Milton Friedman Crushes Man’s 3 Questions like Dixie Cups
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Milton Friedman Crushes Man’s 3 Questions like Dixie Cups

August 24, 2019


Yes, sir?
Dr. Friedman, is there an economic system now or historically that has allowed free
enterprise alone to determine which direction the economy goes? And secondly- I have a three-part
question. Okay, fine.
Secondly, in economics you have resources and how to best use these resources is a value
judgment, but it seems to me you can have either free enterprise decide or government
decide or some combination. Then don’t you think a combination would be the best alternative?
And thirdly, if I can remember it, isn’t there some benefit to having the government steal
our money? Which is what they do effectively; they’ll hold a gun to our head and say pay
us 40 percent of your income or go to jail. They take this money and they give it mostly
to government employees. Well, the government employees spend it. The marginal propensity
to consume is pretty high. So the people who were robbed have to do something creative
to get the money back, and isn’t this creative activity the real wealth of . . . ?
Well, I take it that they would have to be still more creative if 98 percent were being
spent by the government. (laughter)
No, the third part of your thing is just pure fallacy from beginning to end,
(laughter) … because if those people who are now government
employees were employed in creative activity and productive activity they would also be
spending their money, and we’d have a greater total around. All you’re doing…let’s suppose
for a moment- take the extreme case, that that 40 percent is being used just to have
people sit around. The fact that they spend their money doesn’t alter the situation. The
only product there is is what the 60 percent produce, and that 60 percent is divided among
100 percent. If those 40 percent were also producing goods, then there would be more
goods to go around among everybody. You are just involved in a fallacy of looking at dollars,
which is important sometimes, instead of looking at the real product, the goods and services
that people produce and people consume. Spending isn’t good; what’s good is producing. What
we want to have is more goods and services. And as I say, the obvious indication that’s
clear is that if your logic were right, it would apply for 50 percent, 60 percent, 70,
90, 98, 100 percent, and obviously you would see that that would be a bunch of nonsense
at that stage. It is desirable to have some money spent by
government for those things, those services that we believe we can get more usefully and
more effectively through government. If people are getting their money’s worth, fine. That’s
why it’s very desirable to have governmental expenditures take place at as local a level
as possible, because you as a citizen of a small community can judge whether you are
getting your money’s worth. You can decide that you want to spend it. But when it comes
to the federal government you tend to think that you are spending somebody else’s money,
and you are in a way, but he’s spending yours. Now let me go back to the first two items.
Is there any example of a society in which the fundamental determination of the direction
of activity was determined by free enterprise, by free competition? Of course, most of history,
most of societies today. Government does have 40 percent of our income that it spends, but
it wastes half of it, so that as an effective matter 80 percent of our resources are being
determined by free enterprise now. And if I go back to the whole period of the nineteenth
century, to the whole period of the great growth of the U.S.; to Britain in the nineteenth
century, the period when Britain emerged as a leader of the nations, at the height of
Britain’s power as the leading nation in the world, at the time of Queen Victoria’s jubilee–in
1899 I think it was or something- celebrating the fiftieth anniversary, the golden jubilee
of her reign–when Britain ruled the waves and had an empire on which the sun never set,
total government spending in Britain was 10 percent of the national income. So of course
there have been many examples over time in which free enterprise has dominated and predominantly
been the major source of determination. Today it’s true in Hong Kong, in Taiwan, in many
countries around the world. Alright now, your second question is: does
not the allocation of resources involve value judgments and isn’t it better to have that
value judgment shared by government and the people? Who is government? What’s government?
Is that something other than you and me? Is that something other than us operating through
a different mechanism? Who can make value judgments? Only people. Resources don’t make
value judgments; governments don’t make value judgments; people make value judgments. And
the question is: what is the most effective way in which we as people can jointly, cooperatively
express our values? Now, we express some of them individually in the family at home, separately,
people, you and I alone. We express some of them by doing things for ourselves. We express
some of them through voluntary groups–Boy Scouts, churches, charitable organizations.
We express some of them through cooperation on a broader scale- on a free market through
business enterprises that serve as intermediaries between people selling their productive services,
producing products and selling the products. We express some of our values through doing
things through government, and there is nothing wrong with doing that, provided we keep in
control and don’t let the government become the master instead of the servant.
And the real problem is, in my opinion, that as we move from the local community to the
state, from the state to the federal government, it becomes increasingly difficult for us to
control the mechanism we have established and that mechanism tends to control us. That
was the great wisdom of the Founding Fathers of this country, of the people who wrote the
Constitution. That constitution was designed to limit government’s powers in order to preserve
the freedom of the individual, and what has happened in the past fifty years is that the
fundamental character of the Constitution has really been changed. We have broadened
enormously the conception of what is a governmental power and what is not, and have departed from
that limited government until we have created a Frankenstein, an unlimited government that
threatens to destroy us.

