The Most Persistent Economic Fallacy of All Time!

[@adulby]

"spending isnt good, producing is good" took a nice shot at Keynes right there. supply economics at its best.

[@jackbrady9738]

spending produces produce tho

[@Yurothehotot]

Supply has no value without demand.

[@logmeindangit]

@@jackbrady9738 spending does not produce. People produce, in order to exchange their labor for something else of value, something that someone else can provide better than they can. For example, let's say one guy knows how to make saws and nails, and another guy knows how to cut lumber. They each see value in the other person's labor, so will either barter to exchange goods and services, or will create a placeholder, money, to represent the value of those goods and services.. Money produces nothing, it just stands as a representation of value, but if confiscated from the person who earned it, as doesna thirf or a government imposing a tax, the confiscator, who has less respect for how that money was earned, because they did not earn it, they only took it from someone else. That taker will not be as careful in negotiating how it is spent. Too often, it is wasted on projects and people who do NOT produce an equivalent return of value for the money given them by the takers, the "thieves." When it is just two people agreeing to a transaction, exchanging their money for something else of value, like cut lumber, saws or nails, they are free to reach a decision, an agreement on what a fair trade would be. When government taxes people, taking money from earners, it did not earn it, it just took it. Since it did not earn it, the value of what effort it took to create that money is not nearly as well respected by government as the person who sacrificed their time and effort, and earned it. Government will often spend that confiscated money in ways that produces nothing but allegiance, as in a bribe. Also, welfare payments produce nothing for government when that money is "spent." The result, though, creates dependence by the welfare recipient, who didn't work for the money - they were given it because they were pitiful. And the pitiful will then come back to government to beg for more "free" (to them) money, and they will produce nothing in return except a dedicated vote for the government people giving them that confiscated, then redistributed money. But what did this do for the person from whom that money was taken? Nothing. In fact, it actually put that person farther behind, because the money they worked for, earned, was taken away from them, so has to be earned all over again. Taxation that does not benefit the taxed is enslavement, forced labor, the fruits of which are taken to become the oroperty of the thief, government. This is an example of how money does not always create production or products. Most of the time it does. The perversion arises when a third party, such as a robber or government, takes money from producers who have earned it, and gives it to people who have not. Certainly the robbers and government didn't earn it, and they produced nothing in exchange for the money they took. And the people receiving money from the thieves do not care where that money came from, ... but they should. They would, if they had honor.

[@MicahErfan]

what no understanding of aggregate demand does to a mf

[@DerDammerung]

​@@logmeindangit you explained that so well. Thank you.

[@christopheradderley6902]

Milton specifically refers to being employed in "productive or creative activity". People who allocate money (administrators of large Government programmes) are not by their very nature employed in creative or productive activity. Then you move on to the second debate about market resource allocation vs Government resource allocation and Hayek explained this issue better than many. How can any one person or organisation possess that kind of knowledge and act upon the information either accurately or at the correct time?

[@cm770011]

Christopher Adderley and the finance industry only allocates money therefore making private equity overall a wasteful enterprise for our elites to be pursuing with such dogma

[@christopheradderley6902]

Looking at society as a whole; misallocation of capital resources is arguably hugely wasteful. Either in a public or private capacity. Private equity is arguably less wasteful than pulling choices out of a hat and going for it.

[@solank7620]

Matt Good lord you have it backwards. Private equity does amazing good. Investors do more good than anybody. They take on great risk, and find the best talent with the best ideas. It is very, very, VERY fucking difficult to do this. Especially since you are competing with other intelligent, talented investors. Without investors, there is no Ford. No Apple. No Google. Facebook never becomes anything. And the list is endless. Investors create industries. These people deserve tons of credit. They increase liquidity in the market. They reduce bid:ask spreads. And by competing with other investors, they bid up the price that entrepreneurs can get for their companies, and increase the salaries employees can demand. Investors are some of the people you should be most thankful to in all of society.

[@solank7620]

Cerebral Cinephile There is no guarantee whatsoever that increasing corporate taxes will increase tax revenue. Most likely it would reduce them. Ireland reduced corporate taxes, their revenues went up and the EU bitched about it. You have it absolutely backwards on food stamps and such. I saw Tucker Carlson claim food stamps were a subsidy. This is total bullshit, and a misunderstanding of basic economic mechanics. Food stamps change the opportunity costs of unemployment. They are a penalty. Not some subsidy. Imagine if a state had a basic income of $20,000. Do you want employers would be able to decrease wages? Of course not. They’d have to raise wages because employees wouldn’t be as desperate for jobs.

[@prabhakaranjeyamohan4579]

@@solank7620 Investors invest in companies that makes them money, either that's good or bad to the society is later to be known. Of course they invest in company which might benefit the society but can also may invest in company which would degrade the society like say pharmaceutical companies which sell crappy medicines costing healthcare and our health, lobbying government to promote their products which might be unethical. Just saying goverment or private, good people making good decisions make the society good. And it is a good thing that in a democratic society , people have control over choosing a government which will do better in allocating resources.

[@jannmutube]

My perspective is that deregulation started a process of stealing from Individual Retirement Accounts. It started with the technology bubble. The explanation for the market fall was that companies were being put on the NY Stock Exchange that were really name only and there was nothing behind them. They took money in and cashed out. They could do it because the conservative "free market" proponents repealed the Glass Stegall Act which would have prevented over capitalization of stock.

[@Treblaine]

The problem with charity healthcare: a minority donating inconsistently to disparate efforts is SO ineffective and NOT-comprehensive (poignantly in USA) while still prone to bureaucracy. Government is in perfect position to take charge of public health with democratic + congressional oversight (no religion forced with treatment), fiscal clout and unified resources+expertise from Military (Medical Corps), police, law enforcement, fire, emergency services, etc. (You owe someone a Dollar/doughnut).

[@df4250]

Hhhmmm, "Spending's not good, What's good is producing." Sounds to me like a pretty flawed argument since what's the point of producing if there's no spending? Also, heaps of emphasis on "productivity" - the production of a product at ever increasing efficiency and profitability (very often- bugger the efficiency, just increase the efficiency of the profitability at whatever cost). Any consideration to what the offsets are to this notion of ever increasing productivity?

