Listing of transcripts and videos of “Free to Choose” episode 3 – Anatomy of a Crisis on http://www.theDailyHatch.org
Milton Friedman in his series “Free to Choose” used a pencil as a simple example to should have the “invisible hand” of the freemarket works (phrase originally used by Adam Smith).
“How grateful I have been over the years for the cogency of Friedman’s ideas which have influenced me. Cherishers of freedom will be indebted to him for generations to come.” —Alan Greenspan, former Chairman, Federal Reserve System
“Right at this moment there are people all over the land, I could put dots on the map, who are trying to prove Milton wrong. At some point, somebody else is trying to prove he’s right That’s what I call influence.” —Paul Samuelson, Nobel Laureate in Economic Science
In 1980 when I first sat down and read the book “Free to Choose” I was involved in Ronald Reagan’s campaign for president and excited about the race. Milton Friedman’s books and film series really helped form my conservative views. Take a look at one of my favorite films of his and if you take time to watch these episodes on inflation then you see how Ronald Reagan was able to bring inflation under control in the 1980’s with the help of Paul Volker of the Federal Reserve:
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. Wall Street. Most of us know what happened here 50 years ago. Inside the Stock Exchange on October 29, 1929, the market collapsed. It came to be known as Black Thursday. The Wall Street crash was followed by the worst depression in American history. That depression has been blamed on the failure of capitalism. It was no such thing but the myth lives on. What really happened was very different.
Although things looked healthy on the surface, business had begun to turn down in mid 1929. The crash intensified the recession. So did continuing bank failures in the south and Midwest. But the recession only became a crisis when these failures spread to New York and in particular to this building, then the headquarters of the Bank of United States. The failure of this bank had far reaching effects and need never have happened.
It was something of a historical accident that this particular bank played the role it did. Why did it fail? It was a perfectly good bank. Banks that were in far worse financial shape had come under difficulties before it did and had, through the cooperation of other banks, been saved. The reason why it wasn’t saved has to do with its rather special character. First its name, Bank of United States, a name that made immigrants believe it was an official governmental bank although in fact it was an ordinary commercial bank. Second its ownership, Jewish, both its name and the character of its ownership which had so much to do with attracting the large number of depositors from the many Jewish businessmen in the city of New York. Both of them also had the effect of alienating other bankers who did not like the special advantage of the name and did not like the character of the ownership. As a result, other banks were all too ready to spread rumors, to help promote an atmosphere in which runs got started on the bank and which it came into difficulty. And they were less then usually willing to cooperate in the efforts that were made to save it.
Only a few blocks away is the Federal Reserve Bank of New York. It was here that the Bank of United States could have been saved. Indeed, the Federal Reserve System had been set up 17 years earlier precisely to prevent the worst consequences of bank failures.
The Federal Reserve Bank of New York, whose directors today meet in this room, devised a plan in cooperation with the superintendent of banking of the State of New York to save the Bank of United States. Their plan called for merging the Bank of United States with several other banks and also providing a guarantee fund to be subscribed to by still other bankers to assure the depositors that the assets of the Bank of United States were safe and sound. The Reserve Bank called meeting after meeting to try to put the plan into effect. It was on again, off again. But finally, after an all night meeting on December 10, 1930, the other bankers, including in particular John Pierpont Morgan, refused to subscribe to the guarantee fund and the plan was off. The next day the Bank of United States closed its doors, never again to open for business. For its depositors who saw their savings tied up and their businesses destroyed, the closing was tragic. Yet when the bank was finally liquidated, in the worst years of the depression, it paid back 92.5 cents on the dollar. Had the other banks cooperated to save it, no one would have lost a penny.
For the other New York banks, they thought closing the Bank of United States would have purely local effects. They were wrong. Partly because it had so many depositors, partly because so many of the depositors were small businessmen, partly because it was the largest bank that had ever been permitted to fail in the United States up to this time, the effects were far reaching. Depositors all over the country were frightened about the safety of their funds and rushed to withdraw them. There were runs. There were failures of banks by the droves. And all the time the Federal Reserve System stood idly by when it had the power and the duty and the responsibility to provide the cash that would have enabled the banks to meet the insistent demands of their depositors without closing their doors.
