Category Archives: Milton Friedman

FRIEDMAN FRIDAY Paddy Cosgrave Sep 7, 2016 Trump and the Risk of Doing Nothing

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Over 200 years ago, just as the excesses of British aristocracy were being banished from Boston’s shores, one of America’s founding fathers Thomas Jefferson warned of a “new aristocracy” which might one day come to control America under the name of democracy.

For those interested in the 2016 US election, and bemused in particular by the rise of Donald Trump, Jefferson’s warnings make for fascinating reading.

Thomas Jefferson was concerned by the rise of what he termed “our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country”. Jefferson hoped that his fellow democrats would “crush in its birth” this “new aristocracy”. He lamented that if they failed, then eventually this “new aristocracy” would rise to “rid[e] and rul[e] over the plundered ploughman and beggared yeomanry” under the name of democracy.

But Jefferson was not alone.

Alexander Hamilton, another founding father, warned of a new “spirit of speculation”. It was a “dangerous tumour” he wrote that if allowed develop unchecked would one day “rob the industrious of the fruits of their labour and… enable the idle and rapacious to live in ease and comfort at the expense of the better part of the community”. He called it “popular despotism” and insisted that it’s rise “must be corrected”.

Another founding father, James Madison worried of a comparable future. In that future, democratic government would be found “substituting the motive of private interest in place of public duty”, leading to “a real domination of the few under an apparent liberty of the many”. The drivers of this change in Madison’s view would be “[t]he stock-jobbers” who he wrote “will become the praetorian band of the Government, at once its tool and its tyrant; bribed by its largesses and overawing it by its clamours and combinations”.

On the other side of the Atlantic, during a similar period, Scottish philosopher and economist Adam Smith was also sharing his predictions.

Smith’s words should carry weight for those interested in capitalism, freedom and democracy on all sides of the political spectrum. Nobel prize winning economist Milton Friedman, who is an ideological pillar of modern liberalism, begins one of his more seminal works, Free to Choose, with great praise for Adam Smith. Smith is, Friedman concludes, the “father of modern economics”, and his book The Wealth of Nations a “masterpiece”. For any classical, quasi or neoliberal, Adam Smith’s words in Wealth of Nations are therefore worth some consideration.

Smith believed the existence of what he called “joint stock companies” was unreasonable except in exceptional circumstances where they can demonstrate “with the clearest evidence that the undertaking is of greater and more general utility than the greater part of common trades”. However, Smith later concluded that while corporations “are established for the public-spirited purpose of promoting some particular manufacture” they “can in other respects scarce ever fail to do more harm than good”.

In the long run, Smith concluded that “the interested sophistry of merchants and manufactures”, might come to overwhelm the benevolent aspirations of democrats everywhere and turn civil government into “civil government… instituted for the defence of the rich against the poor”.

Some decades later Alexis de Tocqueville, whom another ideological pillar of modern liberalism Frederick von Hayek considered one “of the greatest political thinkers”, made similar observations. De Tocqueville urged in his chef-d’oeuvre Democracy in America that any “friends of democracy should keep their eyes anxiously fixed” on “the manufacturing aristocracy which is growing up under our eyes”. De Tocqueville understood it to be “one of the harshest which has ever existed in the world”. Moreover, if allowed develop, it could plausibly be expected to lead to “a permanent inequality of conditions”, leading to “a real domination of the few under an apparent liberty of the many”, to borrow Madison’s words once more.

Milton Friedman wrote at length about the “relation between economic freedom and political freedom”, and was adamant that “historical evidence speaks with a single voice”. The founding fathers of the United States and of modern economics are part of that single voice. While many of their predictions were for the most part theoretical, those theories perhaps pass Friedman’s ultimate test of validity when applied to our modern democracies. Writing in 1966 in The Methodology of Positive Economics Friedman concluded that:

[T]heory is to be judged by its predictive power for the class of phenomena which it is intended to “explain.” Only factual evidence can show whether it is “right” or “wrong” or, better, tentatively “accepted” as valid or “rejected.” …the only relevant test of the validity of a hypothesis is comparison of its predictions with experience.

The experience of many in the western world today, in particular the squeezed middle, is that Jefferson’s “new aristocracy” has truly “become the praetorian band of the Government”. Trump, Farage and many others across the western world, both on the right and left, are reshaping politics by articulating people’s fears in a new language. In place of Jefferson’s “new aristocracy” is the 1%. In place of Madison’s “stock jobbers” is Wall Street. In place of what Adam Smith termed “the interested sophistry of merchants and manufactures” are the lobbyists both in the United States and Europe.

However, implicit in much of the recent commentary about the rise of the 1% and their role in shaping policy is the assumption that this phenomenon is something new or recent. It’s not. As the documentary record shows it has been forever both a feature and concern of democrats on both sides of the Atlantic. The only difference today perhaps is the extent to which our “new aristocracy” influences decisions that impact on all of our lives.

The question then for those interested in maintaining the promise of the founding fathers of modern democracy is to what extent you believe Trump or Farage or similar political voices are the answer to this “dangerous tumour”, this “new aristocracy”. If you don’t, the challenge then is to build or support voices that are the answer. As to do nothing at a moment of so much tumultuous change is to tacitly acquiesce to whatever happens next.

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Some sources in particular order for those curious:

Friedman, Milton, “The Methodology of Positive Economics” In Essays In Positive Economics (Chicago: Univ. of Chicago Press, 1966)

Friedman, Milton & Rose, Free To Choose, (Avon, 1981)

Friedman, Milton, Capitalism and Democracy, (University of Chicago Press, 2002)

Werhane, Patricia, Adam Smith and His Legacy for Modern Capitalism, (Oxford University Press, 1991)

Smith, Adam, The Wealth of Nations, (Aberdeen University Press, 1904)

Sellers, Charles, The Market Revolution: Jacksonian America, 1815–1846, (New York: Oxford University Press, 1991)

Jennifer Nedelsky, Private Property and the Limits of American Constitutionalism: The Madisonian Framework and its Legacy, (University of Chicago Press, 1990)

Hayek, F.A., The Road to Serfdom, (Routledge Classics, 2002)

Tocqueville, Alexis de, Democracy in America, (Mentor Books, 1984)

Manley, John F., “American Liberalism and the Democratic Dream: Transcending the American Dream,” Policy Studies Review, Vol. 10, №1, Fall 1990

 

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FRIEDMAN FRIDAY Tuesday, September 20, 2016 Milton Friedman’s Morals As Trump and Clinton bang the drums for tariffs and renegotiated deals, where’s the popular voice for trade?

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Tuesday, September 20, 2016

Milton Friedman’s Morals

As Trump and Clinton bang the drums for tariffs and renegotiated deals, where’s the popular voice for trade?