[@soostdijk]

DF a produced good, like a bottle of milk is still good if there is no money, but if there is money, but no milk you are screwed

[@df4250]

@@soostdijk Production of a bottle of milk might be ok for a while, until it goes off eventually. If there is no money, no one can buy the milk. Continued production of milk that ends up going off is sheer waste that achieves nothing. On another tack, continued production of items that are profitable but in some way harmful, is not good because the overarching drive for profitability at all costs will eventually be self defeating in that it can destroy the goose that laid the golden egg. The problem I have with Milton's teachings is that he totally lacks any planning or consideration of the consequences of the single minded "efficient" drive for profit, irrespective of the social or environmental consequences. By "efficient" I mean a process whereby the maximisation of profit is pursued without due consideration to damaging consequences, which, if they were taken into account, would adversely affect the maximisation of profit.

[@redunzl5]

I'm familiar with it. It affords loan opportunities to previously marginalized populations via relaxed lending criteria and regulations. Nowhere in the act does it force lenders to make bad loans. You should read it.

[@generatordoc]

No, utility distribution would be in the pervue of the local citizens. Electrical distribution is often private companies or local coops. When municipalities start generating power, it becomes more expensive by default. Water utilities work best as local coops as government utilities are inherently more expensive. Sewer systems operate best as coops as well.

[@FletchforFreedom]

@niclasjt As for the comparison to Europe, the poverty level for a family of 4 in the US is set at $22,350. The average living standard in the EU (admittedly a proxy for Europe) is $34,000; the average living standard in the US is $48,100. These figures are all pre-tax, BTW, albeit the US poor aren't paying any. After tax, the US figure would be $35,113 and the EU figure would be $19,720. Not completely clean, but indicative...

[@berictzepeshku3424]

"don't you profit from the roads, income and businesses around you?" yes of course that's why i don't mind paying my taxes even if i had to pay up to 30% of my income i would not mind as long as the money is spend on useful services for people not wars or bailouts. what i don't understand is how can you advocate selfishness when you yourself based on that quoted statement are favoring social cohesion (as opposed to individualism).

[@FletchforFreedom]

@mistersmith6000 I haven't "written off the whole of modern Japan" in any way. In fact, the collapse would have happened much sooner and far deeper were it not for the cultural aspects behind Japan's much higher savings rate. There's noting "easy" about the analysis. The reasons I have provided for Japan's "success" and "failure" come directly FROM actual research.

[@Myutoobtxtoob]

I understand Friedman and wish it were so, but what Friedman says works only in a perfect world. Our Founding Fathers knew as much.

[@halloranedward]

@FriedmanPinochet The military and prisons do not produce any thing and so can not be an engine of growth. we do run on state sponsored socialism (there is no such thing as state sponsored capitalism,that's an oxymoron) the government controls prices through things like subsidies,bailouts,tax incentives, market orders and payroll tax. It is no different than having state monopolies.We are a fascist economy.

[@FletchforFreedom]

@pvisserandorra Actually YOUR contribution is beside the point. I have not argued that anyone should not have the right to implement whatever system the people see fit to embrace. That has no bearing on the historical events that took place, as such, or the viability of any such system. People may vote for Marxism as often as they like; that will never make a debunked economic theory magically viable.

[@evankant5965]

The exact same debate, the exact same arguments found in Bastiat's, "The Broken Window" written in the mid-19th century. It seems that Economic History is progressing in a very slow pace.

[@kcor4]

Or what was true a couple hundred years ago is still true today. Truth doesn't progress or regress; it merely is.

[@m.browne2548]

Agree with both of you but I also feel that these truths are still not being understood and still seem taboo at this time.

[@youtubearchive3668]

Oy vey dont ya know ve invented economics!

[@szczesciejestkoloruczarneg749]

Economics is so hard to understand for so many. To me the hard thing to understand is why is it hard for so many? ://

[@frankk1512]

no one is a destruction of capital for production of capital the other is movement.

[@gibaudrac1]

This guy blows my mind.

[@cerebrobeso9660]

I didn't know Friedman was the Incredible Hulk.

[@gambu4810]

What do you mean about this?

[@cerebrobeso9660]

@@gambu4810 the color seems green

[@durwinpocha2488]

"You tend to think, that you're spending someone else's money and you are in a way. But he's spending yours....." Milton Friedman.

[@Danioton]

Friedman is asserting Say's Law - Growth in the standard of living is due to increases in the ability to produce goods and services that other people are willing to pay for and is not due to consumption itself. Say's Law is often misstated as demand creates its own supply. Anyone can easily look up one of the many English translations of Say's book and find the relevant chapter to read for yourself. Demands are unlimited and spending does not itself create value. To spend one has to produce something of value wanted by someone else willing to exchange their production with you (something facilitated by current/money).

[@krishnanunnimadathil8142]

You mean “supply creates its own demand”, as Say would have put it?

[@bdwWilliams-y7q]

so if no body wanted some thing then why would anybody supply it

[@ericjeon4901]

his argument is very persuasive as it focuses on the value of freedom for citizens

[@PFB1994]

Unfortunately decades of facts won't change their faith in Friedman's ideas.

[@thomasjgallagher924]

Yeah this hasn't stood the test of time, has it?

[@berictzepeshku3424]

as a simple example - deciding to become an artist or a professional athlete is practically economic suicide in a country like the US in which the safety net is so threadbare. yet millions of people choose to go into these professions all the time knowing full well that the probability of doing that for a living full time is very low. they do it because they enjoy doing the work

[@pioneertech-w5o]

one of Keynes's biggest ideas was that government pay off debt during times of prosperity. Unfortunately, the most fundamental oversight that Keynes had was that the nature of government is not to shrink itself, but to grow itself. A government that has access to the ability to create money will never shrink, nor will it never permanently reduce its debt, regardless of the relative prosperity of the economy

[@user-ze3sg6ix1u]

THANK YOU, no idea how he, or any economist can ignore that people only do what they're INCENTIVIZED TO. When the govt is going into debt with other people's money why the fuck would they care about being responsible?

[@felixchanthapanya2912]

The EU makes me really sad.

