Milton Friedman - Bad Laws

[dave19941000]

If Friedman was so right why do 80-90% of university educated economists (depending on the country) reject his thoeries and point to every country they have been used as proof of its failure?

[cionnathomathuna]

@dave19941000 where on earth did you get that statistic? and which countries, if any, are you talking about?

[dave19941000]

@cionnathomathuna The statistic comes from the University of Montreal which asked the question to economists from around the 1st world if they supported, rejected, or had no opinion of Friedman's policies.

[cionnathomathuna]

@dave19941000 aha sure, well the Nobel prize committee mustn't have seen that study

[ElJefer]

@dave19941000 Can you point to the countries that supposedly prove Milton's ideas' failure?

[dave19941000]

@ElJefer Argentina, Chile, Indonesia, Russia, Bolivia, Uruguay and occupied Iraq to name a few.

[ElJefer]

@dave19941000 And why do those countries prove his failure?

[dave19941000]

@ElJefer After passing Friedmans laws, the poverty rate rose, the middle class (of those that had one) shrank rapidly, prices rose, wages fell and forgien corporations bought everything that was privetized at dirt low prices (exept in Russia, where it was the Oligarchs who did that). There is a reason those policies have always needed a military to stop the people of a country to reverse them where it is being used.

[ElJefer]

@dave19941000 So these countries withdrew 95% of government involvement in the economy, removed most regulation on businesses, respected private property, and removed all barriers to trade?

[dave19941000]

@ElJefer Yes (exept Russia, they kept the trade barriers), that is what happened, and their economies and people payed the price. It did not work out for the better.

[ElJefer]

@dave19941000 Let's focus on one of those countries. During which years did they practice this. I want to look into it

[dave19941000]

@ElJefer The first example is Chile after the Coup which put Pinochet into power, or Russia during the post-Soviet period.

[ElJefer]

@dave19941000 I don't mean to quote wikipedia, but let me know if this is wrong: "Many of these reforms have been continued to this day ... Chile is currently the 11th most economically free nation in the world and the most free in Latin America ... Currently, Chile is the most economically prosperous nation in Latin America according to GDP per capita." Of course, a correction was required, but the long-term effects seem quite positive.

[dave19941000]

@ElJefer Those numbers give a false impression. Its like in the US, where 50% of the population lives in near-poverty, yet it is the richest nation in the world. In Chile over 90% of the wealth is in the hands of the top 10%, and Chile has a very high poverty rate, as well as one of the highest (and it was for a time the highest) levels of income inequality in the world. Basicly, its people playing with statistics to give a false impression.

[dmg46664]

@dave19941000 50% of the USA does not live in near poverty. Come here to Africa and see poverty! You can have an apartment, Cable television, a car, and a soup kitchen around the corner and still be considered on the poverty line in the USA. Come to South Africa and see the difference living in a shack often (not always) with bad sanitation. Disgusts me that the poor in China save at a higher rate than the affluent poor in the USA.

[ElJefer]

@dave19941000 Income inequality doesn't mean living standards per capita are low. And how are you measuring poverty? The main point is did the country improve per capita or not after the long-term effects of the Chicago school could correct the Keynesianism?

[DREwestcoast]

@dave19941000 occupied iraq... LOL that's a strawman if I ever seen one.

[stealthgerm]

today there are countries with no minimum wage laws no child labor laws.why arnt thier economies greater then that of usa

[fzqlcs]

@stealthgerm yeah, China is really struggling these days.

[stealthgerm]

@fzqlcs strugling all the way to the bank.imagine how the usa would be struggling with all the jobs with all the jobs if those jobs never would of been outsourced.imagine if all the factories would of stayed in the usa.

[fzqlcs]

@stealthgerm Those jobs were outsourced because Americans were unable or unwilling the prices charged for American companies. Had the foreign competition been eliminated, Americans would simply have a lower standard of life, being no more able to afford the products than before. Government regulations drive up the cost of production so that companies are forced to outsource and consumers support that activity with their purchases.

[dlstb]

@fzqlcs I'm not sure how this was meant, but I do know that China has been building a housing bubble that makes our 07-08 mess look like a glass of spilt milk compared to a Mr. Saint Helens eruption. They have built on average, 10 large metropolis size cities a year for the past several years. Currently, most of these cities are 80-90% vacant and in disrepair despite being brand new. The economic growth that China is experiencing is not real growth but a squandering of natural resources and labr

[UponInfinity]

@dlstb China has economic issues but a housing bubble is not one of them. A housing bubble indicates a surplus or housing. China has 400 million people living in poverty still. True, central planning of their cities is causing some undue investment, but at some point, most of those buildings are going to be used. My theory is China has so many dollar reserves, it wants to spend them now while they still have value, before inflation kicks in. At least they'll get something out of them.