By William McGurn

The Wall Street Journal

September 20, 2016

Whether it’s Donald Trump complaining “we don’t win on trade” or Hillary Clinton vowing to appoint a “chief trade prosecutor,” our two main candidates for president are both campaigning on the idea that government needs to protect us from any foreigner who would sell us something at a better price than we could get at home.

Where’s Milton Friedman when you need him?

In 1980, the Nobel Prize-winning economist brought the message of free markets and free trade into the homes of ordinary Americans via an extraordinary public television series called “Free to Choose.” He did so without apology, without a prepared script and in plain language—moral as well as practical—that you didn’t have to be an economist to understand.

He also did it against the prevailing mood that while free markets might be nice in theory, in reality what America needed was a healthy shot of protectionism: e.g., “voluntary” restrictions on Japanese cars, stronger anti-dumping statutes and greater enforcement of state “buy American” laws.

Is it so much different today? In an age when the global economy has helped lift billions out of abject poverty and put in the pockets of our children iPhones with more processing power than the computers NASA used to put a man on the moon, trade has become a dirty word.

The negatives of trade seemed to be confirmed by a now-famous 2012 graphic by economist Branko Milanovic, which plots how much real income has grown between 1988 and 2008 by income percentiles of the global population. Called the “elephant chart” because of its shape, it appears to prove the Trump-Clinton critique: that the winners from trade are foreigners and our top 1%, while the losers are the working and middle class in the developed West, including the U.S.

But the London-based Resolution Foundation has now re-crunched the numbers to adjust for factors including population growth and the collapse of the U.S.S.R. When it did, it found that though income growth for the U.S. working and middle classes was smaller than for their peers in other Western economies, it was not stagnant.

In a recent Financial Times story, Resolution Foundation director Torsten Bell sounded a distinctly Friedmanite note: “Although globalisation brings a range of challenges for lower income families, we need to be clear that weak income growth generally is rooted in domestic policy, and blaming globalisation takes the pressure off governments.”

What might such pressure look like? Well, Harvard economist Edward Glaeser suggests we might, for example, consider the way well-intentioned government programs can boomerang by discouraging work—everything from minimum-wage hikes that make low-skilled young men more expensive to hire to the huge marginal tax rates that kick in when, say, a single mom using some government benefit gets a job.

No one denies that Americans can lose jobs when an industry abroad is selling a good or service at a better price. But the high-employment, mass-manufacturing economy of the postwar years is not coming back no matter how high tariffs are or what we do to countries who manipulate their currencies. Even more interesting, the Resolution Foundation study reports average real income growth for lower- and middle-class workers in the U.K. was much higher than for their American counterparts, even though the U.K. has an economy that is more, not less, dependent on trade.

For his part, Friedman would ask by what right should an American be prevented from buying a lawful good or service if he found a better price from someone overseas? Where’s the morality of keeping a worker from selling the product of his labor to someone who happens to live in another country? And the following was Friedman’s response on “Free to Choose” when a union official challenged him on his bid to eliminate all tariffs over five years:

“The social and moral issues are all on the side of free trade. And it is you, and people like you, who introduce protection who are the ones who are violating fundamental moral and social issues.

“Tell me, what trade union represents the workers who are displaced because high tariffs reduce exports from this country, because high tariffs make steel and other goods more expensive, and as a result, those industries that use steel have to charge higher prices, they have fewer employees, the export industries that would grow up to balance the imports, tell me what union represents them? What moral and ethical view do you have about their interests?”

It’s still a good question. Because here we are, seven weeks out from an election in which the Republican and the Democratic nominee are trying to outdo each other in their opposition to trade. And neither appreciates the irony that the very definition of a bad trade deal is one that inserts the heavy hand of government between a voluntary exchange that leaves both Citizen of Country A and Citizen of Country B better off.

 

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FRIEDMAN FRIDAY Donald Trump and Milton Friedman Debate Free Trade by JOE CARTER • March 7, 2016

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ACTON INSTITUTE POWERBLOG

Donald Trump and Milton Friedman Debate Free Trade

If it wasn’t for Bernie Sanders, Donald Trump would win the title of most economically illiterate presidential candidate in the short history of the twenty-first century.

A prime example of why he’d earn this ignoble title is Trump’s opposition to free trade — a position which, not surprisingly, he shares with Sanders. The only real difference between Sanders and Trump on this issue is that no one trust that Trump would actually carry out his proposed destructive policies (he’d flip-flop on the issue like he does on everything else), while Sanders would be devastatingly consistent.

The video below compares and contrasts Trump’s ignorance about free trade with the wisdom of Milton Friedman, one of the greatest economists in American history.

Trump vs Friedman – Trade Policy Debate

 

Published on Nov 9, 2015

Import tariffs v. free trade, argued by Donald Trump and Milton Friedman. http://www.LibertyPen.com

 

If judged on substance, it’s obvious Friedman wins this debate. But in the long run Trump and other anti-free market politicians are likely to continue to convince the public to support their terrible, anti-trade policies. When it comes to economics, Americans have a tendency to reject policies that make our country more prosperous in favor of ignorant demagoguery that gives the appearance of punishing foreign nations.

(Via: AEI Ideas)

JOE CARTER Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History’s Greatest Communicator (Crossway).

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FRIEDMAN FRIDAY Can Government spend money at no expense?

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Milton Friedman – The Free Lunch Myth

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Milton Friedman – Whats wrong with welfare?

NOVEMBER 14, 2016 1:20PM

Trump and Federal Workers

The incoming Trump administration has indicated that it will make reforms to the federal workforce. Here are a few places where the administration may focus its efforts:

  • Freezing Hiring: Trump’s Contract with the American Voter promised “a hiring freeze on all federal employees to reduce federal workforce through attrition (exempting military, public safety, and public health).” As a goodwill gesture, Trump should also shrink the army of almost 4,000 political appointees in his administration in order to speed agency decisionmaking.
  • Increasing Firing: Trump is famous for firing people on his TV show, and he will likely support reforms to increase federal firing. On the campaign trail, Trump talked about firing VA executives, and his advisors Chris Christie and Newt Gingrich talked about the importance of civil service reforms to increase firing. Reforms are needed: federal civilian workers are fired at just one-sixth the rate that private-sector workers are. Members of the federal senior executive service are fired at just one-twentieth the rate that corporate CEOs are.
  • Reducing Retirement Benefits. Federal wages and benefits are higher, on average, than in the private sector, but it is on benefits that federal compensation really stands out. The WaPo has discussed various GOP proposals to reduce federal benefits. My favored reform is to repeal the old-fashioned defined-benefit pension plan. That would leave federal workers with a generous defined-contribution plan, which is the standard in the private sector.
  • Reforming Federal Unions. One reform was mentioned in the Republican platform: “union representatives should not be allowed to engage in union-related activities while on the public’s time.” Republicans on the Hill have been investigatingthe use and abuse of such “official time” in federal agencies.