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  1. terrible, its hard to believe that people can't see through such absurd responses. Friedman is a fool.

    1. The market deciding alone on the distribution of production produces incredibly short term thought. Take for example the recent example of the electric car, if the government had not subsidized, and didn't continue to heavily subsidize the electric car we would eventually come to a point where a massive, rapid, and incredibly destructive transition would become necessary. Technocratic long term planing is an important part of maintaining an economy. Yes all else being equal the government should stay out of the issue, but suggesting there is no place for the government is absurd. This doesn't even take into account issues of environment, and social stability.

    2. The government produces goods and services, the idea that no government employee contributes to social wealth is factually wrong and quite absurd. The government is not as efficient as the free market in most cases, but government run healthcare for example is not only a significant contributor to social wealth, it is actually a fair amount more efficient due to the inability of a consumer to make informed decisions. This is essentially indisputable, while the market is more efficient generally – as are essentially all distributed decision making apparatuses.

    3. Economies aren't driven by production, they are driven by demand. Government or private demand is irrelevant. Without demand, production has no purpose. We define demand as the driver because it can exist without production and maintain meaning. Demand creates opportunity for production not the other way around.

    Milton might have a point if there was an inevitable equilibrium to economic distribution, but historically, and by the basic laws of physics no natural equilibrium exists. In fact just the opposite is true, wealth is continually and increasingly stored and removed from the economy which causes economic collapse. Again there is no historical or economic model in common use which doesn't outline and predict this.

  2. In free enterprise, (non-government), the worker produces a product, gets paid for a job, and feels useful to his customers. Government employees merely SPEND the money, produce almost nothing, and make the rest of us in the USA hate their guts!

  3. if he were still alive i would ask what the hell does the 0.1%, who own 80% of the wealth of this country actually produce, except more laws that gives them even more wealth? They produce NOTHING! They generate NOTHING! They simply take and take and take and take! And give nothing to the society which they manipulate to give them even more wealth! Bush senior had it right! He called it VOODOO ECONOMICS and he was exactly right!

  4. The questioner himself can barely remember his own third question at the beginning, yet Friedman can remember all three while answering them one by one.

  5. Here, for those whose life's timeline missed him, was the Richard Feynman of economics!
    If you also missed Feynman (Nobel laureate in physics, as was Friedman in economics), do yourself a favor and look up some of the videos of him, too!

    Fred

  6. And what in 50 years when human race is 10 billion strong yet so technologically innovative that there literally isnt enough jobs available to fill even half the working population, all while earths resources become stretched too thin to even accommodate the frivolous consumerism capitalism demands?

  7. Mr Milton Friedman, truly knows his economics and how the system in America Works Capitalism and our Constitution shall limit the Powers of the Federal Government. this government is for the people and by the people we have the power not the federal Government.

  8. Forgot to mention that if the 40% were all producing goods and services (assuming, per his argument) then prices would ultimately go down, as a result of a more diversified market.

  9. …. and the British Empire example doesn't work. They collected huge sums from their Imperial subjects. Apples and Oranges.

  10. I wouldn't even have been able to remember what the three questions were. If anyone tried to ask me three questions at the same time, I would stop him after the first one. Let HIM remember what they were. They are HIS questions. Chances are, he wouldn't be able to remember them.

  11. Donald Trump is the closest thing to Milton Friedman, and Ronald Reagan was second closest. Reagan said "Mr. Gorbachev, tear down this (Berlin) Wall." And it was so. Democrats now try to take that away from Reagan, such is their reprehensible dishonesty and arrogance.

  12. the hilarious point here is that even the opposition wants to see opponents making a very fucking good case. meanwhile nowadays – you dont thin like us – nazi, racist. soggy knees, etc.