[UponInfinity]

@dlstb China has economic issues but a housing bubble is not one of them. A housing bubble indicates a surplus or housing. China has 400 million people living in poverty still. True, central planning of their cities is causing some undue investment, but at some point, most of those buildings are going to be used. My theory is China has so many dollar reserves, it wants to spend them now while they still have value, before inflation kicks in. At least they'll get something out of them.

[dlstb]

@UponInfinity It builds 10 large cities a year and the cost of buying a home there is more than the average person (anywhere, not just in China) can afford. The home loans have a 50% down payment and interest in the teens on the remainder of the 200k+ homes. All those people living in poverty will NEVER be able to afford this type of housing in the planned economy system. This means that China does have a housing bubble because it has millions of homes no one can afford. Not just a surplus.

[quinnrasta]

@UponInfinity People have no idea how bad China's housing bubble is right now...google China Ghost cities. China is doing all it can to tame inflation. It is going to fall hard!!!

[TheMoriMaster]

@stealthgerm Because obviously that is the only determining factor in economics. /sarcasm

[ElJefer]

@stealthgerm minimum wage and child labor laws are not the only factors to consider

[jjsjeffjjsjeff]

Thumbs up for hard liquor and freedom!

[jeffersonianideal]

It is next to impossible to get a person who has never attempted the responsibilities associated with entrepreneurship, to understand the frustrations and impediments associated with government regulation. Even if the business is a one person operation, it still must be successful enough to assure a salary for its owner and enough profit for growth. Perhaps the closest an employee can come to understand this is by truly realizing the effect that the tax burden has on their individual liberty.

[mba2ceo]

labor value has NOTHING to do with wage !!! Supply and Demand DOES.

[criticalsection]

I tend to believe if government interventions in the economy like minimum wage, affirmative action, etc. were bad for industry, industry would use their great financial resources to get elected the people who would end these practices.

[fzqlcs]

@criticalsection Big business has no problem with these laws because the expense imposed on them by them are minor compared to the expense put on their smaller competition. Walmart support the Americans With Disabilities Act even though it cost them millions. It was much easier for them to install ramps and isolate parking slots than for a mom and pop store to do so. These laws drive out their small business competitors but never touch the big guys.

[criticalsection]

@fzqlcs I agree with all of that. I guess what confuses me is how Firedman can say these initiatives were counter to a free economy when they're supported by industry.

[fzqlcs]

@criticalsection Whenever government intervenes in the market, they skew the results. A free economy is not one in which government gives advantage or support to business. It is one in which government leaves business alone to succeed or fail based on its ability to satisfy customers. Big business has no interest in a free economy, they want a system of crony capitalism, where political power to regulate markets can be purchased. It is the consumers for whom Friedman advocates.

[criticalsection]

@fzqlcs Again, I agree with everything your saying, but it's difficult for me to believe that change in this department can come without support from industry. Maybe Friedmen is talking to the wrong audience. I don't know.

[jazzbo66zz]

In the absence of political opposition it is strange that so much rhetoric must be expended defending the plantation economy. if workers for Nike in Cambodia can be induced to live on $2 a day then why not their US counterparts? The world seen as a geography of interlocking labor markets represents a cost saving advance over more traditional colonial systems including chattel slavery. Among the advantages of externalization or outsourcing is release from moral hazard & political liability.

[unfad1ng]

@jazzbo66zz

Because US food prices are higher and people have to work get more money to buy stuff in the us but since prices for food are lower in camboida people can work for less and are willing to work for less whilst americans wount work for that little and will get offered more to keep them at their hon

[mpc91]

@jazzbo66zz - But workers in Cambodia choose to work for Nike, and for them it is a good paying job. That $2 a day in Cambodia can be a much better wage than whatever other opportunities these people have. If it wasn't, nobody would work for them.

They aren't drafting people, not threatening them with force. Only government can do that.

I fail to see how improving people's lives represents a moral hazard.