My essays “Bureaucratic Failure in the Federal Government” and “Reducing the Costs of Federal Worker Pay and Benefits” should provide useful information to the Trump team in assembling its workforce reform agenda.

 

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NOVEMBER 29, 2016 3:44PM

Markets in Education Work, But Keep the Feds Out of It

President-Elect Trump’s selection of philanthropist and long-time school choice advocate Betsy DeVos for Secretary of Education has the public education establishment and its allies in panic mode. American Federation of Teachers President Randi Weingarten tweeted“Trump has chosen the most ideological, anti-public ed nominee since the creation of the Dept of Education.” Over at Slate, Dana Goldstein frets that “Trump could gut public education“—even though federal dollars account for less than 10 percent of district school funding nationwide. The New York Times has also run series of hand-wringing pieces about what the Trump administration has in store for our nation’s education system.

At the center of the panic over Trump’s nomination of DeVos is their support for school choice. Although light on details, Trump has pledged to devote $20 billion to a federal voucher program. As is so often the case, the most vocal opponents of federal school choice are right for the wrong reasons. Not only does the federal government lack constitutional jurisdiction (outside of Washington, D.C., military installations, and tribal lands), but a federal voucher program poses a danger to school choice efforts nationwide because a less-friendly future administration could attach regulations that undermine choice policies. Such regulations are always a threat to the effectiveness of school choice policies, but when a particular state adopts harmful regulations, the negative effects are localized. Louisiana’s folly does not affect Florida. Not so with a national voucher program. Moreover, harmful regulations are easier to fight at the state level than at the federal level, where the exercise of “pen and phone” executive authority is increasingly (and unfortunately) the norm.

Many of Trump’s critics have not addressed very real federalism concerns, but have instead used the DeVos appointment to attack school choice generally, particularly its more free-market forms.

In a New York Times blog, Kevin Carey of the left-wing New America Foundation writes:

Ms. Devos [sic] will also be hamstrung by the fact that her deregulated school choice philosophy has not been considered a resounding success. In her home state, Detroit’s laissez-faire choice policies have led to a wild west of cutthroat competition and poor academic results. While there is substantial academic literature on school vouchers and while debates continue between opposing camps of researchers, it’s safe to say that vouchers have not produced the kind of large improvements in academic achievement that market-oriented reformers originally promised.

In a Times op-ed, Tulane Professor Douglas Harris echoed these critiques, claiming that “even charter advocates acknowledge” that Detroit’s charter school system—which DeVos supposedly “devised […] to run like the Wild West”—is “the biggest school reform disaster in the country.”

Consider this: Detroit is one of many cities in the country that participates in an objective and rigorous test of student academic skills, called the National Assessment of Educational Progress [NAEP]. The other cities participating in the urban version of this test, including Baltimore, Cleveland and Memphis, are widely considered to be among the lowest-performing school districts in the country.

Detroit is not only the lowest in this group of lowest-performing districts on the math and reading scores, it is the lowest by far. One well-regarded study found that Detroit’s charter schools performed at about the same dismal level as its traditional public schools. The situation is so bad that national philanthropists interested in school reform refuse to work in Detroit. As someone who has studied the city’s schools and used to work there, I am saddened by all this.

Likewise, Harvard Professor Paul Reville decried that “in places like Michigan and Arizona where the approach to opening up choice has been a Wild West version of an unregulated free market, the results have been highly disappointing, giving school choice a bad name.”

Charter schools in Michigan and Arizona may be subject to fewer government regulations than in other states, but it’s absurd to describe the sectors as “laissez-faire” or “an unregulated free market.” For example, charter school regulations in both states, as elsewhere, limit the ability of charter schools to set their own mission (e.g., they must be secular), mandate that they administer the state standardized test, forbid them from setting their own admissions standards, forbid them from charging tuition, limit who can teach in the schools, limit the growth of the number of schools, and so on.

“Laissez-faire” indeed!

And although Michigan’s results are far from stellar, they’re also not the “disaster” that Harris depicts. Indeed, Harris links to the 2013 CREDO report, which found that, on average, Detroit’s charter schools outperformed the district schools that their students would otherwise have attended. Indeed, nearly half of Detroit’s charter schools outperformed the city’s traditional district schools in reading and math scores, while only one percent of charter schools performed worse in reading and only seven percent performed worse in math.

CREDO 2013 Michigan Charter School Study

Source: CREDO’s 2013 report on charter schools (page 44).

CREDO’s 2015 report even called Detroit’s charter sector “a model to other communities.” I’d say that’s overstating it. Nevertheless, while Detroit’s district schools are so bad that it’s not a very high bar, Detroit does show how even a significantly regulated system of school choice can outperform the government’s system of district schools. Using the CREDO study to knock Detroit’s charter sector is, to borrow a phrase from Harris, “a triumph of ideology over evidence.”

And since Harris mentioned the NAEP, let’s see how Arizona’s “Wild West” charter sector performs. As education analyst Matthew Ladner has detailed, Arizona’s charter sector not only outperformed the state average for gains between the 2011 4th-grade and 2015 8th-grade NAEP tests for math and language arts, but they beat the statewide average gains for every single state. The Arizona charter sector’s gains between the 2009 and 2015 NAEP science tests were at least double the statewide average gains everywhere else.

Source: Matthew Ladner.

A word of caution is in order. These comparisons don’t account for differences in demographics among states nor changes in demographics over time. The raw NAEP results cannot tell us whether a particular policy caused any improvement or decline in the scores. Moreover, as Ladner notes, it’s possible to have significant gains while simultaneously doing poorly overall. The bowler whose average score improves from a 25 to a 50 might earn the “Most Improved” trophy while still being the worst bowler in the league. That said, after controlling for demographics, Arizona’s math and language arts scores are above average (13th nationwide). Although we don’t have adjusted scores for Arizona’s charter sector, they are likely even better. Moreover, even using raw scores, Arizona charter students perform about as well as Massachusetts students on the 2015 8th grade NAEP science test. For that matter, Arizona’s charter schools topped the list for college attendance among Arizona’s 2015 graduates.

If Harris believes that supposed lack of regulation in Detroit’s charter sector (at least as compared to charter school regulations in other states) accounts for their poor performance on the NAEP, how does he explain the Arizona results?

Indeed, even without heavy top-down oversight, Arizona manages to close down poorly performing charter schools fairly quickly through a rather innovative method called “parental choice.” The average closed charter operated for only four years and had an average of only 62 students enrolled in their final year. As Ladner explains, parents put most of those charters out of business before the regulatory apparatus got around to it:

Arizona parents seem extremely adept at putting down charter schools with extreme prejudice. Arizona parents detonate far more schools on the launching pad compared to the number we see bumbling ineffectively through the term of their charter to be shut by authorities (or to give up the ghost in year 14 in an ambiguous fashion). Both of these things happen, but the former happens with much greater regularity than the latter. Having a vibrant system of open enrollment, charter schools and some private school choice means that Arizona parents can take the view that life is too short have your child enrolled in an ineffective institution.