  13. To bad capitalism works so good it's destroying the oceans with garbage an even changing the climate. Who are doing it the rich the powerful the self interested who is the advocate of the common good ? Milton Friedman did more harm than good.

  14. Some commentators on here believe the term "crushed" is too harsh a term. Not so. The guy who asked the questions did so with a condescending and self-righteous demeanor. The questions were obviously uttered as facts he thought would be difficult for Friedman to rebut. However, as we all saw, Friedman "crushed" the arrogant poser.

  15. What's not mentioned here is that if me and my friends own all the land, we can charge all of everyone's income to live on it, so they will all starve to death, not reproduce, and all of humanity would die out. That's Friedman's brilliant idea of free enterprise, and yes, that is the way government works (and doesn't work). The 50,000 homeless in Los Angeles have little money to produce and use whatever they have to buy opioids, etc… When gov can not allow you to give away food or sell food without a license, that's not free enterprise. Gov wants free enterprise within their dictates of allowances. That's not free enterprise. You can vote all you want and that won't change a thing. License is not free enterprise. Tax is not free enterprise.

  16. We've evolved into a top down form of government. Municipalities employ grant writers to navigate the complexities of begging state and federal bureaucracies for money. States send their representatives and lobbyists to Washington to fight for their sliver of the pie. State powers have been diminished leaving them as a middle man for cities and towns. This is corrupt by nature. The forefathers never intended the federal government to have so much centralized authority.

  17. The government enslaves the creators via tax, perhaps the managers in government should be creative about what resources they need to invest their windfall in the most creative way?

  18. Capitalism is a bit of a snake pit.
    But of course snakes are not immoral or out to profit at any cost,
    so this is an unfair and stigmatizing comparison for reptiles…

  19. Renaissance Italy – Free enterprise fostered by the de Medici and other wealthy families may be the best example of free enterprise bolstering not only the European culture(s), but also western civilization as a whole.

  20. It's unfortunate that today (July, 2019) there so so many legislators and citizens don't understand (and don't care) about the real function of government. Many think it's government's function to re-distribute the wealth that others produce. That works in the short term but isn't sustainable nor just.

  21. What a succinct and collected explanation of a fundamental principle that my generation and those younger have never experienced and are educated against. Power seeks power; Organisations tend to corruption.

  22. Don’t quite agree with Friedman ,..The government/Bureaucracy is spending more money than it is taking in! ….this is inflation and you have more unearned money chasing same number of goods, ie competing with your money that you earned!

  23. Example: new 1968 Chevy Camaro Cost $3,600.00 ; in 2019 it costs $36,000.00; and the USA has printed/created $22 Trillion Dollars! ……the greatest counterfeiters in The World!

  24. What makes anything "theirs"? Only laws enforced by the government. This what the government "gives," it can also take away.

  25. I agree we have unlimited government with runaway spending which will result in the collapse of the economy soon,

  26. I want every legal citizen in this country, regardless of race, creed, or ethnicity, to be PROSPEROUS, healthy, productive, self-sufficient and HAPPY.

    And ONLY the Free Market can deliver it.

  27. Milton Friedman pushed perverted ideas. He has irrevocably damaged the world. He is the reason Donald Trump was elected.

  28. That guy reminds me of how obnoxious Jeff Greenfield was on “Firing Line,.” Second-rate minds love to try to stump first-rate intellects.

  29. as a specific debate AGAINST the growing Education Dept on the Federal level, MF makes a perfectly sane case AGAINST the flow of taxpayer money to the WORTHLESS people in DC who want to govern our institutions of learning

  30. Asking a question based on a false premise is a common tactic of the left. Milton uncovered and addressed that trick immediately.

  31. Almost as imposing as is his intellect is how gracious and winsome he is with his questioners. Look at any debate or Q&A in which he participated, and you will see the same kindness. I think his character had much to do with helping people receive his arguments. "The tongue of the wise makes knowledge acceptable" (Proverbs 15:2)

  32. Milton Friedman knew one day there would be a digital currency, too bad he did not live long enough to see it. It would have been great for him to witness it.