The way runs on banks can spread and can be stopped is a consequence of the way our bank system works. You may think that when you take some cash to a bank and deposit it, the bank takes that money and sticks it in a vault somewhere to wait until you need it again to turn it back over to you.
Bank teller: Okay, how would you like this? Two tens, one five and five ones. Okay.
Friedman: The bank does no such thing with it. It immediately takes a large part of what you put in and lends it out to somebody else. How do you suppose it earns interest, to pay its expenses, or pay you something for the use of your money? The result is that if all depositors in all the banks tried all at once to convert their deposits into cash, there wouldn’t be anything like enough cash in the banks of the country to meet their demands. In order to prevent such an outcome, in order to cut short a run, it is necessary to have some way either to stop people from asking for it, or to have some additional source from which cash can be obtained. That was intended to be the purpose of the Federal Reserve System. It was to provide the additional cash to meet the demands of the depositors when a run arose.
A classic example of how this system could and did work properly can be found over 2,000 miles from New York near the great Salt Lake in Utah.
In the early 30’s some banks in Salt Lake City and surrounding towns began to get into difficulties. The owners of one them were smart enough to see what had to be done to keep their banks open and courageous enough to do it. When fearful depositors began to clamor to withdraw all their money, one of George Eccles jobs was to brief his cashiers on how to handle the run.
TEMIN: We don’t think the big capital arose before the government did? VON HOFFMAN: Listen, what are we doing here? I mean __ defending big government is like defending death and taxes. When was the last time you met anybody that was in favor of big government? FRIEDMAN: Today, today I met Bob Lekachman, I […]
worked pretty well for a whole generation. Now anything that works well for a whole generation isn’t entirely bad. From the fact __ from that fact, and the undeniable fact that things are working poorly now, are we to conclude that the Keynesian sort of mixed regulation was wrong __ FRIEDMAN: Yes. LEKACHMAN: __ or […]
MCKENZIE: Ah, well, that’s not on our agenda actually. (Laughter) VOICE OFF SCREEN: Why not? MCKENZIE: I boldly repeat the question, though, the expectation having been __ having been raised in the public mind, can you reverse this process where government is expected to produce the happy result? LEKACHMAN: Oh, no way. And it would […]
The massive growth of central government that started after the depression has continued ever since. If anything, it has even speeded up in recent years. Each year there are more buildings in Washington occupied by more bureaucrats administering more laws. The Great Depression persuaded the public that private enterprise was a fundamentally unstable system. That […]
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: Once all of this was a swamp, covered with forest. The Canarce Indians who lived here traded the 22 square miles of soggy Manhattan Island to the Dutch for $24.00 worth of cloth and trinkets. The newcomers founded a city, New Amsterdam at the edge of an empty continent. In the years that followed, it proved a magnet for millions of people from across the Atlantic; people who were driven by fear and poverty; who were attracted by the promise of freedom and plenty. They fanned out over the continent and built a new nation with their sweat, their enterprise and their vision of a better future.
For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. For the immigrants who were welcomed by this statue, America was truly a land of opportunity.
They poured ashore in their best clothes, eager and expectant, carrying what little they owned. They were poor, but they all had a great deal of hope. Once they arrived, they found, as my parents did, not an easy life, but a very hard life. But for many there were friends and relatives to help them get started __ to help them make a home, get a job, settle down in the new country. There were many rewards for hard work, enterprise and ability. Life was hard, but opportunity was real. There were few government programs to turn to and nobody expected them. But also, there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found in fact, a free market, and most of them thrived on it.
