Economy, Socialism And Milton Friedman 🔴 Free to Choose Part 4 From Cradle To Grave


after the Second World War New York City
authorities retained rent controls supposedly to help their poorer citizens
the intentions were good this in the Bronx was one result by the 50s the same
authorities were taxing their citizens including those who live in the Bronx
and other devastated areas beyond the East River to subsidize public housing
another idea with good intentions yet poor people are paying for this
subsidized apartments for the well-to-do when government at City or federal level
spends our money to help us strange things happen the idea that government
had to protect us came to be accepted during the terrible years of the
depression capitalism was said to have failed and politicians were looking for
a new approach Franklin Delano Roosevelt was a
candidate for the presidency he was governor of New York State
at the governor’s mansion in Albany he met repeatedly with friends and
colleagues to try to find some way out of the depression the problems of the
day were to be solved by government action and government spending the
measures that FDR and his associates discussed here derived from a long line
of past experience some of the roots of these measures go back to Bismarck’s
Germany at the end of the 19th century the first modern state to institute
old-age pensions and other similar measures on the part of government in
the early 20th century Great Britain followed suit under Lloyd George and
Churchill it too instituted old-age pensions and similar plans these
precursors of the modern welfare state had little effect on practice in the
United States but they did have a very great effect on the intellectuals on the
campus like those who gathered here with FDR the people who met here had little
personal experience of the horrors of the depression but they were confident
that they had the solution in their long discussions as they sat around this
fireplace trying to design programs to meet the problems raised by the worst
depression in the history of the United States they quite naturally drew upon
the ideas that were prevalent at the time the intellectual climate had become
one in which it was taken for granted that government had to play a major role
in solving the problems in providing what came later to be called security
from cradle to grave Roosevelt’s first priority after his
election was to deal with massive unemployment a public works program was
started the government financed projects to build highways bridges and dams the National Recovery administration was
set up to revitalize industry Roosevelt wanted to see America move into a new
era the Social Security Act was passed and other measures followed unemployment
benefits welfare payments distribution of surplus food what these measures of
course came rules regulations and red tape as familiar today as they were
novel then the government bureaucracy began to grow and it’s been growing ever
since this is just a small part of the social
security Empire today their headquarters in Baltimore has 16 rooms this size all
these people are dispensing our money with the best possible intentions but at
what cost in the 50 years since the Albany meetings we have given government
more and more control over our lives in our income in New York State alone these
government buildings house 11,000 bureaucrats administering government
programs that cost New York taxpayers 22 billion dollars at the federal level the
Department of Health Education and Welfare alone has a budget larger than
any government in the world except only Russia and the United States yet these
government measures often do not help the people they are supposed to all
right Richard Brown’s daughter Halima needs constant medical attention she has
a throat defect and has to be connected to a breathing machine so the chill
survived the night it’s expensive treatment and you might expect the
family to qualify for a Medicaid grant no I don’t get it but I’m not eligible
for it I make a few dollars too much and the salary that I make I can’t afford to
really live and save anything is out of the question and I mean I live we live
from payday to payday I mean literally from payday to payday the struggle isn’t
made any easier by the fact that mr. Brown knows that if he gave up his job
as an orderly at the Harlem Hospital he would qualify for a government handout
and he’d be better off financially home estate that’s a section page it’s a
terrible pressure on him but he’s proud of the work that he does here and he’s
strong enough to resist the pressure mr. brown and you’re fully dilated so I’m
here to take you to the delivery room try not to push please we want to have a
nice tell delivery mr. Brown has found out the hard way that welfare programs
Troi and individuals indicator now we’ve considered welfare we went to see if I’d
apply for welfare but we were told that we were only eligible for five dollars a
month and and to receive this five dollars we would have to cash in our son
savings bonds and that that’s not even worth it if I don’t believe in something
for nothing anyway I think a lot of people are capable of working and are
willing to work but it’s it’s just the way it’s set up it’s um the mother and
the children are better off if the husband isn’t working or if the husband
is in fear and this breaks up so many poor families one of the saddest things
is that many of the children whose parents are on welfare will in their
turn end up in the welfare trap when they grow up in this public housing
project in the Bronx New York three-quarters of the families are now
receiving welfare payments well mr. Brown wanted to keep away from this kind
of thing for a very good reason the people who get on welfare lose their