[jazzbo66zz]

Friedman reminds us that of all the mechanisms of the free market, poverty is the most critical to maintaining the social divisions from which elite entitlements derive. If Americas dispossessed could be further reduced to accepting the squalor of life in shanty towns such as might be found in Jakarta or Mexico City the globalization process might be complete. Friedman's conception of "liberty" is what Sheldon Wolin describes as Inverted Totalitarianism abetted by a transposition of terms.

[mpc91]

@jazzbo66zz - Actually, he doesn't say that at all. It might help your argument if he had. But you cannot quantify capitalism in communist terms.

In the free market there are no "entitlements", and in a libertarian society there are no enforceable social divisions other than the freedom of association. You earn what you get by meeting the needs of others. People become "elite" only in their capacity to make something that other people desire, or to perform some necessary service.

[jazzbo66zz]

It is foolish to believe that we can expect profits to go on accruing to the top, if the social order has no bottom. He argues perceptively that in order for some to enjoy lives of lavish entitlement it is necessary for many others to live an existence of perpetual servitude. Milton Friedman enunciates the philosophy of organized crime better than anyone I can think of with the possible exception of mob lawyer Roy Cohn. Delighting in the misery of others is in itself a kind of vicarious wealth.

[mpc91]

@jazzbo66zz - No, you believe those things. You believe that economics is a zero sum game, and that there is a fixed supply of wealth. You believe that for one person to get rich, another person must become poor.

It's just not so. People only get truly wealthy in a free market by creating wealth, but creating jobs, and giving a vast group of people something that they want. You don't get rich delighting in the misery of others, you get rich by alleviating misery.

[jazzbo66zz]

We must remain prepared to expand the scale of the custodial state as we respond to the demand of employers for lower wage workers. As we roll back programs of public assistance, wage protections & labor law we must raise penalties to cover the increasingly higher resource outlays required for more punitive state power w/ larger institutional holding areas for the resulting indigent. The notion of some kind of forced labor camp system might serve cost efficiency & political utility both.

[mpc91]

@jazzbo66zz - Your defense of tyranny is frightening. Your distrust of free people is evident. Your faith in government is misplaced.

There is no need for increased state punitive power, quite the opposite. Reductions in regulation always result in less crime, not more. It also makes it easier to do business, and the supply of wealth increases. Prohibition and the drug war have created criminals, not reduced crime. Laws do not make us safer, freedom does.

[jazzbo66zz]

Wages determine political status. We must preserve the free market mechanism of poverty to isolate the many unfit & undeserving. It is necessary for a number of millions to go without the basics that might otherwise lead to political participation. impoverishment is critical not only to keeping the bulk of wealth in as few hands as possible but also to maintaining the state of social deprivation keeping those at the bottom divided & more easily regulated by state intervention via incarceration.

[ProudConservative2]

Thanks to these videos... Elvis is not the only one still alive and still playing!

[FRSFreeStatePlus]

"Bad Laws" are Laws written to protect people from themselves rather then from others. Laws should be written to protect people from others not themselves. If your a true believer in Limited Government and true disbeliever in 'Big Government" then your against "Bad Laws".

[arbide2]

Even if you don´t agree with most of what he says, Milton Friedman was a true intellectual heavyweight.

[TimeWarp66]

1:20 - 2:00

[PlusSumGame]

What film is this originally taken from? I've found loads of these clips but I have no idea what the full-length thing is called. Anyone know?

[fpm919]

I think its from the Milton Friedman lecture series. He gave a series of 15 lectures that were the precursor to this PBS free to choose series. I think you can get the dvds from the idea channel but unfortunately they very expensive.

[BasilTheBasilisk]

Is it any accident that Milton and David Friedman look like Ferengi?

[BasilTheBasilisk]

Milton Friedman was a fraud. His ideas on deregulation are responsible for the current economic crisis. Only sheep believe this idiocy.

[vedasisme]

People are in disagreement about the effectiveness of minimum wage to this day. I should think that the reason for this is, in essence, that the answer is unclear. There is evidence supporting both sides.

Mr. Friedman's rhetoric carries a lot of truth, but minimum wage has no black & white to its morality, as any debate I have witnessed will prove.

[fzqlcs]

It is evil to tell a man, in a free society, that he must be idle simply because he does not provide a recognized value of $8 an hour. It is anti-liberty. If such people were allowed to work for less they could attain the necessary skills to command more than minimum. These laws only exists because unions pushed them to drive up the cost of competitive labor. There is no moral basis for minimum wage. It is a black and white issue if reason and liberty are one's values.