[@franticamber]

No one---and I mean NO ONE---articulates the principles of free market economics better than Dr. Milton Friedman. I MISS HIM!!!

[@sandal_thong8631]

I have several economics books by John Kenneth Galbraith, which I think are excellent.

[@Renato4004]

He actually makes a case for direct democracy and small communities goods and serivces. Something that occurrs in Switzerland. The people from that community have the right to vote where to spend the money and how, they would first arrange meetings as it is done in several places, something like the common expenses and then decide the outcome of their spending. Switzerland wouldn't be switzerland only because of their free market, their direct democracy and their direct decision of the laws and public spending is key.

[@zubstep]

To add to your point, the concept described by Friedman here is subsidiarity. You can have subsidiarity without direct democracy, but it seems much more likely to be in practice with direct democracy than without it.

[@BygoneT]

Yeah but direct democracy is a suicidal enterprise if people don't care about politics and factual data. People also tend to get greedy about having more "Freedoms". I don't think it would work in large scale and especially in Murica.

[@sungod9797]

Direct democracy leads to mob rule.

[@GhostSamaritan]

@@sungod9797 How? If anything, representative democracy leads to a mob rule. A bottom-up approach to direct democracy would be superior (i.e. a city has more influence over itself than the state, a state has more influence over itself than the nation, etc.)

[@DCLNick]

@diurdi I agree with the theory but I'd like to see everyone pursue their goals on an even playing field. I'm not sure it always works that way in practice. I include profit because it tends to accumulate the resource of money towards those that are in the position to profit i.e. existing higher socio-economic groups, and those with money have easier access to resources to pursue their goals. I don't believe the most wealthy are always the most worthy, work the hardest or are the most creative.

[@burhanjohncena]

The government should not involve itself with economic activity too much, but at least, the government should provide mechanisms to reduce pollution emissions and provide policing and defense.

[@JordanSumberg]

You are the most reasonable person in all of politics and modern discourse.

[@selfishcapitalist3523]

Yes

[@Lexrezende]

Economy should try to become a science again and stop being an ideology, a religion. Economy should substitute homo economicus for homo sapiens and become a serious area, not the hilarious and pathetic bullshit it became.

[@jackbrady9738]

government should: 1. long long term medical research (that free market wouldnt do cuz too risky) 2. defence 3. justice

[@jamesedmonds5693]

My Boss who installs carpet has been charging the same price for 20 years. His only pay increases comes from accepting more work. We were talking to a guy once who owned some rentals who said he just paid some mexicans to install carpet for him and their prices couldnt be beat, then Lonnie told him what he charged per square yard and the owner said he them twice as much. Then lonnie told him about the guarentees he offers, which the mexicans didnt.

[@soumyabhattacharjee6442]

I like his propensity to look at logical extremes (though I don't agree with a lot of his ideas). I tend to look at logical extremes as well, it's an immediate way of judging a logic. My friends hate it when I do that. They confuse it with a straw man 😑

[@adamhammond9985]

Same thing happens to me. It's a formal argument known as reductio ad absurdum. People think it's appealing to extremes but it is not. www.logicallyfallacious.com/tools/lp/Bo/LogicalFallacies/30/Appeal-to-Extremes

[@tiendoan1333]

@@adamhammond9985 You can commit a fallacy but still have a correct conclusion

[@gabbar51ngh]

@@tiendoan1333 he didn't commit a fallacy. When your inherent statement or argument itself is flawed from the very beginning then it's good way to show how ineffective it is by expanding it to show it's not producing any results.

[@RedPillGrimReaper]

True. What you’re talking about is reductio ad absurdum, and the reason people think it’s a logical fallacy is because people have use logical fallacies to make it work most of the time. But if you’re using it while maintaining the framework of the argument, it does not necessarily have to be a strawman

[@SilvanoJulio]

This is awsome. I was libertarian during my entire life, in a instinctively way, and I didn't know it. I didn't know this way of thinking existed and It had strong fundations. I am very impresed. I always was the special guy who was born very poor but I always thought as a rich man, even when I was a kid. I didn't like my neiborhood, the way poor people acted, their habits, I wanted to be different. For the past 16 years and currently, here in Argentina, a socialist goverment created millons of poor people that depend on the govemernt help to live. Then they use poor pleople for the reelection, and so on. Now, I am very very well economically thanks to my own effort and I have to pay too much taxes to affort the rest of the poor people that is not able to produce any goods or service. All those theories are present here in Argentina

[@shybandit521]

Most people are instinctively libertarian. Most have to be trained either through education (communist teachers) or through daily life giving you a mindset (I'm poor so I'll always be poor) to become anything else. It's human nature to buy and sell, people always want to sacrifice as little as possible to get something, and gain as much as possible from a sacrifice, and it always hurts on an instinctual level when what you gain from a sacrifice is taken away. For example, no matter how necessary a good road may be to get your bakery more business, it feels like you baked the bread for nothing when you lost a significant portion of your profits on that sale to a government who you barely feel the effects of.

[@gabbar51ngh]

Almost everyone is an individualist when they realise Their Freedom is violated. You can find homosexual socialists suddenly talking like Libertarians when it comes to government banning homosexuality. Individualism Trumps collectivist ideology.

[@sandal_thong8631]

Economics is not science, but rather propaganda to justify policies that keep wealth in the hands of a few.

[@sakarikaristo4976]

Something like that but not quite. I have tried very hard to imagine what would it be like if businesses saw a lower rate of return on capital employed tolerable. Should that improve workers’ salaries and tilt the income distribution towards more ”fairness” (definition needed)? Or should it lead to efficiency? Or less spending and investment, meaning less employment? It’s not simple to find a balance where workers win and businesses and business owners lose, and are content with this outcome such that it would be stable.

[@sandal_thong8631]

@@sakarikaristo4976 With regard to business the idea I'm currently mulling over for the last couple months is that people are promoted to their level of incompetence. That is, if they do well at their job (and the corporation is big enough to allow it), they might be offered a promotion to a position in which they may or may not be suitable based on the requirements and their talents. If they succeed, they get another promotion. If they don't then they're at the level of their incompetence. An alternative is the Dilbert Principle based on the comic strip. The author states that bad engineers are promoted to management to get them out of the way of the people doing the work. So far, I'm more inclined to believe the former.