Many people still come to the United States driven by the same pressures and attracted by the same promise. You can find them in places like this. It’s China Town in New York, one of the centers of the garment industry __ a place where hundreds of thousands of newcomers have had their first taste of life in the new country. The people who live and work here are like the early settlers. They want to better their lot and they are prepared to work hard to do so.
Although I haven’t often been in factories like this, it’s all very familiar to me because this is exactly the same kind of a factory that my mother worked in when she came to this country for the first time at the age of 14, almost 90 years ago. And if there had not been factories like this here then at which she could have started to work and earn a little money, she wouldn’t have been able to come. And if I existed at all, I’d be a Russian or Hungarian today, instead of an American. Of course she didn’t stay here a long time, she stayed here while she learned the language, while she developed some feeling for the country, and gradually she was able to make a better life for herself.
Similarly, the people who are here now, they are like my mother. Most of the immigrants from the distant countries __ they came here because they liked it here better and had more opportunities. A place like this gives them a chance to get started. They are not going to stay here very long or forever. On the contrary, they and their children will make a better life for themselves as they take advantage of the opportunities that a free market provides to them.
The irony is that this place violates many of the standards that we now regard as every worker’s right. It is poorly ventilated, it is overcrowded, the workers accept less than union rate __ it breaks every rule in the book. But if it were closed down, who would benefit? Certainly not the people here. Their life may seem pretty tough compared to our own, but that is only because our parents or grandparents went through that stage for us. We have been able to start at a higher point.
Frank Visalli’s father was 12 years old when he arrived all alone in the United States. He had come from Sicily. That was 53 years ago. Frank is a successful dentist with a wife and family. They live in Lexington, Massachusetts. There is no doubt in Frank’s mind what freedom combined with opportunity meant to his father and then to him, or what his Italian grandparents would think if they could see how he lives now.
Frank Visalli: They would not believe what they would see __ that a person could immigrate from a small island and make such success out of their life because to them they were mostly related to the fields, working in the field as a peasant. My father came over, he made something for himself and then he tried to build a family structure. Whatever he did was for his family. It was for a better life for his family. And I can always remember him telling me that the number one thing in life is that you should get an education to become a professional person.
Friedman: The Visalli family, like all of us who live in the United States today, owe much to the climate of freedom we inherited from the founders of our country. The climate that gave full scope to the poor from other lands who came here and were able to make better lives for themselves and their children.
But in the past 50 years, we’ve been squandering that inheritance by allowing government to control more and more of our lives, instead of relying on ourselves. We need to rediscover the old truths that the immigrants knew in their bones; what economic freedom is and the role it plays in preserving personal freedom.
That’s why I came here to the South China Sea. It’s a place where there is an almost laboratory experiment in what happens when government is limited to its proper function and leaves people free to pursue their own objectives. If you want to see how the free market really works this is the place to come. Hong Kong, a place with hardly any natural resources. About the only one you can name is a great harbor, yet the absence of natural resources hasn’t prevented rapid economic development. Ships from all nations come here to trade because there are no duties, no tariffs on imports or exports. The power of the free market has enabled the industrious people of Hong Kong to transform what was once barren rock into one of the most thriving and successful places in Asia.
If you enjoyed that then take a look at the other segments:
PETERSON: Well, let me ask you how you would cope with this problem, Dr. Friedman. The people decided that they wanted cool air, and there was tremendous need, and so we built a huge industry, the air conditioning industry, hundreds of thousands of jobs, tremendous earnings opportunities and nearly all of us now have air […]
Part 5 Milton Friedman: I do not believe it’s proper to put the situation in terms of industrialist versus government. On the contrary, one of the reasons why I am in favor of less government is because when you have more government industrialists take it over, and the two together form a coalition against the ordinary […]
The fundamental principal of the free society is voluntary cooperation. The economic market, buying and selling, is one example. But it’s only one example. Voluntary cooperation is far broader than that. To take an example that at first sight seems about as far away as you can get __ the language we speak; the words […]
_________________________ 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 […]
I am moving the FRIEDMAN FRIDAY to a monthly feature on http://www.thedailyhatch.org. My passion has been recent years to emphasize the works of Francis Schaeffer in my apologetic efforts and most of those posts are either on Tuesdays or Thursdays.