[vedasisme]

Historically, minimum wage has had no negative effect on business or job creation. Some argue that minimum wage creates a minimum standard for workers as well.

In your defense, it has also been shown to hurt small business, and does nothing to help those in poverty, as you've said.

The only thing I am objecting to is the branding of the opposing view as "evil," because we won't get anywhere if neither side is willing to listen to the other, which is what I am seeing here.

[fzqlcs]

I appreciate your desire to be a moderating influence, but remember that when you mix food with poison, the end result is still poison. I think telling a man he is not allowed to work unless others believe him worth $8 an hour is an affront to the very concept of self-ownership To insist upon compromise is to make the case that the concept of self ownership is not an absolute. I not only cannot be comfortable with that concession, I believe it to be evil.

[kyaraska]

We should also remember that medicine consumed in moderate amounts heals, however, if you take too much, it poisons

[FletchforFreedom]

Actually, your stance is incorrect. The studies show conclusively that the minimum wage has harmed both job creation and employment and has utterly failed as an antii-poverty method. Only the Card & Kruger studies purported to show a different result but that study (and others by the same researchers) have been repeatedly discredited.

Don't believe ANYTHING you find at the economic (sic) Policy Institute.

[studentofsmith]

@FletchforFreedom My Human Resources Management instructor at college once took the opportunity to pass out a newspaper article citing the Card & Kruger studies to help give students a "balanced" perspective on the issue. The very next day I passed out an article from The Economist that directly challenged those studies... in the interests of 'balance' of course.

She was not pleased.

[stealthswimmer]

Minimum wage reduces the employment not of everyone, but of those people whose skills aren't high enough (or have employers that believe the employees' skills aren't high enough) to earn that wage, and/or that the employer thinks don't have the potential to reach that productivity level quickly enough.

[bodybuilder444444]

Beast

[ironclad452]

genius

[funkymonkey1930]

I miss Uncle Milty!!

[whoo689]

I wish more economists taught with the enthusiasm and simplicity (that part being for those who are 'dumber' and can't understand econ as well) of Friedman. Then maybe more people would pay attention and actually know this stuff, esp. the Democrats. How the hell did Democrats get all their college credits if they're so ignorant on Econ? Were their econ classes pass/fail and easy as hell?

[MaterialGod]

Sadly, they most likely get their college credit because it's most modern universities that preach a lot of this collectivist claptrap in the first place from what I've seen =/

[whoo689]

Even if minimum wage laws WERE necessary at one point, if that could ever be proven, they certainly are not now here in the developed world. We already have so many labor laws that it's impossible for a corporation to get away with "screwing over" the worker in a huge way. And the minimum wage only covers like .33-2% of the American labor force. Not a whole lot. Democrats don't realize just how silly attempts to raise the wage are in lifting up the poor.

[whoo689]

What are the main songs or audio you use for your video intros called, LibertyPen? I like em.

[whoo689]

Not only that, but we're so advanced economically there's no way a corporate leader or manager is gonna pay 'unfair' wages just b/c the minimum wage is lifted. I worked at Walmart for a summer a few years ago, and my pay was $7.40 to start. It might've been $8 or more if I worked longer, and that's certainly higher than the federal or state minimum wage here in MO. If companies REALLY were gonna screw workers over w/o a min. wage, they'd give us the minimum and not a penny more.

[whoo689]

But alas, there's a little thing called COMPETITION in the workforce that employers are VERY keen on. They know that if they don't provide the wages and/or benefits that workers want, esp. for full-time work, they'll go elsewhere. Unless of course, they like that workplace so much more than the others. But most workplaces in a field are generally the same, so I don't think that factor matters much for most folks. I'd work at Best Buy OR Circuit City, probably.

[kbr7171]

I have to disagree with Mr Friedman on this. We have minimum wage laws now and we have a flood of immigration from poor hispanic countries. I think he's been disproven by todays stream of immagration.

[MrBWB]

haha yea, and they all work for paychecks worth less than the minimum wage, paid under the table. if you wanted them to actually follow the law, you would have to abolish the minimum wage.

[kbr7171]

Irregardless of wether the employer follows the law in paying them the minimum wage he stated passing a minimum wage laws stems the tide of poor immigrants...it hasn't. i'm not arguing for minimum wage, i'm just showing how his theory has been proven wrong.

[imre1000]

kbr7171, Friedman's theory is that minimum wages are bad for the economy. Especially for the poor.