[@Griesmer]

"Feds" "loose" $9 Trillion, Do"D" "loose" $2.3 Trillion on just one occasion

[@Mandibil]

Government spending is always the broken window. Friedman apparnetly coludnt let that one go

[@elsiegel84]

The fundamental fallacy here is that the government taxes to spend, whereas the opposite is true. The government must spend dollars into existence before they can ever be taxed, and before they can ever be exchanged for bonds. Any notion to the contrary defies logic.

[@hermitoldguy6312]

Govt could levy taxes in wheat, rather than dollars.

[@elsiegel84]

@@hermitoldguy6312 Of course they could and often did under feudalism. Under capitalism only money counts.

[@sandal_thong8631]

Nonsense.

[@gobbly1337]

And 35 years later we have more goods and services than we know what to do with, and our economy sucks.

[@Kevin-rs6cr]

The principal fallacy is supply-side economics. Giving the super-rich giant tax taxes cuts does not lead to greater investment by the rich it leads to greater savings. One must understand the very important difference between investment in economic terms and investment in financial terms or savings. When one buys a share of stock in a company, or any other existing capital asset, that is not investment in economic terms, that is savings. Supply only increases when new capital is created not when the ownership of existing capital transfers from one person to another. There is already a significant tax advantage to economic investment. When a company takes its profits and reinvests them by hiring people or purchasing capital equipment in order to expand production those expenses are 100% tax-deductible over time. When top marginal personal and corporate income, capital gains, and dividend tax rates are lowered the cost of recognizing profits and using those profits to purchase existing capital becomes more favorable relative to making new investments. It should be clear that this policy is a rent-seeking policy on the part of the super-rich and does nothing to expand the economy. Furthermore the idea that tax revenues are simply frittered away is nonsense. The government makes important investments in education, infrastructure, and basic R&D which would simply not occur if left completely to the private sector. Taxing wealth which is being hoarded by the super-rich and directing it towards necessary public investment can reasonably expected to be an expansionary policy.

[@ModernGameArmy]

Kevin Neeland supply side economics is not a thing. In no economic text book will you find such a phrase

[@Kevin-rs6cr]

en.wikipedia.org/wiki/Supply-side_economics

[@ModernGameArmy]

"In no economic text book" Of course there is a page on Wikipedia

[@Kevin-rs6cr]

I am not sure what your point is. It is covered in the following textbook: www.amazon.com/Principles-Economics-7th-Mankiws/dp/128516587X/ref=sr_1_2?ie=UTF8&qid=1502594262&sr=8-2&keywords=economics+textbook It literally took me 2 minutes to find an economics textbook which discusses supply-side economics.

[@ModernGameArmy]

I can't find anywhere on that page where it mentions anything about supply side economics.

[@khurmiful]

The guy makes a lot of sense, most of the times

[@brekinla]

I have yet to hear the exception, could you enlighten us?

[@gabbar51ngh]

@@brekinla well he wanted fed to let money printer go brr to avoid great depression. Milton's a monetarist. Look up Hayek's views on Milton.

[@cm770011]

2:15 yep

[@UCSDEngineerDoctor]

When did you spend your time in SouthEast Asia? Were you born there in the early 60's? Did you spend time there from 1975 through 1980 - which was VIETNAM's killing fields? You know my entire family was incarcerated in a CHINESE/RUSSIAN concentration labor camps for 5 years, some of my family members spent 10 years in JAIL. How old are you? What kind of experience do you have?

[@dewok2706]

It's a damn shame your "entire family" got away. We'd have one less spawn of morons in america.

[@Enedrapvp]

Name one starving person in a capitalist system. I can name millions in socialist and communist systems. Your beliefs are fallacy.

[@haydenf4562]

Look up gadaffi Libya and South Yemen. They thrive until the cia overthrows them

[@Lexrezende]

Socialism and capitalism are both shit. We souldn't have to choose between one of them (and we don't). Only stupid people believe that we have to choose one or the other. Both are idiotic, unsustainable and self destructive faiths based on fallacies. Capitalism deny the role of collective, the collective needs of humans, mainly the need of stability and security. Socialism denies the individual needs. Both confuse infinite raise in wealth and comfort with life quality enhancement. Both produce more pollution than the planet is capable of processing. Both extract more resources than the planet is able to replenish. Both have a blind faith in exponentially technological development without considering its risks and the impossibility of taking countermeasures when things change so rapidly that we can't understand and predict problems. Both are materialistic and destroys transcendental values that are important to people and their mental health. It's unbelievable that people are still trying to force XIX century dogmas in the XXI century world.

[@Lexrezende]

I love how people that create the most fallacious theory in history still have the poker face to tell other people they are using fallacies lol

[@WJack97224]

Exactly. This fella admitted taxes are theft, which is sin, and so he is attempting to justify sin. Pure lunacy. Thank you Milton for setting this fella straight. Thanks for posting this video. Good on ya mate.

[@michaelkilcommons57]

Milton Friedman was a Nobel Prize winning economist, but his neo-liberal economic policies did not work so well. Now we have vast concentrations of wealth, so we have luxury housing being built for millionaires while most struggle and many go homeless.

[@michaelkilcommons57]

@@victoneter You are probably the most ignorant person who ever responded to a comment I made. I am not in a position to know what the government is spending and for what purposes, and neither are you. You must be listening to some neo-liberal propagandist like Larry Kudlow. I do know that trillions are being spent on the military and around a trillion or more has been spent on bank bailouts. You have fallen for a bait and switch scam. The free-market conservatives promised free-markets and prosperity and what was delivered was the dystopian nightmare of poverty, homelessness, drug abuse, etc. that we are living through. We were both victims of a con job my friend, the only difference is that you have not woken up to the fact that we were hoodwinked.

[@michaelkilcommons57]

If free-market capitalism is so great, why is it that China has modern new infrastructure and a rising standard of living for its people, and we have rising homelessness and poverty? I remember a time when it would be unusual to find people living in the streets. Every time I see the Russians blowing up billions of dollars of ammunition and war material and I think of the problems this country is facing at home, I hate the people who are in charge of this country more and more.