Milton Friedman on Donahue – 1980 (First Appearance)
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
I am moving the FRIEDMAN FRIDAY to a monthly feature on http://www.thedailyhatch.org. My passion has been recent years to emphasize the works of Francis Schaeffer in my apologetic efforts and most of those posts are either on Tuesdays or Thursdays.
The on-going debate over raising the debt ceiling has focused on many areas of disagreement between Democrats and Republicans but none bigger than the Republican determination not to raise taxes. Many pundits credit this to the political power of Grover Norquist and his Americans for Tax Reform who have spent years collecting “No Tax Increase” pledges from Republican candidates. Others attribute Republican intransigence on taxes to a near religious belief in supply side economics, a school of thought founded by economist Arthur Laffer and journalist Jude Wanniski in the late 1970s.
The true seeds of this attitude toward tax increases, in my view, actually go back farther and can be traced to an even nobler pedigree. The real inspiration for this conviction comes from the late Nobel prize-winning economist, Milton Friedman. It is only by understanding Friedman’s reasoning and his values that one can fully understand why Republican refuse to see spending cuts and tax increases as simply two sides of the same budget-balancing coin.
This was not always the Republican, or even the conservative, position. During the 1950s, it was Democrats who advocated tax cuts to stimulate the economy and President Eisenhower who insisted “we can never justify going further into debt to give ourselves a tax cut at the expense of our children.”
In 1964, the eventual Republican nominee for president, Senator Barry Goldwater, voted against the so-called Kennedy tax cuts (actually passed after Kennedy’s assassination the previous year) because he was convinced the resulting deficits would be inflationary. Even after losing the presidential election to President Lyndon Johnson in a landslide later that year, Goldwater predicted a Republican comeback, telling U.S. News & World Report that a no-win war in Vietnam and high inflation would prompt a backlash against the Democrats two years later (he was right on both counts).
So if Eisenhower and Goldwater represented Republican orthodoxy in the 1950s and ‘60s, what happened? In large part, it was an intellectual revolution in conservative/libertarian thought prompted by economist Milton Friedman. While Friedman rejected the simplistic Keynesian (and later supply-side) notion that tax cuts automatically stimulate the economy, he believed that higher taxes were bad because they led to more and bigger government, which he was convinced at best led to waste and at worse to greater government control over our economy, our lives and our freedoms.
In 1967, three year’s after the Kennedy tax cuts, the Johnson Administration was already running huge deficits thanks to the a combination of Great Society social programs and the Vietnam War. Writing in his regular Newsweek column on August 7, 1967, Friedman expresseded his concern that this would soon lead to higher taxes, using an analysis that would become familiar to his readers over the years:
“.If we adopt such programs, does not fiscal responsibility at least call for imposing taxes to pay for them? The answer is that postwar experience has demonstrated two things. First, that Congress will spend whatever the tax system will raise—plus a little (and recently, a lot) more. Second, that, surprising as it seems, it has proved difficult to get taxes down once they are raised. The special interests created by government spending have proved more potent than the general interest in tax reduction.
“If taxes are raised in order to keep down the deficit, the result is likely to be a higher norm for government spending. Deficits will again mount and the process will be repeated.”
Sure enough, a year later a 10% income tax surcharge was enacted by Congress to cut the deficit and fight inflation. His prediction having been confirmed, Friedman returned to the subject in another Newsweek column dated July 15, 1968. He now described a familiar pattern of how Democrats used the traditional view of fiscal conservatism to convince Republicans to help pay for the Democrats’ own profligate spending:
“The standard scenario has been that the Democrats—in the name of the New Deal, the Fair Deal, or the Great Society—push through large spending programs . . . generally against the opposition of the Republican leadership. The spending programs not only absorb the increased tax yield generated by the ‘fiscal drag,’ they go farther and produce deficits.