He never said that having minimum wages would prevent immigration altogether.

[kbr7171]

Friedman said, "My parents emmigrated here in the 1890's...they were able to emmigrate here why? Not merely because we have free immigration but also, for example, because we also had no minimum wage laws. Had there had been minimum wage laws there would have been no jobs for them to take."

What is so difficult about understanding that this statement has been proven false?

[LibertyPen]

Minimum wage laws hurt the poor because they require that anyone who cannot provide a minimum level of value (that which commands minimum wage) are, in effect, banned from legal employment altogether. Minimum wage laws require that low skill workers must work "under the table" (like illegals), or beg welfare, in order to survive. Who pushed through the minimum wage? Certainly not the poor. It was organized labor, seeking to raise the cost of unskilled labor, thereby making it less competitive.

[ipwnallnubscuzirock]

you just quoted what Milton Friedman said in another one of your videos :D, you should send him a link to it.

[LibertyPen]

Good suggestion. It is now posted as a video response.

[kbr7171]

Agreed. I cannot state this enough, I AM NOT AN ADVOCATE OF MINIMUM WAGE.

[Bigturns33]

absolutly right. It hurts small business with even the smallest capital which keeps them out the job market and kills competition in the job market. I dont understand why people do not understand this.

[kbr7171]

We have minimum wage laws now and we have poor people from poor nation still emmigrating here, regardless of weather the employers are paying minimum wage. Had there been minimum wage laws in the 1890's there would have been employers paying less than minimum wage like there is today. I AM NOT DEFENDING MINIMUM WAGE!!! Merely showing that his statement has been proven false. Mr Freidman is a very bright man whom I agree with more often than not. But in this case he has been proven wrong.

[ipwnallnubscuzirock]

Minimum Wage tends to affect teenagers much more than poor people. There are not many poor people working at, say, a McDonalds or WalMart. Usually they are either teenagers or in the Lower Middle Class. So it is basically a redistribution of wealth.

[ipwnallnubscuzirock]

Suppose this was not the case. A buisiness that employs more employees at less than the minimum wage, voluntarily on both sides I might add, would have to fire some employees when the minimum wage law is enacted because it increases costs. They would fire the least skilled workers, that is, the poor person, first because they give less benefit to the company. A simple cost-benefit analysis shows that minimum wage claims what it does, but does not do what it claims. Intentions dont = outcome.

[insightfu]

You're forgetting that in the 1890's the nation was only coming towards the end of the gilded age and had recently overtaking Britain as the worlds largest economy. You have to ask two questions: 1. Why did Milton's family come to the US?

2. What would have been the effect of minimum wage laws for a family like his immigrating into a largely industrial economy without the prospect of getting a job, which i'm assuming would be a minimum wage job.

[richardcadbury]

People employ illegals (despite the risk of punishment) because they will work below the minimum wage.

[CountArtha]

First, they're not taking minimum wage jobs; they're working underground - labor smuggling, if you will.

Second, they're attracted by social programs that reward idleness and punish industriousness.

[kbr7171]

THAT'S NOT THE POINT!!! Friedman said if there was a minimum wage 100+ years ago people would have not emmigrated here. That's false! We have minimum wage and people are emmigrating here. The same thing would have happened a 100+ years ago too because there would have been employers practiced "labor smuggling" as you called it.

[CountArtha]

But rememeber: there was no welfare state (or "safety net," if you prefer) in the 1890s. Apart from the Chinese, who were excluded out of racism, the government pretty much let in anyone who could pass the physical. Unless they were productive enough to merit a minimum wage, they would have been unemployed and would probably have starved. So it was a good thing there was no minimum wage and they could pretty much all find work.

[whoo689]

Hong Kong, as just one example, has no minimum wage, and it's pretty damn viable as a small economy. People can easily find work there, and it's pretty skilled labor. In fact, a lot of the services we take for granted as "government monpolies" are easily provided by the private sector there. Kind of destroys the notion of "natural" monopoly, doesn't it?

[5amuu]

Thank you LibertyPen!

[kmg501]

Keep posting these, America needs a strong dose of common sense to snap it back to reality.

[antoconno]

Not going to happen anytime soon with the grasp media has on the sheeple.

[Surhotchaperchlorome]

Though he's a monetarist, his point about smugglers makes him come off as an Agorist Anarcho Capitalist.

[hahahaspam]

BOOZE!!!