The critics’ read of the evidence on voucher programs also leaves much to be desired. Harris points only to research on statewide voucher programs in Louisiana and Ohio that found negative impacts, but he ignores the near-consensus of more than a dozen random-assignment studies that found modest positive impacts on student performance on tests as well as on high school graduation and college matriculation. Outside of Louisiana’s heavily regulated voucher program, none were found to produce a negative impact and only one found no discernible impact. (The Ohio study was not random-assignment and its comparison group may have been severely compromised by the study’s design.) Moreover, nearly every study on the impact of private school choice policies on district school performance found a positive impact, including in Louisiana and Ohio. The one exception was Washington, D.C., where the voucher funds come from a separate source and therefore a decrease in district school enrollment does not affect their funding.

On the whole thus far, private school choice programs have been an improvement over the status quo. Nevertheless, Carey is only half right when he writes that “vouchers have not produced the kind of large improvements in academic achievement that market-oriented reformers originally promised” because no state has yet adopted the sort of large-scale, lightly regulated, universal voucher system that market-oriented reformers like Milton Friedman called for. Instead, most voucher programs are limited in scale and eligibility and subject to numerous regulations. They’re designed, essentially, to fill empty seats rather than to revolutionize the way education is delivered. Small-scale choice programs should be expected to deliver positive but small-scale results, and that is what the research has found.

Advocates of large-scale private school choice programs should be careful not to over-promise, but critics of market-oriented educational choice policies should also be careful not to cherry pick or to make claims that the research literature does not support. Outside heavily regulated environments, private school choice policies have a consistently positive track record. What we should be able to agree about is that the positive track record of state-level school choice policies does not imply that Congress should enact a federal voucher program.

 

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Open letter to President Obama (Part 618) (Emailed to White House on July 22, 2013)

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 going on out here.

______________________________

FREE TO CHOOSE “Who protects the worker?” Video and Transcript Part

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 “What is wrong with our schools?”  and “Created Equal”  and  From Cradle to Grave, and – Power of the Market. Milton Friedman shows in this episode how the worker is best protected and it is not by the government!!!!!!!

The essence of what Milton Friedman is saying in this episode is found in this statement:

“The situation of immigration restrictions really has to do with the question of a welfare state. As I say in the film, I would favor completely free immigration in a society which does not have a welfare system. With a welfare system of the kind we have, you have the problem that people immigrate in order to get welfare, not in order to get employment. You know, it’s a very interesting thing, if you would ask anybody before 1914 the U.S. had no immigration restrictions whatsoever, I’m exaggerating a little bit, there were some immigration restrictions on orientals, but it was essentially, mainly free. If you ask anybody, any American economic historian was that a good thing for America, everybody will say yes it was a wonderful thing for America that we had free immigration. If you ask anybody today, should we have free immigration today, everybody will __ almost everybody will say no. What’s the difference? I think there’s only one difference and that is that when we had free immigration it was immigration of jobs in which everybody benefited. The people who were already here benefited because they got complementary workers, workers who could work with them, make their productivity better, enable them to develop and use the resources of the country better, but today, if you have a system under which you have essentially a governmental guarantee of relief in case of distress, you have a very, very real problem.”

Pt 5

L. WILLIAMS: Dr. Friedman and Walter Williams go back in history and they take a look at a situation where America was empty, where we didn’t have anything like the sophisticated industrial economy we have today, but had a much more agricultural and rural kind of economy and of course when the __ when the impoverished peasants of Europe, my ancestors and most of our ancestors, except for the slaves, which is another situation, but when these people came from Europe and came to a wide open continent with the most fertile soil then available to anyone in the world, naturally there was progress; and I or any of us would be mad to deny progress. But as that developed and as population increased and as we moved into a much more sophisticated industrial economy, we moved then into the situation in the 1930s, or earlier than that , at the end of the century. As some of the more skilled jobs came along, the labor movement didn’t happen by accident. Didn’t happen because there wasn’t a need there. The results of this development, even with all the wealth available in America, the results of this development was that many working people were not having anything like, by standards of civilization or whatever, anything like their fair share in this progress.

MCKENZIE: Now you’re arguing that in a free market, for labor, everyone benefits. Does that mean that you would favor abolition of all immigration restrictions?

FRIEDMAN: The situation of immigration restrictions really has to do with the question of a welfare state. As I say in the film, I would favor completely free immigration in a society which does not have a welfare system. With a welfare system of the kind we have, you have the problem that people immigrate in order to get welfare, not in order to get employment. You know, it’s a very interesting thing, if you would ask anybody before 1914 the U.S. had no immigration restrictions whatsoever, I’m exaggerating a little bit, there were some immigration restrictions on orientals, but it was essentially, mainly free. If you ask anybody, any American economic historian was that a good thing for America, everybody will say yes it was a wonderful thing for America that we had free immigration. If you ask anybody today, should we have free immigration today, everybody will __ almost everybody will say no. What’s the difference? I think there’s only one difference and that is that when we had free immigration it was immigration of jobs in which everybody benefited. The people who were already here benefited because they got complementary workers, workers who could work with them, make their productivity better, enable them to develop and use the resources of the country better, but today, if you have a system under which you have essentially a governmental guarantee of relief in case of distress, you have a very, very real problem.

MCKENZIE: But this is true of every western industrialized country.

FRIEDMAN: That’s right and that’s why today __

MCKENZIE: Yeah.

FRIEDMAN: __ under current circumstances you cannot, unfortunately have free immigration. Not because there’s anything wrong with free immigration, but because we have other policies which make it impossible to adopt free immigration.

MCKENZIE: Well I’d like other reactions. Is it at all feasible to open the door of the labor market internationally now? Bill Brady?

BRADY: I would __ I would say yes providing they open the door to us. I think that the door to not only the labor market, the door to all markets should be __ should be open. That is the product markets.

W. WILLIAMS: My feelings about the undocumented workers of Mexican-Americans are inscribed at the foot of the Statue of Liberty. I think that the people should have the right to come to this country. Now, those who would say, you know, I hear a number of people saying that, well the immigrants are contributing to our unemployment problem. And I point this out to some people, I said, “look, you know, this is the same rhetoric that the Irish used when the blacks were coming up from the north, ” you know, they’re using blacks as scapegoats. They’re saying, “get those people back where they came from so that our members can get jobs, ” you know. Unions were as well doing this, you know, they called them scabs, strikebreakers, etcetera, etcetera. So I do not wish for Mexican-Americans to become the new scapegoats of our particular national problems. They are not the problem, and our nation benefits to the extent that these people come here and work. And to that extent __ to that extent__ so it’s kind of good for them to remain illegal aliens as opposed to being legal aliens where they’re subject to our welfare programs, so that we don’t want them to come here to __

(Several people talking at once.)