“The Democrats then appeal to the Republicans’ sense of fiscal responsibility to refrain from cutting tax rates or, as in this case, to raise them. The Republicans cooperate, thereby establishing a new higher revenue base for further spending. The Democrats get the ‘credit’ for the spending; the Republicans, the ‘blame’ for the taxes; and you and I pay the bill.”
Fast forward seven years, when Republican President Gerald Ford was proposing a tax cut to stimulate the economy during a brief recession. As an economist who believed monetary, not fiscal, policy was the best way to keep the economy on a stable path to growth, Friedman did not believe the proposed tax cut would have its intended stimulatory effect. He explained why in another Newseek column on July 15, 1975 but went on to say:
“Yet I must confess that I favor tax cuts—not as a cure for recession but for a very different reason. Our basic long-term need is to stop the explosive growth in government spending. I am persuaded that the only effective way to do so is by cutting taxes—at any time for any excuse in any way.
“The reason is that government will spend whatever the tax system raises plus a good deal more—but not an indefinite amount more. The most effective way to force each of us to economize is to reduce our income. The restraint is less rigid on government, but it is there and seems to be the only one we have.
“So hail the tax cut—but let’s do it for the right reason.”
Another six years went by and now it was the newly-elected president, Ronald Reagan, who was proposing a large, multi-year tax cut to get the economy moving. At the time, he was also proposing off-setting spending cuts (which we all know didn’t happen). Friedman wrote yet another Newsweek column dated July 27, 1981, refuting objections to the plan by liberal economists while also discounting many of the claims of supply-siders in the Reagan Administration. Friedman still supported the tax cuts, of course, and explained why liberals were suddenly worried about deficits:
“The analysis so far treats government spending and taxes as if they were two independent entities. They clearly are not. We know full well that Congress will spend every penny—and more—that is yielded by taxes. A cut in taxes will mean a cut in government spending. And there is no other way to get a cut in spending.
“That is the real reason why the big spenders and the big inflationists of the past have suddenly been converted to fiscal conservatism and to preaching the virtues of fighting inflation. They know that a multi-year tax cut will force multi-year spending reductions. They hope that a one-year tax cut will quiet public agitation and allow them to revert next year to their high-spending ways.”
Taken as a whole, these excerpts from columns written for a popular magazine by a Nobel laureate economist between 1967 and 1981—44 to 30 years ago—spell out precisely the philosophy that today motivates many Republicans in and out of Congress to firmly oppose any tax increase as part of a deficit reduction or budget-balancing plan proposed by Democrats.
Like Milton Friedman, they are firmly convinced that any taxes they raise will ultimately result in increased government spending. They believe government spending necessarily translates into more and bigger government. They believe the federal government is already too big, threatening not just the health of the economy but their freedom and way of life as well.
One can argue with Friedman’s assumptions as well as the conclusions he draws from them. But until those on the other side—including the President, Democratic congressional leaders and the media—understand the reasoning and motivations behind the anti-tax sentiments of Republicans from Capitol Hill to the Tea Party activists, it’s hard to imagine anything more than a temporary truce in the battle being waged over the budget.
Anyhow, I’ve always included Tennessee in the list of no-income-tax states, but that’s not completely accurate because (like New Hampshire) there is a tax on capital income.
That’s the bad news. The good news is that the Associated Pressreports that Tennessee is getting rid of this last vestige of income taxation.
The Tennessee Legislature has passed a measure that would reduce and eventually eliminate the Hall tax on investment income. The Hall tax imposes a general levy of 6 percent on investment income, with some exceptions. Lawmakers agreed to reduce it down to 5 percent before eliminating it completely by 2022.
It’s not completely clear if the GOP Governor of the state will allow the measure to become law, so this isn’t a done deal.
That being said, it’s a very positive sign that the state legislature wants to get rid of this invidious tax, which is a punitive form of double taxation.