[@michaelkilcommons57]

The people who control the country, billionaires, psychopaths and pedophiles, did not use their newfound economic freedom from high taxes and deregulation to invest in productivity. As a matter of fact, they shipped the productive elements of the economy to China where they could get a better return on their money. They impoverished the country. Everything Milton Friedman said is a lie.

[@firstlast9916]

@@michaelkilcommons57chine was fully communist until 1978. They freed trade (Especially international trade) back in 1978. And now they will be surpassing the US in gdp in about a year or two. Before 1978, the had practically zero gdp.

[@luvbotany]

Its hard to imagine local governments or private biz developing the Interstate system, the internet, NASA, CDC, EPA, SEC, Military, the Fed,.... while the government isnt good at everything, in many things the government does makes life for the vast majority of the people of the USA better. Thus the argument that stealing money for taxes is bad doesnt hold water. The big topic of the day is healthcare but if you look around the world, big government healthcare is by far better for the people, empirically far better result. Additionally who pays 40%? certainly not the rich... only us working smucks pay that which is a whole nuther problem. And additionally additionally, that whole 'if 40 then why not 98%' doesnt work because what about 0% huh? Milty is the master of 'winning' an argument with the absurd notion but not offering real truth. Certainly there is a balance. Funny how when you travel the world, the countries with the highest taxation has the highest standard of living and the highest satisfaction ratings. That cant be a coincidence...

[@mikeblain9973]

Friedman was not really arguing for a particular tax rate. He was only refuting the questioner's point that the gov employees buy stuff which benefits the rest of us. Friedman was just saying everybody would be better of by maximizing productive jobs, and minimizing gov jobs. He was not saying gov is unnecessary.

[@luvbotany]

Mike Blain Everyone is only better off by maximizing productive jobs and minimizing gov jobs if society is actually better off, let me explain. Privatizing the prison system has been a disaster. Incompetence in the public sector is no justification for privatization because maybe the job is just too big and hard for private monies, like NASA and FEMA. Mistakes happens but gov learns from its mistakes much better than private companies as they are held morally as well as fiscally responsible whereas private companies can come and go without any consequences with people holding big bags of money, in privatizing profits and socializing losses. Freedom industries in WV polluting a river is a typical example that is repeated daily. Just the fact that people agree that gov play a role in many aspects of life tells me that its not about gov/no gov but about where to draw the lines. If your rich vs poor can dramatically change where you think that line ought to be drawn. This also tells me that profits ought to be taxed much heavier until such a time whereas privatizing profits and socializing losses is not the norm but the exception to pay for the inevitable...

[@mikeblain9973]

luvbotany I think most people agree that socializing losses is a bad idea, and Friedman would have definitely have agreed. Yes, the prison system should be handled by gov. But those things have nothing to do with Friedman's point in this video. So how fiscally responsible are the SEC? When they make mistakes (like Madoff) it does not cost them anything. How is anyone morally responsible for invading a country under false pretense? They only have to bluff their way through to the end of their elected term, and no consequences.

[@mikebetts2046]

Hey luvbotany, I think you are dead wrong about "working smucks" paying 40%. I know of nobody making less than around 200k + that pays the 40% marginal rate. I just crossed the 100k line and the rich still pay a higher rate than I do (at least the working rich; doctors, lawyers, company execs, etc). Too many people live under the delusion that the poor and middle class carry the heaviest tax burden. I for one call BS on that.

[@mikebetts2046]

Furthermore, your comment about higher taxes and standard of living is not as logical as you think. I could just as easily state that the higher standard of living allows higher taxes while you seem to think the higher taxes caused the higher standard of living. If you are correct then why not crank everyones tax rate up to around 75% then? Just think of how great it would be then?

[@88CrazyLegs88]

The original argument wasn't all that logical, but Milton's rebuttal is equally fallacious. He ASSUMES that the government worker is not, or can not, in fact create anything for the economy. But the opposite is true. Look at Boeing. A corporation that has produced, essentially, modern flight. Pay homage to the Wright brothers all you like, it was Boeing who produced what we see today and in the last century of modern air travel. And this just scratches the surface. We could go into the theory that advanced flight has ushered in an era of relative peace compared to what might have come about. Or any of the other corporations who benefited from the government either directly or indirectly and revolutionized the world. Like Microsoft, for example bringing the modern home computer. The list is substantial.

[@mikeblain9973]

So you are saying commercial enterprises are productive. Yes, and Friedman was saying government is not productive. It sounds like you are making the same case as him, except for your first sentence. Do you want to clarify?

[@88CrazyLegs88]

Who do you think subsidized Boeing? The government. The Pentagon funding tons of research into what is our now modern day technological civilization. MIT was at the heart of it. Milton is just flat wrong. The only argument he could make is that the free market MIGHT have done the same thing but cheaper. But, I doubt he would tread that far.

[@mikeblain9973]

88CrazyLegs88 Gov involvement generally stifles innovation. Surely you are not saying we would not have had those innovations without gov?

[@88CrazyLegs88]

Mike Blain What you're saying here is fairly common among Libertarians and of course Neocons, but it's just untrue. Gov stifles innovation CAN be true, and it can surely be false. Look at Nuclear power plants for instance. Without the Manhattan Project there never would be this alternative energy. But, the government DID stifle progress on specific types of nuclear power that uses Thorium instead of Uranium. Thorium cannot be weaponized, so no funding. That was bad, in my opinion. So, it can be, just like many things in the world, good or bad.

[@mikeblain9973]

88CrazyLegs88 Government is not a source of funds, they can only channel taxpayer funds. They might postpone taxpayers having to pay, by borrowing then taxing later. Maybe thorium will prove viable, maybe not. Government cannot make it viable if it isn't.

[@Kiwi76RamenNoodle]

em·pire noun \ˈem-ˌpī(-ə)r\ 1a (1) : a major political unit having a territory of great extent or a number of territories or peoples under a single sovereign authority; especially : one having an emperor as chief of state (2) : the territory of such a political unit b : something resembling a political empire; especially : an extensive territory or enterprise under single domination or control 2: imperial sovereignty, rule, or dominion Enlighten us as to how the US fits that definition.