GREEN: I think that this country cannot have a group of workers to remain outside the framework of our laws and our protection. And as long as we have workers who are attracted to the United States because of the standards of living; and I think minimum wages play a part in that as part of that attraction. But it seems to me to have undocumented workers without providing either a means of protection for them and it seems to me that we’ve got to go to the question of providing the amnesty for those generations of workers who have come here over a period of time, now two, three, maybe four generations. We have to see that they have the same rights and protection of all other workers. And as it stands now, large numbers of them live outside the framework of the laws and statutes that we have on the __ on our books.

MCKENZIE: Comment Milton.

FRIEDMAN: They do and the tragedy of the situation, as what Walter Williams point out, that as long as they are undocumented and illegal they are a clear net gain, the nation benefits and they benefit. They wouldn’t be here if they didn’t. The tragedy is that we’ve adopted all these other policies so that if we convert them into legal residents it’s no longer clear that we benefit. They may benefit, but it’s no longer clear that we do. What Lynn Williams said before is again a travesty on what was actually going on. The real boost to the trade union movement came after the Great Depression of the 1930s; that Great Depression was not a failure of capitalism; it was not a failure of the private market system as we pointed out in another one of the programs in this series; it was a failure of government. It was not the case that somehow or other there was a decline in the conditions of the working class that produced a great surge of unionism. On the contrary __ unions have never accounted for more than one out of four or one out of five of American workers. The American worker benefited not out of unions, he benefited in spite of unions. He benefited because there was greater opportunity because there were people who were willing to invest their money because there was an opportunity for people to work, to save, to invest. That’s still the case today. You say, we have to provide them with something or other Ernest. Who are the “we”?

GREEN: We the people.

FRIEDMAN: How do we the people __ but how do we the people do it?

GREEN: And it seems __ we the people provide them the protection by seeing that their safety __

MCKENZIE: You’re talking about the immigration population now.

GREEN: __ and occupational health codes that protects the environment that they work in, see that they have civil rights laws that protect their own person. See that they have civil liberties laws that protect them further. We the people of this country provide that protection.

W. WILLIAMS: Why are they coming here it’s so bad? If they don’t have, you know, you’re kind of painting an image, you know. Why are these people coming? We’re not pulling them here by chains.

GREEN: It’s obvious why people come here; it’s one of the wealthiest nations in the world.

(Several talking at once.)

MCKENZIE: Gentlemen, don’t all talk at once. Lynn, and then __

W. WILLIAMS: So what are you talking about protecting them?

GREEN: Why did you leave Little Rock, Arkansas to go to Philadelphia? It seems to point__

L. WILLIAMS: It seems to me that it’s obvious __

W. WILLIAMS: Would you extend the courtesy to finish. Look, look, first thing, look, let me say the following things: There’s some basic things that we need to know.

L. WILLIAMS: Well now are you going to say the thing I was interrupting and then say five more things. I mean there isn’t all afternoon.

W. WILLIAMS: You know, labor unions, and minimum wages for that case cannot improve the condition of the working people of the country.

L. WILLIAMS: We do it everyday.

W. WILLIAMS: Because if__ are you suggesting __

L. WILLIAMS: We improve the working conditions of working people in countries all around the world, everyday.

W. WILLIAMS: Well you know this __ you know what you’re telling the audience, you’re saying that you can solve the problems in Bangladesh. You can make them a rich country if you tell them to unionize like we are __

L. WILLIAMS: I didn’t say that.

W. WILLIAMS: __and demand high wages.

L. WILLIAMS: No, I didn’t say anything remotely like that.

W. WILLIAMS: It’s productivity that keeps income low.

MCKENZIE: Lynn, let him finish.

BRADY: I come back to my initial question: why are so many leaving the union?

L. WILLIAMS: There aren’t very many leaving the union.

BRADY: Oh, there are too. I’ve given you the statistics.

L. WILLIAMS: Ah, now, do you think I’m __ you grind off some percentages. I live in the labor movement.

BRADY: You __ do you have other percentages?

FRIEDMAN: In or on?

L. WILLIAMS: In, with and on. And of course they pay me, of course, and I don’t have any objection to that at all.

FRIEDMAN: Neither do I.

L. WILLIAMS: At least we got you a few minutes ago __ we got you to get the labor movement up into this century. And I agree with the observation you made __

(Laughter)

L. WILLIAMS: I agree with the observation you made that the industrial union movement __ that there was a union movement came out of the, out of the dirty ’30s and out of the depression and grew and that was essentially and industrial union movement. But I wonder if __ I wonder when I hear your commentary on the film and so on about unions and restricting practices and restricting access to industry and all of this, I really __ I don’t mean it disrespectfully, but I really wonder __

FRIEDMAN: Don’t mind being disrespectful, it’s all right. I’m used to it.

L. WILLIAMS: I really wonder if you, if you do understand how the industrial union movement, which is __ the more recent part of the union, how it really operates. We’re not telling anybody who they have to hire.

FRIEDMAN: (Laughing)

___________________________

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

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  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 […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 1of 7)

“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 […]

By Everette Hatcher III | Posted in Current Events, Milton Friedman | Edit | Comments (0)

“Friedman Friday,” EPISODE “The Failure of Socialism” of Free to Choose in 1990 by Milton Friedman (Part 1)

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 […]

By Everette Hatcher III | Posted in Milton FriedmanPresident Obama | Edit | Comments (1)

“The Failure of Socialism” episode of Free to Choose in 1990 by Milton Friedman (Part 1)

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 […]

FRIEDMAN FRIDAY I attended a dinner and heard Stephen Moore of the Heritage Foundation speak about Trump and I got a chance to ask a question about Moore’s 2013 article on Milton Friedman’s view on Immigration

Trump Economic Adviser Stephen Moore VS. Liberal Economist Paul Krugman – August 7, 2016

Milton Friedman – Illegal Immigration only helps when its Illegal

I attended a dinner  and heard Stephen Moore of the Heritage Foundation speak about Trump and I got a chance to ask a question about Moore’s 2013 article on Milton Friedman’s view on Immigration and you can read that article here at this link.

Moore Talks Taxes, Trump September 22, 2016 Caleb Taylor 

Stephen Moore, an economist with the Heritage Foundation and a top economic advisor for Donald Trump, said Tuesday that Arkansas should get serious about reducing its income tax.

Moore spoke for about an hour Tuesday night on taxes and Trump at a dinner hosted by the Advance Arkansas Institute.