Advocates are right that this will make the Volunteer State more attractive to investors, entrepreneurs, and business owners.
Keep in mind that this positive step follows the recent repeal of the state’s death tax, as noted in a column for the Chattanooga Times Free Press.
Following a four-year phase out, Tennessee’s inheritance tax finally expires on Jan. 1 and one advocacy group is hailing the demise of what it calls the “death tax.” “Tennessee taxpayers can finally breath a sigh of relief,” said Justin Owen, head of the free-market group, the Beacon Center of Tennessee, which successfully advocated for the taxes abolishment in 2012.
On the other hand, New York seems determined to make itself even less attractive. Diana Furchtgott-Roth of the Manhattan Institute writes for Market Watch about legislation that would make the state prohibitively unappealing for many investors.
New York, home to many investment partnerships, now wants to increase state taxes on capital gains… New York already taxes capital gains and ordinary income equally, but apparently that’s not good enough. …The New York legislators want to raise the taxes on carried interest to federal ordinary income tax rates, not just for New York residents, but for everyone all over the world who get returns from partnerships with a business connection to the Empire State. Bills in the New York State Assembly and Senate would increase taxes on profits earned by venture capital, private equity and other investment partnerships by imposing a 19% additional tax.
Diana correctly explains this would be a monumentally foolish step.
If the bill became law, New York would likely see part of its financial sector leave for other states, because many investors nationwide would become subject to taxes that were 19 percentage points higher….No one is going to pick an investment that is taxed at 43% when they could choose one that is taxed at 24%.
Interestingly, even the state’s grasping politicians recognize this reality. The legislation wouldn’t take effect until certain other states made the same mistake.
The sponsors of the legislation appear to acknowledge that by delaying the implementation of the provisions until Connecticut, New Jersey and Massachusetts enact “legislation having an identical effect.”
Given this condition, hopefully this bad idea will never get beyond the stage of being a feel-good gesture for the hate-n-envy crowd.
But it’s always important to reinforce why it would be economically misguided since those other states are not exactly strongholds for economic liberty. This video has everything you need to know about the taxation of carried interest in particular andthis video has the key facts about capital gains taxation in general
Not let’s take a look at the big picture. Moody’s just released a “stress test” to see which states were well positioned to deal with an economic downturn.
Is anybody surprised, as reported by theSacramento Bee, that low-tax Texas ranked at the top and high-tax California and Illinois were at the bottom of the heap?
California, whose state budget is highly dependent on volatile income taxes, is the least able big state to withstand a recession, according to a “stress test” conducted by Moody’s Investor Service. Arch-rival Texas, meanwhile, scores the highest on the test because of “lower revenue volatility, healthier reserves relative to a potential revenue decline scenario and greater revenue and spending flexibility,” Moody’s, a major credit rating organization, says. …California not only suffers in comparison to the other large states, but in a broader survey of the 20 most populous states. Missouri, Texas and Washington score highest, while California and Illinois are at the bottom in their ability to withstand a recession.
Of course, an ability to survive a fiscal stress test is actually a proxy for having decent policies.