[@Kiwi76RamenNoodle]

Bingo. The idea of immutable inalienable rights is completely lost on people who live in countries like the UK or where I live, New Zealand, where they can create and delete rights overnight by a whim of the current parliament of the day simply because something is trendy or fashionable.

[@PFJung]

So you're saying that federal administration of social security for 300 million people would be just as efficient as state administration for only 50 million? I am sorry, but that is not how the world works. That is how Bureaucracy works.

[@chica476]

Which ones?

[@silentmajor]

Are there anymore Milton Friedman's around? :(

[@Kiwi76RamenNoodle]

Prisoners of the Monarchy. In other words - Brits, those who still live in England.

[@PFJung]

Ever heard of globalization? Try South Korea, Hong Kong, or Japan for starters.

[@nathanneiman]

You don't want to pay for the road, you don't want to pay for the police, you don't want to pay for the justice, you don't want to pay for the public education, you don't want to pay for the street lighting, you don't want to pay for the city cleaning, for the garbage collection and disposal, you don't want to pay for the water and sewage treatment, you don't want to pay for the Army, you don't want to pay for the Congress, you don't want to pay for the firefighters, for the environmental protection agency, you don't want to pay nothing because you think you don't need nothing. All you think you need is to be more selfish and richer. You call Socialism the payment for these public services, but in Socialism you don't have to pay nothing for that, it's all free.

[@Mrcamhi]

Nathan Neiman Lol, do you understand anything about political ideologies? Seems not... Claiming the right doesn't wan't to pay anything to the government for those kind of services is so moronic...

[@Hatchet-Jack]

Totally agree. I think the American ppl are ready for the truth. A politician that is able to explain things the way MF does, would be very popular, imo.

[@benmeisel5660]

Named by dog Milton after him

[@carlosgarcia-jz3dq]

the einstein of ecomonics, I love how he cuts through all the BS and gets to the ultimate RESULTS. Capitalism has everyone living better than communism, period. Free people do a better job than a tyrannical government, period. My favorite Freeman quote 'governments should only create policy based on RESULTS, never based on intentions.

[@thatsthewayitgoes9]

This segment by audience member and Milton Friedman is, in my opinion, brilliant & true and should be taught in every grade & High School & college

[@biffalobull2335]

He can tell you how foolish your position is…. And you’ll thank him for it

[@drummah107]

wow. excellent point. I was not familiar with either corporatism or hypercapitalism, and because of that I struggled to explain to my professors why capitalism is a more efficient system than they believe it to be (for all of the same reasons that Friedman articulated).

[@frankvonfrauner]

How much should a loaf of bread cost? A question no socialist can answer

[@anthonyesposito7]

​@frankvonfrauner pretty sure marx addressed this. Also, as a side note, one of the interesting things arises as a result of "capitalist logic" is that when capitalists over produce - which they often do and that's fine - in and of itself, but what happens as a result of that over production of good is that the in order to keep the perception of artificial alive they will often destroy there existing stock of whatever it may be like cars, or any other consumer items, the most horrible being the destruction of food rather than giving it away. After all they can't sell it anyway. The funny thing is, capitalists would actually prefer to take a lost than to give away surplus goods because it will affect the price of the existing stock. Capitalism and its flawed logic of which this is just one of many examples should have been abolished long ago and will given enough time. Time to move on to production for need, not for profit. It's illogical to say otherwise.

[@lavabeard5939]

Yes. You are right. But that is NOT how government spending can be applied effectively. Like Friedman said, there are some things that the government does better than the public. Defense, for example is one everyone agrees on. There is also Keynesianism which is effective if used correctly. For example, during a recession the government can fund infrastructure or scientific projects or participate in a war if that is the unfortunate case. After the economy recovers, spending can be reigned in.

[@alexw2689]

I would argue that comparing the laws of economics to the laws of physics is almost talking cross purpose. Economics is foundationally a social science. In social sciences, there are exceptions to rules, but the rules are excellent guidelines. Just like in natural sciences, when the rules do not apply, they change. For example, look at the Keynesian Government Multiplier. It's great in theory, but in reality, we see crowding out, so this theory needs adjusted or reevaluated.

[@jamesedmonds5693]

Look at some third world countries, in thier mountains, Look how they farm the steeps, we dont do that in america hardly at all, I have seen a couple hills being farmed but usually not int he same ways, Trees and shrubs dont even usually grow well in places like this, but with labor and some simple technics we could add 100's of millions acres of farmland, instead we just let out land continue to erode from the mountains and get washed out to sea.

[@jamesedmonds5693]

it can, it could probally support 10's of billions if people would use the resources right. Look at america, 85% of the people live in metro areas, most of america is in fact uninhabited. In Alaska alone the people own only 1% of the land while gov owns the rest. The land is just sitting there unused in most parts. It could and would support human habitation of millions of small scale farms, but the government wants you in the cities, that way your easier to control.

[@jackmcslay]

How about car industries with robots that allow more efficient production? Or farms that are now more efficient due to new machinery? You just happened to pick two of the worst examples possible, oil and mineral extraction are heavily controlled by government. Not to mention that anything subsidized by tax money will distort the market and make people less willing to pay for it. The more a government spends on a sector, it always leads to the market spending less on that same sector.

[@gobbly1337]

I also can't help but point out that as nations have industrialized, their birth rates have traditionally declined. Excess resources is certainly a factor in population, but it is by no means the determining factor, and none of that supports a claim that capitalism itself creates efficiency in resource production. I know people in oil and mineral extraction and it seems that much of it is driven by sciences developed at universities subsidized by tax dollars.

[@gobbly1337]

I cannot agree with you on the causality of capitalism to an increase of resources. Though I will admit it consumes them with reckless abandon. I also disagree with your assertion of income per household. In fact, that income per household has remained flat while households transitioned from single to dual incomes. And all of that is really besides the point of median wages being stagnant while cost of living increases. Perhaps I should have defined long time, I'm talking 30-40 years, not 200.

