.
Here are some excerpts from a column in the Wall Street Journal by Kimberley Strassel. She was motivated by a pork-filled handout to the tech industry this past summer, but then proceeded to list many other sins.
The GOP that is assisting in this quarter-trillion-dollar spendathon is the same GOP that last year provided the votes for a $1 trillion infrastructure boondoggle. The same GOP that in 2020 signed on to not one, not two, three or four, but five Covid “relief” bills, to the tune of some $3.5 trillion. The same GOP that…blew through discretionary spending caps. The same GOP that has unofficially re-embraced earmarks. The party occasionally takes a breather—say to gripe about the Democrats’ $1.9 trillion Covid bill in 2021—but then it’s right back to the spending grindstone. When was the last time anyone heard a Republican talk about the need to reform Social Security or Medicare? That disappeared with the election of Donald Trump (opposed to both)… Instead, a growing faction of the party sees a future in buying the votes of working- and middle-class voters with costly new entitlement proposals of their own, such as expanded child tax credits.
I don’t know whether to laugh or cry.
But since laughing is more fun, here’s a cartoon about earmarks (which recently were endorsed by Republican lawmakers).
I’ll close with a tiny bit of optimism.
I’ve dealt with hundreds of politicians over the years, most of whom were Republicans.
By and large, they usually understand that big government is bad for prosperity. But there are two things that have an impact on their voting behavior.
They are afraid of being rejected by voters who want freebies (especially the ones they already are receiving).
But they might be willing to cast courageous votes if there is a real chance of a long-run change in policy.
To elaborate on the second point, there have been three periods of spending restraint in my lifetime: 1) the Reagan years, 2) the Clinton years, and 3) the Tea Party years.
In all three cases, there was a critical mass of lawmakers who were willing to do the right thing in spite of the usual incentives in Washington to do the wrong thing.
Is there a 4th period in our future? That depends on whether the GOP returns to Reaganism.
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December 22, 2022
The Honorable t John Thune of Soth Dakota United States Senate Washington, D.C. 20510
We got to stop spending so much money and start paying off our national debt or the future of our children and grandchildren will be very sad indeed. Everyone knows that entitlement spending must be cut but it seems we are not brave enough to do it.
TRUE CONSERVATIVES are not the problem because they voted AGAINST THE OMNIBUS SPENDING BILL THAT DEMOCRATS AND RINO REPUBLICANS LIKE YOU IN THE SENATE HAVE VOTED FOR!!! Why did you betray your conservative supporters back home?
WASHINGTON – Sen. John Kennedy (R-La.) released the above statement after voting against the $1.7 trillion government appropriations package.
Key excerpts from the senator’s statement are below:
“Here’s the main reason I voted against the budget: Inflation. As I’ve said before, inflation is ravaging the American Dream. It’s a cancer on the American Dream, and we’re not going to get control of it until Congress stops spending so much money.”
“We’ve got to slow the rate of growth of spending and debt. Now, look, I’m not naive. There are many people here in Washington, not just on the Democratic side—there are many big-government Republicans as well—and their attitude is, ‘We can’t possibly spend enough money.’ If they ran out of money to spend and couldn’t borrow any more, they would think about taking out a reverse mortgage on Alaska to get the money. But there are enough Republicans on Capitol Hill for us to be able to slow the rate of growth and spending, and this bill didn’t do that.”
“The question becomes . . . What’s the best way to achieve the best budget? Do we sit down and do it now, or do we wait until we have a majority of Republicans in the House of Representatives? And I said all along, we should wait.”
“Here’s what it comes down to: Would you rather have Nancy Pelosi decide what the federal budget is going to be, or would you rather wait until he’s sworn in as Speaker of the House and have Kevin McCarthy? And that, to me, is a no brainer, and there was never any doubt in my mind that the prudent decision, in terms of controlling spending, was to wait for Kevin McCarthy [instead of] allowing Speaker Pelosi to make the decision.”