Milton Friedman bragged on Hong Kong’s free economy in 1980 and Dan Mitchell does in 2016!!! Milton Friedman PBS Free to Choose 1980 Vol 1 of 10 Power of the Market Published on May 9, 2012 America’s freedom and prosperity derive from the combination of the idea of human liberty in America’s Declaration of Independence […]
Socialist Edward Lipinski met Milton Friedman and said, “I used to believe in socialism, I still do, but socialism is an ideal but we can’t have in the real world until we are rich enough to afford it. Socialism will be practical when every man in Poland has a house and two servants.” “Milton Friedman […]
Best quote from the speech below: However, the point that impresses me now and that I want to emphasize is that the problem is not only for them but for us. They have as much to teach us as we have to teach them. What was their problem under communism? Too big, too intrusive, […]
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 […]
Milton Friedman – Public Schools / Voucher System Published on May 9, 2012 by BasicEconomics No description available. Milton Friedman – Public Schools / Voucher System (Q&A) Part 1 Milton Friedman: Why soaking the rich won’t work (Do the rich hoard their money? What are they investing in?) Uploaded by voogru on Apr 10, 2010 […]
Which Way for Capitalism Milton Friedman from the May 1978 issue WHAT IS THE FUTURE of capitalism?—by which I mean the future of competitive capitalism—free enterprise capitalism. In a certain sense, every major society is capitalist. Russia has a great deal of capital, but it is under the control of governmental officials who are […]
Milton Friedman – Free Trade vs. Protectionism If Milton Friedman was here he would attack Trump’s proposal for a 45 percent tax on Chinese products! Dissecting Trumponomics March 22, 2016 by Dan Mitchell At this stage, it’s quite likely that Donald Trump will be the Republican presidential nominee. Conventional wisdom suggests that this means Democrats […]
Milton Friedman – Free Trade vs. Protectionism Free to Choose Part 2: The Tyranny of Control (Featuring Milton Friedman Mark J. Perry@Mark_J_Perry March 5, 2016 9:26 pm | AEIdeas Some economic lessons about international trade for Donald Trump from Milton Friedman and Henry George Carpe Diem Trump vs Friedman – Trade Policy Debate In the […]
Milton Friedman – Free Trade vs. Protectionism Free to Choose Part 2: The Tyranny of Control (Featuring Milton Friedman Donald Trump: Clueless about free trade Larry Elder rebuts candidate’s ‘they’re taking our jobs’ claim Published: 02/03/2016 at 6:39 PM One of Donald Trump’s talking points and biggest applause lines is how “they” – Japan, China […]
Milton Friedman – Free Trade vs. Protectionism Free to Choose Part 2: The Tyranny of Control (Featuring Milton Friedman Trump vs Friedman – Trade Policy Debate Eight Questions for Protectionists September 23, 2011 by Dan Mitchell When asked to pick my most frustrating issue, I could list things from my policy field such as class […]
I am moving the FRIEDMAN FRIDAY to a monthly feature on http://www.thedailyhatch.org. My passion has been recent years to emphasize the works of Francis Schaeffer in my apologetic efforts and most of those posts are either on Tuesdays or Thursdays.
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Milton Friedman PBS Free to Choose 1980 Vol 1 of 10 Power of the Market
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
Free market economist Milton Friedman (1912-2006) won the Nobel Peace Prize for economics in 1976.
Friedman published more than 800 columns and articles in his career. From 1966 to 1984, he wrote a series of more than 300 columns for Newsweek on economics, often alternated with other columnists holding opposing views in order to foster the vigorous debate he relished. Here is an interesting 1983 quotefrom Friedman, looking back on his Newsweek experience:
“The task has been challenging and highly rewarding. It has forced me to try … to express technical economics in language accessible to all. It has forced me also to stick my neck out in public…. Best of all, it has produced a stream of reactions from readers – sometimes flattering, sometimes abusive, but always instructive. I have learned in the process how easy it is to be misunderstood or – to say the same thing – how hard it is to be crystal clear. I have learned also how numerous are the perspectives from which any issue can be viewed. There is no such thing as a purely economic issue.”
In a 1973 Newsweek column, Friedman boldly made the assertion that ever since its charter was revised in 1962, the Food and Drug Administration had caused more harm than good. The letters of response Newsweek received from its readers then gave Friedman the opportunity six weeks later to publish a follow-up column with one of his patented philosophical lessons about the nature of government bureaucracies
Let me show you, with some excerpts from both columns…
“Put yourself in the position of an FDA official charged with approving or disapproving a new drug. You can make two very different kinds of serious mistakes:
1. Approve a drug that turns out to have unanticipated side effects resulting in death or serious impairment of a sizable number of persons.
2. Refuse approval to a drug that is capable of saving many lives or relieving great distress and has no untoward side effects.