[@williamvasquez8167]

i didnt say farms you did. See you were thinking farms, I wasnt. But if you want to talk about Farmers sure.. they are by law suppose to pay $7.25 because the Fed Govt mandates it. So Americans are expensive to hire. Now if I am an out of work American and i knew if i could work a farm for say $5 an hour, I would take it. But again, Farmer can get in trouble with hiring an American with those prices. this is caused by the govt. They made this happen. Minimum wage hurts the poor.

[@freedomunrestricted]

It is simple supply and demand, as long as there is a large pool of people willing to work under the conditions you described the farmer does not have to choose to raise wages. But it is not just farm jobs that illegal immigrants are working. There is also a lot in service industry and oilfield jobs. And while it might be long hours and tough work in the oil field. Even if they are getting paid under the table it isn't chump change I promise you that.

[@freedomunrestricted]

I guess you must have a different view of society versus the system. To me society is every day people helping each other out when times are rough. The system is the failing policies we currently suffer from. I know plenty of people who prefer to sit around unemployed and game the system. And many more who believe certain jobs are below their dignity. There is a reason 10's of millions of immigrants come to this country to work jobs people here refuse to do.

[@AnthonyMazzarella]

1 society does not do any think groups cannot DO any action is caused by volition and volition by reason and consciousness only individuals are conscious. There for only individuals can do thinks. Your statement is called a stolen concept fallacy 2 demand goes downs when cost increases. So when government taxes and creates regulations it makes it more costly to higher. It makes wages go down and goods more expensive. In short it Bottlenecks the system.

[@jwidja]

Search on youtube Stefan Molyneux or Freedomain radio, if you're interested in the philosophy of anarchists or anarcho-capitalists, Stef has a great debate with a socialist. The title is Stefan Molyneux versus Vladmir Safatle 'The function of the state in society'. It's a long debate, just under 2 hours, but I promise, it is fascinating and will change the way you view government and the world

[@TheMax161]

Japan chose to place their war industries within civilian population centers. the military commanders made that decision, and they chose to kill their own people because of it. When the atomic bombs were dropped, and the Emperor of Japan saw how the civilians suffered the most, he decided on surrender. US 'aggression' was against the Japanese military, who used the population as a shield. Likewise, what Al-Qaeda calls US 'aggression' is simply the growth of trade to the Middle East.

[@TheMax161]

Prior to each atomic bomb drop, leaflets were dropped in Hiroshima and Nagasaki for 10 days prior to the bombings, warning of the use of a powerful new bomb and telling the citizens to evacuate. these warnings were dropped in all of the primary and secondary target cities, all without naming the date or the actual targets. No one had to die, they chose to remain. Japan already had plans to use the civilians to defend the home islands, estimates were 1 million dead if invaded.

[@redunzl5]

I'm sorry to have bored you. I'm also sorry that you could not find even one news article "that you have read in the past year" that would have supported your position. I do follow the news. That is why I do not see the logic of your stated position. The subprime crisis was caused by unrestrained greed in the financial sector, not by governmental fiat. You obviously need to broaden your perspective. It seems that the political propaganda you previously spoke of is what largely informs you.

[@redunzl5]

SEC. 801. This title may be cited as the "Community Reinvestment Act of 1977". [Codified to 12 U.S.C. 2901 note] SEC. 802. CONGRESSIONAL AND STATEMENT OF PURPOSE. (a) The Congress finds that-- (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business;

[@redunzl5]

The shift toward riskier mortgages and private label MBS distribution occurred as financial institutions sought to maintain earnings levels that had been elevated during 2001-2003 by an unprecedented refinancing boom due to historically low interest rates. Earnings depended on volume, so maintaining elevated earnings levels. IT WAS LAX OVERSIGHT OF INVESTMENT BANKS, NOT ONEROUS REGULATION THAT CAUSED THE CRISIS. DO SOME RESEARCH INSTEAD OF NAME CALLING.

[@redunzl5]

Investment bank securitizers were more willing to securitize risky loans because they generally retained minimal risk. Whereas the GSE's guaranteed the performance of their MBS's, private securitizers generally did not, and might only retain a thin slice of risk.[34] Often, banks would offload this risk to insurance companies or other counterparties through credit default swaps, making their actual risk exposures extremely difficult for investors and creditors to discern.[35]

[@redunzl5]

As mortgage originators began to distribute more and more of their loans through private label MBS's, GSE's lost the ability to monitor and control mortgage originators. Competition between the GSEs and private securitizers for loans further undermined GSEs power and strengthened mortgage originators. This contributed to a decline in underwriting standards and was a major cause of the financial crisis.[34]

[@learn905]

government slap high ratings on junk so consumers didnt "have" to look them selves and know what they were getting in to didnt the government act like the deregulated but only did so in the areas that could be considered gambling but didnt do so on wages or real investment the and how do monoplies exist its one of two ways either they compete with such reasonable prices no one can compete and i cant complain about that or the government gave them a monopoly

[@muckypup595]

Fannie Mae and Freddie Mac are government controlled and regulated entities that guarantee loans that are done through mortgage companies and banks based on set criteria. They repackage and sell those loans to the market. It gets more complex from there with the rating agencies etc, which are all government regulated. Think beyond 2 degrees of separation and things get clearer.

[@Willsturd]

Vanderbilt Railroads had lots of competition from trucks later on. Carnegie Steel or Standard Oil did not have a full monopoly especially once people got enough investors to actually compete with them. Read the history books. These monopoly barely lasted. The only monopoly that lasted for more than 20 years without government intervention is the NYSE before 20th century, and the international diamond company right now.

[@Willsturd]

You need to understand that in the entire time Capitalism has been around, mortages have been the safest investments in the entire world. Then all of a sudden we have a housing bubble after hundreds of years of steady housing growth? Don't be a fool and blame it on free-market economist. Look deeper into the problem. Seconldy monopolies are extremely hard to get without government help. Name the "monopolies" you speak of.

[@PFB1994]

Laws have been created, because of things like Love Canal and rivers on fire in Cleveland, and DDT killing wildlife, etc. etc. These things weren't put in place to stop businesses, they were put in place beacuse business showed the dangers prior to a law. I would argue we would be better off if BP had been tightly regulated and prevented from using shabby drilling techniques, libertarians say we are better off with a massive oil spill and BP out of business.