  33. “In whatever country Jews have settled in any great numbers, they have lowered its moral tone, depreciated its commercial integrity, have segregated themselves and have not been assimilated, have sneered at and tried to undermine the Christian religion, have built a state within a state, and have, when opposed, tried to strangle that country to death financially.” BENJAMIN FRANKLIN

  34. "Isn't it good that we steal 40% from people and give it to others and they spend it?" WHAT?!!!! Cause it'd be bad if those people just kept their money and spent it and those others got productive jobs that helped the economy and earned their own money to spend themselves? Or if some of that money was in a savings account being used by banks in the stock market or some shit?

  35. In Sweden we have a former CEO called Leif Östling who got MASSIVE CRITICISM for asking the question “What the hell do l get for my money”?

    He was accused of tax planning, but still he had payed over 100 million kronor in taxes…..

    I think EVERYONE should ask that question, ALL THE TIME!

  36. Doesn't Friedman's argument that government employees add nothing to actual wealth apply equally well to shareholders? It is difficult to see how societies can work without bloated drones of one form or another.

  37. Milton was laser focused on what he innately understood about the economic organisation of our human society, in the same way as Jane Goodall understood Chimpanzee society so well.
    Schools would do well to play these living discussions by people like him to better introduce students to the often difficult subjects to grasp.

  38. Thus video was based on pre internet and the uncovering of how things have been controlled for centuries. This video is all idealistic and far from how things really work

  39. The troublesome thing is that 30 or so years after Friedman and Thomas Sowell's peak, our government has grown ever more controlling.

  40. I can't believe how many gullible sheep there are in this comments section. Friedman was an intelligent man, but his "solutions" were just as naive, on the right, as Bernie Sanders' are, on the left. Trying to turn everything into a market to be exploited by capitalism is even worse than socialism. The purpose of a market is to allocate scarce resources, which works fine with luxury goods and many other goods and services. But it is disastrous when applied to things like education and healthcare, as well as basic food, clothing and shelter, which should NEVER be treated as scarce resources available only to the highest bidder. And that does not even consider big ideas (the military, the internet, the space program, national parks, a national highway system, a cure for cancer, etc., etc.) that only pooled resources (i.e., national government) could ever hope to achieve. Every truly successful society is a balance between public and private enterprise, not an ugly game of capitalism run amok, which amounts to socialism for the wealthy, in which the 1% are allowed to accumulate and control an obscene proportion of the nation's wealth and political power. For the love of God, people, THINK. Look around you. Look at history. Most of Milton Friedman's ideas are as bogus and destructive as supply-side economics. They sound good in theory, but they simply don't work, and they are largely to blame for many of America's current economic ills.

  41. Milton Friedman loved the Federal Reserve bureacrats and Central Bankers. No surprise Milton Friedman did not see the housing bubble coming. Central banks have created the Everything Bubble which I'm sure MF would not see coming too.

  42. Friedman was not a conservative. He loved Monetary policy federal reserve bureaucrats. The same ones that gave us the housing bubble

  43. Ty. This info has been known for 40 years and we are still enacting programs that are at best not effective but usually counterproductive to their purported goals and objectives.

  44. Why 100 percent of people making products produces more wealth than 60 percent of people making products is completely lost on people like this guy with the three questions. Britain was a prosperous nation right up until it adopted socialism. Allowing government to allocate resources is just asking for trouble.

  45. I hate when people say "well the gov stimulates the economy by spending". Ommmm, ok, I can spend my own money, I don't need help with that, and wouldn't it be more moral to leave people with as much of their earned money as reasonably possible?

  46. People asked more intelligent questions when they had to remember it, instead of reading it off of their smartphone sounding like an autistic child trying to form their first words.

  47. Federal employees do not create they only consume. They consume your tax dollars so they can have money to consume Goods in products. Federal employees do not make goods and products for other people to consume. The government wants you to make the refrigerator so they can text you for the refrigerator so they can buy the refrigerator you made. There is no contribution to society by the government in this thought process. The government wants you to make the clothes but in order for them to buy the clothes they have to take something from you in the form of tax dollars just to turn around and give you it back. I miss the good old days when I would give you 10 chickens for one hog they're for eliminating the need for government

  48. America can not continue under the current Judeo-Capitalist system, we need a white Christian society with capitalism and voluntarism.

  49. Amazing that there are still scores of people (Antifa and Democrats) who will protest, scream, and lash out for their passionate desire to feed as much authority to the state as possible.the only possible conclusion one can reach is that they hate their fellow citizens.

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