Apr
10
Giving People Cash, from Alston Mabry
April 10, 2017 |
Milton Friedman - The Negative Income Tax - Firing Line with William F. Buckley Jr.
In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration.
Stefan Jovanovich writes:
My Dad helped Friedman embark on the way to making serious cash in his later life. Dad published "Free to Choose" and helped Friedman find the TV producer (who deserves much of the credit for the success of that series by damping down Professor Milton's inclination to be obnoxiously pedantic). The book royalties were excellent, but what really helped Friedman become semi-rich was the fact that the series made him a "name" for the trade show lecture circuit. The fees he earned were nothing like those the Clintons and General Powell and others later earned; but they were, for the time, major coin.
Since no good deed by a publisher goes unpunished, it will not surprise the List to learn that Friedman continuted to think he knew more about elementary and secondary education than Dad did. I remember listening to several conversations they had where Dad tried to persuade Friedman that his voucher system was both bad politics and worse pedagogy. "Milton, the urban schools were failing (they still are) precisely because the actual students had no incentives. The middle and upper class kids are paid to do well in school - by their parents; my son the bum knew that he would be rewarded for swotting away. But the kids in the ghetto have no such encouragements. They lose money by going to class. Their truant friends could be out on the streets hustling or, at the very least, enjoying the rewards of freedom. This is what has changed with "modern" education. They system worked in the past because poor kids had the greatest personal incentives. Being allowed to skip farm work and go to school only if you got good grades was a real incentive. For you and me, as the children of immigrants, there were huge personal rewards. We were the prize boys in the family. Our parents wanted us to go to school so that someone in the house could speak "proper" English; hell, my older siblings had to sacrifice some of their prospects so that I, the youngest child, could afford to keep going to school."
Dad's solution was simple: pay children for achievement test results. Pay every child for taking the test and then pay them more for getting better and better results. Once people understood that the system was here to stay, parents would be making certain that their kids went to school - if only, Dad said, so they could drink up the money the children earned. (This may sound cynical but it was, in fact, wonderfully charitable; there was nothing "society" could actually do about preventing children from being exploited by bad parents but at least the children would be learning the skills that would allow them to escape as adults.)
Friedman seems to me to have had a similar blind spot regarding "poverty". He was right, of course, about the poverty industry; it is appallingly wasteful and corrupting. But the solution was not to allow the poor to believe that they were somehow entitled to the money, which is precisely what a negative income tax would do. You could eliminate the "helping" bureaucracies and offer the poor incentives to do better by following Dad's scheme, by paying the poor for good conduct. But, if you simply handed over the money and used the income tax as the mechanism, you would be undermining the tax system itself. The experience with the Earned Income Tax Credit is proof of that fact; if you are going to have an income tax at all, you have to treat all income equally and apply the lowest possible rates, even to the helping and disability payments. If the poor pay nothing, they have a permanent incentive to remain officially poor.
Comments
WordPress database error: [Table './dailyspeculations_com_@002d_dailywordpress/wp_comments' is marked as crashed and last (automatic?) repair failed]
SELECT * FROM wp_comments WHERE comment_post_ID = '11617' AND comment_approved = '1' ORDER BY comment_date
Archives
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- Older Archives
Resources & Links
- The Letters Prize
- Pre-2007 Victor Niederhoffer Posts
- Vic’s NYC Junto
- Reading List
- Programming in 60 Seconds
- The Objectivist Center
- Foundation for Economic Education
- Tigerchess
- Dick Sears' G.T. Index
- Pre-2007 Daily Speculations
- Laurel & Vics' Worldly Investor Articles