Moore said:

I keep coming back to this state because there are nine states without an income tax. My mission is to make Arkansas the 10th state without an income tax. By the way those nine states without and income tax, they’re dramatically outgrowing the states with high tax rates.

You aren’t going to get much economic benefit (from cutting the income tax rate on the low-end) it’s better than doing nothing, but you’ve got to bring all of the income tax rates down especially the highest tax rates. Most of the business owners and small business owners pay the individual income tax rate. Why would you want small businesses to pay a 6.9 percent rate? That’s an abomination. Let’s get the highest individual income tax rate lowered and eventually to zero.

Arkansas currently has the highest top individual income tax rate, as compared to its bordering states. Tennessee and Texas have no income tax.

Moore also detailed Republican presidential candidate Donald Trump’s economic agenda. Moore said:

We have an amazing economic program. We put together a great tax plan. It’s a supply-side tax rate reduction plan. It cuts the business tax for all businesses to 15 percent from as high as 40 percent. We think that’s just going to be a magnet for jobs. We are going to have a massive deregulation. I told Trump.. The first thing we’re going to do is put an executive order on your desk that repeals this so-called Clean Power Plan. That’s the bill that would put tens of thousands of coal miners throughout this country out of work.

He’s a businessman and he does know how regulation affects business. Most people in Washington (D.C.) don’t. We’re going to repeal the Clean Power Plan. We’re going to repeal most, if not all, of Obamacare.

Moore, who said Trump wasn’t his first choice to be the Presidential nominee, described Trump as someone who would be a “disruptor” of the status quo in Washington D.C. This is why some in the Republican Party and the conservative movement are still not actively supporting his candidacy, according to Moore. Moore said:

He is going to disrupt Washington D.C. and I believe that’s a very good thing. Some of the political consultants, lobbyists, pollsters and political insiders…they’re terrified of Trump. The reason there is such a ferocious anti-Trump movement inside of the conservative movement is because frankly…they don’t really care about middle class people. They just care about themselves. A lot of these people…they’d do better professionally if Hillary won instead of Trump. So a lot of this is… we don’t just need a shakeup in the Democratic Party. We need one in the Republican Party as well.

Will Trump defeat Hillary Clinton? Will he “disrupt Washington?” Stay tuned.

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FRIEDMAN FRIDAY Need more school choice!!!!

Milton Friedman – Public Schools / Voucher System __ The NAACP’s Shameful Betrayal of Black Kids September 1, 2016 by Dan Mitchell I’ve explained many times that an economy’s wealth and output depend on thequantity and quality of labor and capital and how effectively those two factors of production are combined. Let’s look today on the […]

FRIEDMAN FRIDAY Milton Friedman on Immigration Part 2

_ Milton Friedman on Immigration Part 2 Milton Friedman – Illegal Immigration – PT 1 Milton Friedman – Illegal Immigration – PT 2 _- Immigration and the Welfare State April 4, 2010 by Dan Mitchell My previous post dealing with whether citizenship should be automatic for babies born to illegals generated a lot of commentary, so […]

FRIEDMAN FRIDAY Milton Friedman on Immigration Part 1

_ Milton Friedman – Illegal Immigration – PT 1 Milton Friedman – Illegal Immigration – PT 2 Milton Friedman stated , “you can’t have free immigration and a welfare state.” Below Dan Mitchell links back to this quote in one of his earlier posts: A Plan for Open Borders that Anti-Amnesty Folks Can Support August 18, […]

Milton Friedman on Immigration Part 2

_ Milton Friedman on Immigration Part 2 Milton Friedman – Illegal Immigration – PT 1 Milton Friedman – Illegal Immigration – PT 2   _- Immigration and the Welfare State April 4, 2010 by Dan Mitchell My previous post dealing with whether citizenship should be automatic for babies born to illegals generated a lot of commentary, […]

Milton Friedman on Immigration Part 1

_   Milton Friedman – Illegal Immigration – PT 1 Milton Friedman – Illegal Immigration – PT 2   Milton Friedman stated , “you can’t have free immigration and a welfare state.” Below Dan Mitchell links back to this quote in one of his earlier posts: A Plan for Open Borders that Anti-Amnesty Folks Can Support […]

FRIEDMAN FRIDAY The Left’s Inequality Fixation Is Economically Foolish and Politically Impotent April 22, 2015 by Dan Mitchell (with videos from Milton Friedman)

Dr. Walter Williams Highlights from – Testing Milton Friedman Milton Friedman PBS Free to Choose 1980 Vol 8 of 10 Who Protects the Worker The Left’s Inequality Fixation Is Economically Foolish and Politically Impotent April 22, 2015 by Dan Mitchell I don’t understand the left’s myopic fixation on income inequality. If they genuinely care about the […]

FRIEDMAN FRIDAY Three Cheers for Profits and Free Markets April 7, 2015 by Dan Mitchell (with input from Milton Friedman)

__ Milton Friedman – The Four Ways to Spend Money What establishments are you most unsatisfied with? Probably government organizations like Dept of Motor Vehicles or Public Schools because there is no profit motive and they are not careful in the way they spend our money. Three Cheers for Profits and Free Markets April 7, 2015 […]

FRIEDMAN FRIDAY Dan Mitchell on Milton Friedman and Adam Smith’s perspective on spending other people’s money!!!

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Dan Mitchell on Milton Friedman and Adam Smith’s perspective on spending other people’s money!!!

Dan Mitchell on Milton Friedman and Adam Smith’s perspective on spending other people’s money!!! Milton Friedman, Adam Smith, and Other People’s Money May 8, 2016 by Dan Mitchell From an economic perspective, too much government spending is harmful to economic performance because politicians and bureaucrats don’t have very good incentives to spend money wisely. More specifically, […]

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__ Milton Friedman – The Four Ways to Spend Money What establishments are you most unsatisfied with? Probably government organizations like Dept of Motor Vehicles or Public Schools because there is no profit motive and they are not careful in the way they spend our money.   Three Cheers for Profits and Free Markets April 7, […]

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FRIEDMAN FRIDAY NOVEMBER 10, 2016 11:47AM What Trump’s First 100 Days Might Mean for Education Policy By JASON BEDRICK

__

Free to Choose Part 6: What’s Wrong With Our Schools Featuring Milton Friedman

 

NOVEMBER 10, 2016 11:47AM

What Trump’s First 100 Days Might Mean for Education Policy

President-Elect Donald Trump has released his plans for his first 100 days in office. After outlining proposals for term limits, a trade war, and mass deportations, the plan includes the following paragraph on education policy:

School Choice And Education Opportunity Act. Redirects education dollars to give parents the right to send their kid to the public, private, charter, magnet, religious or home school of their choice. Ends common core, brings education supervision to local communities. It expands vocational and technical education, and make 2 and 4-year college more affordable.