If you make the first mistake, the results will be emblazoned on the front pages of the newspapers. The finger of disapproval, perhaps even of disgrace, will point straight to you.
If you make the second mistake, who will know it? The pharmaceutical firm promoting the new drug…will be dismissed as greedy businessmen with hearts of stone…. The people whose lives might have been saved will not be around to protest. Their families will have no way of knowing that their loved ones lost their lives when they did only because of the [in]action of an unknown FDA official.
…The 1962 [Kefauver] amendments to the Food, Drug, and Cosmetic Act should be repealed. They are doing vastly more harm than good. To comply with them, FDA officials must condemn innocent people to death. In the present climate of opinion, this conclusion will seem shocking to most of you—better attack motherhood or even apple pie. Shocking it is—but that does not keep it from also being correct. Indeed, further studies may well justify the even more shocking conclusion that the FDA itself should be abolished.”
“In a recent column I pointed out that approval of drugs by the FDA delays and prevents the introduction of useful as well as harmful drugs. …I summarized a fascinating study by Prof. Sam Peltzman of UCLA of experience before and after 1962, when standards were stiffened. His study decisively confirmed the expectation that the bad effects would much outweigh the good.
The column evoked letters from a number of persons in pharmaceutical work offering tales of woe to confirm my allegation that the FDA was indeed “Frustrating Drug Advancement….” But most also said something like, “In contrast to your opinion, I do not believe that the FDA should be abolished, but I do believe that its power should be” changed in such and such a way—to quote from a typical letter.
I replied as follows: “What would you think of someone who said, ‘I would like to have a cat, provided it barked’? Yet your statement that you favor an FDA, provided it behaves as you believe desirable is precisely equivalent. The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of governmental agencies once they are established. The way the FDA now behaves, and the adverse consequences, are not an accident, not a result of some easily corrected human mistake, but a consequence of its constitution in precisely the same way that a meow is related to the constitution of a cat. As a natural scientist, you recognize that you cannot assign characteristics at will to chemical and biological entities, cannot demand that cats bark or water burn. Why do you suppose that the situation is different in the social sciences?”
The error of supposing that the behavior of social organisms can be shaped at will is widespread. It is the fundamental error of most so-called reformers. It explains why they so often believe that the fault lies in the man, not the “system,” that the way to solve problems is to “throw the rascals out” and put well-meaning people in charge. It explains why their reforms, when ostensibly achieved, so often go astray.
The harm done by the FDA does not result from defects in the men in charge—unless it be a defect to be human. Most are and have been able, devoted and public-spirited civil servants. What reformers so often fail to recognize is that social, political and economic pressures determine the behavior of the men supposedly in charge of a governmental agency to a far greater extent than they determine its behavior. No doubt there are exceptions, but they are exceedingly rare—about as rare as barking cats.”
I am moving the FRIEDMAN FRIDAY to a monthly feature on http://www.thedailyhatch.org. My passion has been in recent years to emphasize the works of Francis Schaeffer in my apologetic efforts and most of those posts are either on Tuesdays or Thursdays.
Milton Friedman on Donahue – 1979
Uploaded on Aug 26, 2009
Dr. Milton Friedman, Nobel Laureate, promoting “Free to Choose” on the show Donahue.
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
I am moving the FRIEDMAN FRIDAY to a monthly feature on http://www.thedailyhatch.org. My passion has been recent years to emphasize the works of Francis Schaeffer in my apologetic efforts and most of those posts are either on Tuesdays or Thursdays.
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1
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Milton Friedman – A Conversation On Minimum Wage
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Milton Friedman – A Conversation On Minimum Wage
Milton Friedman – A Conversation On Minimum Wage
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ Below are some of the main proposals of Milton Friedman. I highly respected his work. David J. Theroux said this about Milton Friedman’s view concerning […]
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 […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
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 […]
Listing of transcripts and videos of “Free to Choose” episode 3 – Anatomy of a Crisis on http://www.theDailyHatch.org