[@shepd3]

Friedman would say you let people be until they make a mistake, and then you have them recompense the mistake fully. In a libertarian world BP would almost certainly have lost everything and would no longer exist as the financial cost of their egregious behaviour is so financially devastating. Their loss would serve as a reminder to the next lackadaisical polluter that you not only don't get away from it--you, the CEO who approved it, rot in debtors prison for life. There is no fear in paper.

[@PFB1994]

And because the BP Oil spill had the government fail at its duty, doesn't mean that BP should have been allowed to happen. It means the government isn't doing the job of regulating industry and protecting the people. Friedman's theories would tell you - leave BP alone, for they would never allow such a dangerous oil spill to happen, because the oil is what makes them their profit.

[@shepd3]

Interesting. So you really believe printing words on paper stops people from polluting others property (I'm thinking no but you'll have another point to make)? And you really believe that the court is going to protect you from pollution (You might say yes to this until you read that the law, and the courts enforcing it, are why BP doesn't need to clean up oil spill past a certain monetary limitation)? Let's get the gun out of the room and see how we can resolve this debate without it.

[@PFB1994]

I am not missing anything. The question is whether it is better to regulate and not allow free toxic waste pollution in the first place or allow the toxic waste to be dumped and try to settle it in court procedures on what the damage was to the injured parties(provided the injured parties have access to similar quality of lawyers that the corporation doing the polluting has). But either way you are going to have the government involved.

[@shepd3]

Assuming a free society, flame throwers and missile launchers hurt nobody (well, assuming they are not fired at someone else's property). You may dump toxic waste on your property as you wish, so long as you damage nobody else's. You may hunt bald eagles as long as they land on your property unclaimed. You may burn tires on your private property so long as the toxic fumes are contained to your property. What you are missing is that burning tires and toxic waste often damage other's property.

[@PFB1994]

Even in this video, Friedman says there is a role for some government. To say taxation at 40% is bad, because taxation that was 90 or 100% would be terrible is simply false logic. Does that mean taxation at 0% is the best? What country has ever operated at 0% taxation and how would such a nation pay for police, military, roads, sewage, dams, forests, parks, fire departments, education...

[@PFB1994]

Is the CRA the only talking point that Friedman supporters have for less government? What about the repeal of glass steagal - less regulation on banks. The decision to Not regulate the derivatives market that led to huge risk taking by the banks. What other regulations do you hate - the speed limit? the Clean Air Act? Imagine the transportation system without federal funding of roads and bridges. Would we compete with nations that do spend tax money on infrastructure?

[@shepd3]

If you think we have anything near a free market today you are seriously deluding yourself. Not that it's not free-er than many other countries, I'll give you that. But truly free? Can I buy lead painted toys? Can I buy a playground made from treated lumber? Can I buy an assault rifle in NY? Can I buy a car with no safety features? Free market we certainly do not have, nor have we ever.

[@MillionthUsername]

My comments have nothing to do with politics per se. It's an economic question. It just so happens that 100% tax or anything close is approaching pure communism. Why? Because the state effectively takes over production. This is not about the role of gov't, just the economic effect on production by the taking of capital away from producers and handing it over to the state. I didn't say it's communist at 40%, but to argue that taxation doesn't effect production is to argue against capitalism.

[@MillionthUsername]

So it's a question of who has control of production. The more the state does, the less the producers do, and the less useful production there will be. This dynamic is the same at any level because production is either in one hand or the other. One is capable, the other much less. To argue against this is to argue for communism, saying that it doesn't matter if the state controls production. At lower levels, the ill effects are less because producers are hampered but not crushed.

[@MillionthUsername]

The premise in the question is that taking 40% doesn't harm production because that taken money then gets spent. The fallacy is supposing this spending has the same effect as the spending that the producers would have done. But this is false because the producers would spend more on production while the takers spend it more on consumption. This holds true at any level because it's the nature of the act itself. Production is the engine of prosperity, not consumption.

[@MillionthUsername]

False analogy. This medication is deemed to be harmful outside a certain range. But the harm done to production through theft is linear. A little theft does a little harm, while a great deal of theft does a great deal of harm, whereas a little aspirin should be beneficial while a great deal is harmful. If you're saying that theft is to production like aspirin is to a headache, then please make THAT argument specifically. The questioner here did not. Friedman addressed what he was asked.

[@MillionthUsername]

It's not a slippery slope fallacy. It's a logical extension of the questioner's premise. If someone is making an argument that stealing 40% of the producer's wealth does not harm production, then it FOLLOWS that stealing 100% would not harm production. We can see the questioner's fallacy by taking his own logic further. Slippery slope fallacy, OTOH, refers to drawing a conclusion which does not necessarily follow from the premise logically.

[@Vnam72]

You said I was straw manning MF and to straw man is quote (wiki):- "...to create the illusion of having refuted a proposition by replacing it with a superficially similar yet unequivalent proposition...". I have not refuted (or countered) any of his arguments, of which I agree, nor attempted to refute any make believe arguments of his as I said above. I suggest this conversation is over as, again, you are talking nonsense and it is a waste of my time.

[@Vnam72]

3. To quote MF "it is desirable to have some money spent by government." Read MF's Capitalism and Freedom, he supports basic level of education and defence through a small govt. 4. No it is quite clear you do not understand me or my comments. I agree with MF in this vid 100%. How you think my comments show him as a top down statist is beyond me. I do not think he is. You are talking nonsense.

[@Vnam72]

3. "he understood as inherently wasteful"... Incorrect, he said if you're getting your "moneys worth" then fine. That is not "waste". There are some things we get more from through govt. such as defence/army. 4. I find it amusing that 3 people have attacked my argument (which agrees with Friedman) for 3 contradictory reasons. This is what happens when people immediately take to commenting on a question/argument without understanding it.

[@Vnam72]

1. You're making ignorant misrepresentations about my previous statements. Be specific where I made a construct that doesn't exist in reality and where I ignored the subjective valuations of individuals. 2. It seems you do disagree with Friedman as you seem to think that paying someone to do nothing is ok if it's mutually beneficial. Why don't we all just pay each other to do nothing, that would be a much easier life.