Did you watch television last night? If you did, I bet you saw commercials for Geico, Progressive, and State Farm peddling low car insurance rates. Did you ever wonder why you don’t see the same market dynamic with health insurance? There is a one word answer: government. More…
Tag Archives: Milton Friedman
Why soaking the rich won’t work 2
By Tom Quiner
The debate never ends: the rich are rich on the backs of the rest of us so they need to be soaked through higher taxes and their wealth redistributed to those who didn’t earn it.
The late great Milton Friedman addresses this issue head on in the video clip above.
He makes reference to black teen age unemployment being between 30 and 40 percent. Today, on the heels of more government involvement in the marketplace and schools, and higher minimum wages, black teenage unemployment is above fifty percent.
Mr. Friedman’s philosophy is so logical, and yet the Left refuses to learn in the face of evidence that their approach never works.
The rationale behind “tax cuts for the rich” 1
By Tom Quiner
The President and his party are fixated on increasing taxes on America’s most-productive citizens, aka “the rich.”
That seems to be their solution to our debt-ceiling problems: tax the rich more.
So let me pose a question to you. Who is going to create the most jobs for America with extra money, the President … or a rich guy?
Let’s say the President wants to tax a super rich guy an extra $278,000. Would the government do a better job at creating jobs with that money than the super rich guy would with his own money?
We know how many jobs the government would create with that windfall: one. [See a previous post: Is $278,000 per job a good taxpayer investment?]
The President would use it on public employee unions … or green energy … or high speed rails, jobs that require ongoing public subsidy.
The super rich guy would ONLY invest the money in job creation if the jobs were going to make him money. In other words, he would base his decision not on political considerations, but economic ones. His self-interest would be paramount.
The rationale is this: someone is going to spend their own money better than someone else will.
The conceit of the president and his party is that they think they know how to spend other people’s money better than they do themselves. “It ain’t necessarily so!” to quote the great Gershwin song.
The stakes are much higher when you’re spending your own money, because you feel the pain if you spend it poorly.
The stakes are much lower when you spend someone else’s money, because you don’t feel the pain if you spend it poorly. Take Mr. Obama. He took your money and used it to create or “save” jobs at a cost of $278,000 per job. Do you think entrepreneur, Steve Wynn, whom I quoted in my previous post, could do a better job than a man who’s never had to make a payroll in his life?
I’m not being critical or Mr. Obama as much as I’m suggesting that a guy with a proven track record of creating jobs, like Steve Wynn, is going to spend his next buck better than someone else will.
Interestingly, when we cut marginal tax rates for “the rich,” they end up paying more in taxes. Why? Because they invest that money in job-creating efforts that end up making them more money, money they have to pay taxes on.
The government, on the other hand, redistributes much of it to someone else.
What is the power behind government? Coercion. If they want you to do something, they’re holding a club in one hand.
What is the power behind the rich guy? It’s called the marketplace into which people freely enter and mutually benefit.
The marketplace is amazing. It magically gets people to cooperate through the power of mutual self-interest. Milton Friedman tells a great story in the video above on what goes into making a simple pencil. Not a single person in the world knows how to make a pencil! Watch the video and you’ll see Mr. Friedman’s point.
Let’s stop demonizing America’s most-productive workers. Let’s start figuring out a way to reduce government spending to the levels of the Bush or Clinton administrations. Let the rich get richer while they create new jobs along the way.
The president sure isn’t doing it.
Congress isn’t doing it.
The Steve Wynn’s of the world ARE doing it, but the president and his party have made it harder, much harder, for these super-producers to keep producing.
Milton Friedman explains the fallacy of a minimum wage 3
By Tom Quiner
The late Nobel Laureate economist, Milton Friedman, explains why minimum wage legislation is counterproductive. He explains it better than anyone. The clip above was made when the minimum wage was around $2.50, which dates the interview around 1977. Unemployment for teens, and especially black teens, has only gotten worse, as I highlighted in my previous post.
Should you be free to choose? Reply
By Tom Quiner
What an interesting question! It depends on the context, doesn’t it? It depends on the principle involved.
I pose the question in light of the great exchange in the video above between the late, great Nobel laureate economist, Milton Friedman, and a college student who is allegedly Michael Moore. (I don’t know if it is really Mr. Moore, nor does it matter for purposes of this discussion.)
You can’t help but appreciate the way Mr. Friedman engages the young man and forces him to think, to wrestle with a principle.
The young man has a problem with Ford Motor Company’s decision to not put a $13 part on the Pinto back in the 1960′s knowing full well that two-hundred deaths could occur as a result of their economic decision. His chagrin seems reasonable, don’t you think?
Mr. Friedman’s response is that “no one can accept the principal that an infinite value can be put on an individual life.” This, too, seems reasonable.
The young man disagrees, but then offers that he is a supporter of abortion rights. He explicitly states that he does not believe that human life is sacred, that principles have to be balanced.
This young man very much articulates the triumphant philosophy of the Democratic Party today. Human life is not sacred if it is in the womb. It can be discarded, and even more, someone else should have to pay for it. However, their philosophy categorically rejects Mr. Friedman’s central principle: ”Individuals should be free to decide how much they’re willing to pay to reduce the chance of their death.”
The recent healthcare debate touched on this principle. Democrats reject Friedman’s timeless arguments. Instead, they passed legislation which reduces the consumers freedom to choose, and in fact, goes either further by requiring someone else to pay.
Are we free to choose? Yes, if it involves aborting your baby. No, if you would prefer not to purchase health insurance.