The details are far from clear, but it appears that his education policy will focus on three areas:

1. School choice

Trump has the right instinct on school choice, but if he is planning to promote a national voucher program, then he’s going about it the wrong way. He has previously pledged to dedicate $20 billion in federal funds to school choice policies, and stated that he would “give states the option to allow these funds to follow the student to the public or private school they attend” as well as using federal carrots to get states to expand choice policies even further. Expanding educational opportunity is admirable, but using the federal government to do so is misguided. As David Boaz explained more than a decade ago in the Cato Handbook for Congress, the case against federal involvement in education:

is not based simply on a commitment to the original Constitution, as important as that is. It also reflects an understanding of why the Founders were right to reserve most subjects to state, local, or private endeavor. The Founders feared the concentration of power. They believed that the best way to protect individual freedom and civil society was to limit and divide power. Thus it was much better to have decisions made independently by 13–or 50–states, each able to innovate and to observe and copy successful innovations in other states, than to have one decision made for the entire country. As the country gets bigger and more complex, and especially as government amasses more power, the advantages of decentralization and divided power become even greater.

A federal voucher program would very likely lead to increased federal regulation of private schools over time, especially after a new administration takes over that is less friendly to the concept of school choice. As we’ve seen in some states, misguided regulations can severely undermine the effectiveness of school choice and induce a stifling conformity among schools. Moreover, as I’ve explained previously, those regulations are harder to block or repeal at the federal level than at the state level and their negative effects would be far more widespread:

When a state adopts regulations that undermine its school choice program, it’s lamentable but at least the ill effects are localized. Other states are free to chart a different course. However, if the federal government regulates a national school choice program, there is no escape. Moreover, state governments are more responsive to citizens than the distant federal bureaucracy. Citizens have a better shot at blocking or reversing harmful regulations at the state and local level rather than the federal level.

That said, the Trump administration can promote school choice in more productive and constitutionally sound ways. The federal government does have constitutional authority in Washington, D.C., where it currently operates the Opportunity Scholarship Program (OSP). The OSP should be expanded into a universal ESA that empowers all D.C. families to spend the funds on a wide variety of educational expenses in addition to private school tuition, including tutors, textbooks, online courses, curricular materials, and more, as well as save unused funds for later expenses, such as college. The Trump administration should explore similar options in areas where the federal government has jurisdiction, such as on Native American lands and military bases.

2. Common Core:

Yet again, Trump has the right instinct but the policy leaves much to be desired. Ending Common Core is a noble goal, but it is primarily a matter of state policy and at this point there is little the federal government can do about. As Neal McCluskey noted yesterday, “the main levers of [federal] coercion—the Race to the Top contest and waivers out of the No Child Left Behind Act—are gone.” The only way for the federal government to get rid of Common Core would be to engage in the same sort of unconstitutional federal coercion that critics of the Core opposed in the first place.

Nevertheless, the Trump administration could ease the path for states to ditch Common Core by merely refraining from using its authority under Every Student Succeeds Act (ESSA) to dictate state policy. As Neal explained:

What [Trump] can do—and I think, along with a GOP Congress, will do—is ensure that regulations to implement the ESSA do not coerce the use of the Core or any other specific standards or tests. This has been a real concern. While the spirit and rhetoric surrounding the ESSA is about breaking down federal strictures, the Obama education department has been drafting regulations that threaten federal control over funding formulas and accountability systems. And the statute includes language vague enough that it could allow federal control by education secretary veto. A Trump administration would likely avoid that.

3. College and Vocational Education

Here is where Trump’s plan is the murkiest. He wants to “expand” vocational education and make college “more affordable” but he does not explain how. His campaign website provideslittle more in terms of details:

  • Work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars.
  • Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.

These vague bromides could just as easily have appeared on Hillary Clinton’s campaign website, which states:

  • Every student should have the option to graduate from a public college or university in their state without taking on any student debt. By 2021, families with income up to $125,000 will pay no tuition at in-state four-year public colleges and universities. And from the beginning, every student from a family making $85,000 a year or less will be able to go to an in-state four-year public college or university without paying tuition.
  • All community colleges will offer free tuition.
  • Everyone will do their part. States will have to step up and invest in higher education, and colleges and universities will be held accountable for the success of their students and for controlling tuition costs.

So how will Trump try to expand vocational education and make college more affordable? It’s not clear. Ideally, Trump should work to phase out the various federal loan programs and higher ed subsidies that a mountain of research has shown are fueling rapid tuition inflation. Unfortunately, Trump has previously proposed an income-based student loan repayment plan. Such a policy could assist borrowers in repaying loans, but it would still create perverse incentives that fuel tuition inflation and overconsumption of higher ed while leaving the taxpayer on the hook for whatever the borrower couldn’t repay. When a student takes out a $35,000 loan to pursue a degree in puppeteering and then surprisingly can’t find a decent-paying job, taxpayers would pick up the tab.

At this point, it’s not clear what Trump will do about education policy. His education proposals are vague and somewhat disconcerting, but there is also evidence that he wants to move in the right direction, particularly regarding school choice and a reduced federal role in K-12 education. What Trump needs now is a set of good advisers to help guide his commendable education policy instincts toward wise and effective policy.

 

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FRIEDMAN FRIDAY NOVEMBER 10, 2016 3:18PM Trump Spending Cut Ideas By CHRIS EDWARDS

 

There is nothing that is free and that is why we have to cut government spending since we are all paying for this inefficient government!!

Milton Friedman – The Free Lunch Myth

NOVEMBER 10, 2016 3:18PM

Trump Spending Cut Ideas

President-elect Donald Trump said on the campaign trail that he will balance the federal budget and cut wasteful spending. Here are some of Trump’s views on budget reforms:

  • “We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.” Source.
  • “We can also stop funding programs that are not authorized in law. Congress spent $320 billion last year on 256 expired laws … Removing just 5 percent of that will reduce spending by almost $200 billion over a ten-year period.” Source.
  • “I may cut Department of Education. I believe Common Core is a very bad thing,” Trump said. “I believe that we should be — you know, educating our children from Iowa, from New Hampshire, from South Carolina, from California, from New York. I think that it should be local education.” Source.
  • “If we save just one penny of each federal dollar spent on non-defense, and non-entitlement programs, we can save almost $1 trillion over the next decade.” Source.
  • “We’re going local. Have to go local. Environmental protection—we waste all of this money. We’re going to bring that back to the states … We are going to cut many of the agencies, we will balance our budget, and we will be dynamic again.” Source.
  • “Waste, fraud and abuse all over the place. Waste, fraud and abuse. You look at what’s happening with Social Security, you look—look at what’s happening with every agency—waste, fraud and abuse. We will cut so much, your head will spin.” Source.