President Ronald Reagan once said, “I have only one thing to say to the tax increasers: Go ahead, make my day.” ____________ Here below is a list of those 66 brave Republicans that voted against the debt ceiling increase listed below in August of 2011. The ones in blue are the ones that I have […]
_________________ President Ronald Reagan wisely said: “The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution.” You would think that the Republicans who talk so much of cutting spending would try to get a plan that cuts spending 3 […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on […]
(Emailed to White House on 12-21-12.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
(Emailed to White House on 12-21-12) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is […]
The federal government has a spending problem and Milton Friedman came up with the negative income tax to help poor people get out of the welfare trap. It seems that the government screws up about everything. Then why is President Obama wanting more taxes? _______________ Milton Friedman – The Negative Income Tax Published on […]
I was sad to read that the Speaker John Boehner has been involved in punishing tea party republicans. Actually I have written letters to several of these same tea party heroes telling them that I have emailed Boehner encouraging him to listen to them. Rep. David Schweikert (R-AZ),Justin Amash (R-MI), and Tim Huelskamp (R-KS). have been contacted […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Some of the heroes are Mo Brooks, Martha Roby, Jeff Flake, Trent Franks, Duncan Hunter, Tom Mcclintock, Devin Nunes, Scott Tipton, Bill Posey, Steve Southerland and those others below in the following posts. THEY VOTED AGAINST THE DEBT CEILING INCREASE IN 2011 AND WE NEED THAT TYPE OF LEADERSHIP NOW SINCE PRESIDENT OBAMA HAS BEEN […]
I hated to see that Allen West may be on the way out. ABC News reported: Nov 7, 2012 7:20am What Happened to the Tea Party (and the Blue Dogs?) Some of the Republican Party‘s most controversial House members are clinging to narrow leads in races where only a few votes are left to count. […]
Rep Himes and Rep Schweikert Discuss the Debt and Budget Deal Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Here is a study done on the votes of the 87 incoming freshman republicans frm the Club for Growth. Freshman Vote Study In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say […]
Stimulating the economy comes from giving the private sector incentive to grow or in other words cutting taxes for job creators and not class warfare. Sadly we have had too many RINOS out there. The Tea Party is the answer for that. The liberal Arkansas Times blog runned by Max Brantley is upset that the Tea […]
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment: For decades now, we have spent too much money on ourselves and have intentionally allowed our […]
Rep. Quayle on Fox News with Neil Cavuto __________________ We have to get people realize that the most important issue is the debt!!! Recently I read a comment by Congressman Ben Quayle (R-AZ) made after voting against the amended Budget Control Act on August 1, 2011. He said it was important to compel “Congressional Democrats and […]
What future does our country have if we never even attempt to balance our budget. I read some wise words by Congressman Jeff Landry (R, LA-03) regarding the debt ceiling deal that was passed on August 1, 2011:”Throughout this debate, the American people have demanded a real cure to America’s spending addiction – a Balanced Budget […]
I read some wise comments by Idaho First District Congressman Raúl R. Labrador concerning the passage of the Budget Control Act on August 1, 2011 and I wanted to point them out: “The legislation lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation.” I just […]
Gun control arguments just don’t make any sense, but President Obama still supports gun control. Laughing at Obama’s Belly Flop on Gun Control April 23, 2013 by Dan Mitchell I’ve shared serious articles on gun control, featuring scholars such as John Lott and David Kopel. I also posted testimonials from gun experts and an honest liberal. […]
Gun Control explained Merry Christmas from the 2nd Amendment Buy a Shotgun Joe Biden Lying AR-15 Make your own Gun Free Zone PRK Arms on CBS 47 news, Fresno Suzanna Gratia Hupp explains meaning of 2nd Amendment! Penn and Teller – Gun Control and Columbine Somebody Picked the Wrong Girl 5 Facts About Guns, Schools, […]
This is captured in this Wizard-of-Id parody, with the only difference being that UBI is a big handout for everything rather than a set of handouts for specific reasons (food stamps, welfare, housing subsidies, etc).…we find strong evidence for sizeable negative labor supply effects. After two years, households assigned to the cash transfer were 14 percent less likely to have at least one member working compared to households assigned to the control group; main recipients were 20 percent less likely to work. …Another important finding concerns the persistence of effects. Employment rates in the treatment group remain lower even six months after the last transfer, indicating that households’ labor supply decisions may be hard to reverse.
to tens of millions of households with children in 2021, which President Joe Biden’s latest proposed budget seeks to revive. Those similarities suggest American policymakers should take heed of the study’s findings… As Jon Baron, a longtime expert on evidence-based policy, recently described, the findings of the “high-quality” randomized control trial reflected in the study “suggest a need for caution in the design of anti-poverty programs, to avoid discouraging work effort.”
almost surely won’t get rid of the handout programs that already exist (this is the “public choice” problem I mentioned in the above video).
The business tax does not have deductions for interest payments, dividends, or any other type of payment to the owners of the business. As a result, all income that people receive from business activity has already been taxed. …The resulting simplification and improvement in the tax system is enormous. …Eliminating the deduction for interest paid by businesses is a central part of our general plan to tax business income at the source.
The Daily Hatch 