California Gov. Arnold Schwarzenegger declared Monday of this past week “Milton Friedman Day,” in honor of the recently deceased Nobel Prize-winning economist. As we look ahead to the 2008 elections, I was looking back to a 2004 interview I had with Milton, in which he described why so many policies created by politicians to “help” us only decrease our freedoms and quality of life.
When it came to political mischief, no one had a better crap detector than Milton Friedman. He’d seen every trick in the book and could immediately distinguish between honest attempts to improve things and snake-oil solutions that ended up making matters worse. Such as?
How about those “tax simplification” laws that expand our tax code by thousands of pages? Or how about welfare policies that expand welfare rolls? How about spending more money on education only to see student test scores plummet? How about higher minimum wage laws that price teens out of the labor market? Or how about the government (that’s supposed to be us!) spending $110 billion on Hurricane Katrina relief when some property owners in New Orleans haven’t seen a dime of government aid?
Why is it that all these “good intentions” end up paving roads to hell?
According to Milton, it all comes down to one issue: The folks who are spending the money (not us, but the politicians inside the Beltway) don’t have a stake in how that money is spent.
They only want to brag about having spent the money: "I spent $xxx million for education!” “I spent $xxx million for the poor.” “I spent $xxx for the babies in New Orleans.” Etc., etc., etc.
There’s no incentive for them to spend the money wisely, only for them to spend it. Here’s how Milton put it in 2004:
There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.
Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40 percent of our national income.
Of course, whenever you question wasteful government spending, you get the sob stories about widows and orphans and the uninsured. If the government doesn’t “take care” of them, we’re told, who will?
The politicians say that if you leave it up to the market, too many people will be left out. So, in order to create an equalized system of care, whether it’s education or health or social security, you need the government to come in and equalize. To which Milton responded with an all-American attack on class warfare:
But do we want an equalized level of care? We can always have an equalized level at a low level. Where does progress come from? If we go back and look at the history of our country, what is behind our progress? It’s not equalizing. It’s differentiating. It’s that somebody gets a bright idea about how you can have a telegraph line. And who buys that first? Is it the poor people? No. Or look at television. How did we get the television and all its related products? We didn’t get progress in television technology by immediately demanding that every American get a television set. We got it by someone starting the venture and rich people buying it to begin with. Rich people are the experimental ground for every new development. The nature of progress is that what begins as a luxury for the rich becomes a necessity for the poor as it’s developed and passed on.
Is there any politician campaigning for 2008 who speaks so plainly about the limits of government hand outs and the dynamism of the markets? Obviously you can count out class warfare advocates like John Edwards. But even so-called market advocates like George W. Bush and John McCain get flustered when they’re forced to celebrate capitalism. President Bush’s last State of the Union address was essentially a Democratic-style shopping list of new government “benefits.” You have to go back to Ronald Reagan to find a politician with an unabashed appreciation of markets and contempt for government handouts.
Yes, Ronald Reagan believed in a safety net to catch the most desperate. But Reagan despised (and tried to cut out) those forms of charity that created dependency and a feeling of “entitlement” on the part of the recipient. The dependency trap is one of the most insidious creations of the welfare state, and millions have succumbed to its lure—whether rich, poor, black or white.
President John F. Kennedy said we should ask not what the government can do for us but what we can do for the government. Nowadays, even President Bush goes out of his way to find new ways that the government should “take care” of us. Hell, we’re even being told what we can and can not eat by the Republican mayor of New York — freewheeling New York, for Christ’s sake!
This is the nanny-state gone mad, and not enough people are mad about it. Am I alone in getting pissed about the growing paternalistic tendencies of our two main political parties?
Columnist George Will recently quoted a woman who was furious with a school board that rejected her plea to start a charter school for minority students because it would be outside of the paternalistic control of the board. When the liberal board president praised the black woman’s efforts, the woman responded: "A bleeding heart does nothing but ruin the carpet." To which Milton Friedman would have added: “Amen.”