I hope my head does spin from cuts, although most of Trump’s proposals are vague and quite timid. Still, I’m hoping that the more the incoming president finds out about the federal budget, the more he will appreciate the need for major terminations.

So let me suggest some wasteful spending that the new administration should tackle, and the annual savings from terminating each:

President Trump will face major budget pressures in coming years as deficits and entitlement spending soar. Today’s $600 billion deficits are headed toward $1 trillion, and deficits will be even higher if a recession comes along.

Federal spending cuts would help avert a fiscal crisis and boost growth by reducing economic distortions. The incoming Trump team should start with some of the cuts here, and there are plenty more proposals at DownsizingGovernment.org.

 

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FRIEDMAN FRIDAY NOVEMBER 15, 2016 5:22PM New President. New SEC. Less Regulation? By THAYA BROOK KNIGHT

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Milton Friedman – Regulation In A Free Society

NOVEMBER 15, 2016 5:22PM

New President. New SEC. Less Regulation?

The Securities and Exchange Commission (SEC) is poised to have the majority of its seats filled by Trump nominees.  Earlier this week SEC chair Mary Jo White announced she would be stepping down at the end of President Obama’s term. This is not in itself surprising.  The chair serves at the will of the president and it’s customary for the current chair to step aside and let an incoming president install a chair of his or her choosing.  What is remarkable however is the number of vacancies that leaves president-elect Trump to fill.

The five member commission has had two empty seats for over a year and a half now, following Republican Dan Gallagher’s resignation in May 2015 and the expiration of Democrat Luis Aguilar’s term the same month. Although President Obama nominated two candidates to fill those seats, Republican Hester Peirce and Democrat Lisa Fairfax, their confirmations have been stalled in congress.  (Like many similar commissions, the SEC must be politically balanced with no more than three seats filled by members of the same party.)  White’s resignation will therefore leave only two commissioners in office, Republican Michael Piwowar and Democrat Kara Stein. Until a new chair can be confirmed, it is likely that president-elect Trump will name Piwowar acting chair.  In the meantime, however, with only two commissioners, it is unlikely that the SEC will pursue any kind of ambitious agenda.

Looking forward to what the SEC might look like with its new members in place, it would be reasonable to hope for a less aggressive and more market-friendly agency than we have had under White’s direction.  Trump has sounded a decidedly deregulatory tone both in the course of the campaign, vowing to dismantle Dodd-Frank, and in the days since the election.  His pick of Paul Atkins, a former SEC commissioner known for his strong free-market bent, to head up part of his transition team also signals a commitment to paring back the voluminous regulations that have plagued the financial sector in recent years.

As far as concrete agenda items for a new chair, there are a number of regulations ripe for reform.

The U.S. capital markets have seen a marked decrease in the number of initial public offerings (IPOs) in recent years, which many have attributed to the Sarbanes-Oxley Act of 2002 and its onerous reporting and internal controls requirements for public companies.  Under new direction, the SEC would be able to investigate what has been depressing interest in IPOs and to pursue strategies to reduce the regulatory burden as necessary.

Dodd-Frank imposed several disclosure requirements unrelated to companies’ profitability, a tactic former commissioner Gallagher has called “hijacking” the SEC’s disclosure regime. While many of these disclosure requirements cannot be repealed without an act of congress, the new SEC chair would have the authority to push back against any additional issue-of-the-day disclosures.  Senator Warren and others on the left have agitated for a requirement that companies disclose information about political spending; it is unlikely that an SEC chair picked by Trump or his team would pursue such a rule.

Finally, a highly technical rule known as Regulation NMS has long plagued the securities exchanges, even some have argued spawning the trading strategy known as “high frequency trading.”  A new chair would be well-positioned to reopen that regulation and to evaluate its potential unintended consequences.

 

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FRIEDMAN FRIDAY What Would Milton Friedman Say? Immigration opponents often try to claim the famed economist as an ally. They’re mistaken. By STEPHEN MOORE Updated May 29, 2013 8:31 p.m. ET

Free to Choose: Part 1 of 10 The Power of the Market (Featuring Milton Friedman) What Would Milton Friedman Say? Immigration opponents often try to claim the famed economist as an ally. They’re mistaken. By STEPHEN MOORE Updated May 29, 2013 8:31 p.m. ET One of the fascinating sideshows of the immigration debate within the […]

FRIEDMAN FRIDAY Obama loves the death tax but listen to what Milton Friedman had to say about it!!!

__ Obama loves the death tax but listen to what Milton Friedman had to say about it!!! Milton Friedman Redistribution of Wealth and the Death Tax ___________ The Obama Administration’s Assault on the Rule of Law September 6, 2016 by Dan Mitchell What’s the worst development in economic policy of the Obama years? The faux stimulus […]

FRIEDMAN FRIDAY Dan Mitchell and Milton Friedman: Subsidies for Higher Education Are the Problem!

Milton Friedman – Should Higher Education Be Subsidized? Published on Aug 14, 2013 Professor Friedman leads a roundtable discussion with students. http://www.LibertyPen.com Hillary Is Wrong: Subsidies for Higher Education Are the Problem, not the Solution August 24, 2016 by Dan Mitchell “So many bad ideas, so little time.” That’s my attitude about Hillary Clinton. She proposes […]

FRIEDMAN FRIDAY Milton Friedman and Walter Williams have explained, minimum wage laws are especially harmful for blacks!

Milton Friedman – A Conversation On Minimum Wage Published on Oct 4, 2013 A debate on whether the minimum wage hurts or helps the working class. http://www.LibertyPen.com Is Anybody Shocked that Higher Minimum Wage Mandates Are Resulting in Fewer Jobs? August 25, 2016 by Dan Mitchell While economists are famous for their disagreements (and their incompetent […]

FRIEDMAN FRIDAY Milton Friedman and Dan Mitchell look at the economics of medical care!!

Milton Friedman on Medical Care (Full Lecture) Another Grim Reminder that Obamacare Has Made Healthcare More Expensive August 29, 2016 by Dan Mitchell Way back in 2009, some folks on the left shared a chart showing that national expenditures on healthcare compared to life expectancy. This comparison was not favorable to the United States, which easily […]

FRIEDMAN FRIDAY 2 videos by Milton Friedman on welfare state plus 2 cartoons that illustrate the fate of socialism from the Cato Institute

__________   Cato Institute scholar Dan Mitchell is right about Greece and the fate of socialism: Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State July 15, 2011 by Dan Mitchell In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often […]

FRIEDMAN FRIDAY Milton Friedman has the two solutions to the Black Teenage Unemployment Problem!!!

Milton Friedman on Donahue Show in 1979 Milton Friedman has the two solutions to the Black Teenage Unemployment Problem!!! The solutions would be first to lower the Minimum Wage Amount and  second give students the opportunity to have vouchers so their parents can put them in the best schools when they start in the kindergarten […]