human independence and ceiling of dignity they become subject to the
dictates and whims of their welfare supervisor who can tell them whether
they can live here or there whether they may put in a telephone what they may do
with their lives they’re treated like children not like responsible adults and
they’re trapped in the system maybe a job comes up that looks better than
welfare but they’re afraid to take it because if they lose it after a few
months and maybe six months or nine months before they can get back onto
welfare and as a result this becomes a self-perpetuating cycle rather than
simply a temporary state of affairs things have gone even further elsewhere
this is a human state a public housing project in Manchester England well we’re 3,000 miles away from the
Bronx here but you’d never know it just by looking around it looks as if we’re
at the same place it’s the same kind of flats same kind of massive housing units
decrepit even though they were only built seven or eight years ago vandalism
graffiti the same feeling about the place of people who don’t have a great
deal of Drive and energy because somebody else is taking care of their
day-to-day needs because the state has deprived them of an incentive to find
jobs to become responsible people to be the real supports of themselves and
their families for the past seven years Maureen Ramsey has had to buy food and
clothes for her family out of a government handout for the whole of that
time her husband Steve hasn’t had a job each week he collects what’s known in
Britain is Social Security the government looks after him his wife and
their children but accepting welfare payments means accepting the rules of
those who hand them out my opinion anyway you feel as they own you you know
there’s no other way I put there say I got a job tomorrow because I needed some
well I know that I got to go down there and report it because I couldn’t go into
the job because you’d be looking over your shoulder thinking all the Social
Security is coming in I’m going to be done for it hitched is just dopefish you
can’t fight against them the jobs alone or these days it only covered about 45 a
pound a week they needed help to stamp older you see finish over about nine
pounds so good is he working when he used to get the same thing you know what
I mean I can’t see any sense of course he’s quite right that it may not pay him
to get a job now that’s not his fault and I don’t blame him he’s acting
sensibly and intelligently for his own interest in the interest of his family
it’s a fall of a system which takes away the incentive from them to get a job but
suppose you were cruel and simply took away the welfare overnight cut it off
what would happen he would find a job what kind of a job I don’t know it would
might not be a very nice job it might not be a very attractive job but at some
wage at some level of pay there will always be a job which he could get for
himself it might be also that he would be driven to rely on some private
charity he might have to get soup kitchen helper the equivalent again I’m
not saying that’s desirable or nice or a good thing it isn’t but as a matter of
actual fact as to what would happen there is little doubt that he would find
some way to earn a living the American government is trying to break the
welfare track these people were unemployed
they’re now being trained at the taxpayers expense
it may or may not lead to a real job here we have a vast national welfare
system which is diametrically opposed to everything that America believes on
because America was founded on a work ethic has practiced to work ethic and it
said this is what we want everybody to do the opportunity to hold a job and in
America everyone here has to clock in and do a full day’s work it’s an attempt
to make it seem like a real job we’re saying a job as a part of the American
Way of life and we’re going to help you find a job so that you can get a piece
of the pie you can pay taxes you can become a part of that American dream but
the dream isn’t working schemes like this run under the
government’s comprehensive education and training act seated have a high dropout
rate and many trainees end up back where they begin on welfare the men and women who administer Sita
and similar programs the officials of the Department of Health Education and
Welfare our dedicated people their motives are good their achievements are
not the results of these programs have been disappointing why I believe that
the basic reason is because it is very hard to achieve good objectives through
bad means and the means we have been using are bad in two very different
respects in the first place all of these programs involve some
people spending other people’s money our objectives that are determined by still
a third group of people nobody spends somebody else’s money as
carefully as he spends his own nobody has the same dedication to achieving
somebody else’s objectives that he displays when he pursues his own beyond
this the programs have a insidious effect on the moral fiber of both the
people who administer the programs and the people who are supposedly benefiting
from it for the people who administer it it instills in them a feeling of almost
godlike power for the people who are supposedly benefiting it instills a
feeling of childlike dependence there capacity for personal decision-making
atrophies the result is that the programs involve a misuse of money they
do not achieve the objectives which it was their intention to achieve but far
more important than this they tend to rot rot away the very fabric that holds
a decent society together figure out if you think that’s
overstating the case look what atw found when it made a
special investigation into the spending of the vast funds it administers we just
got the plan from the Public Health Service on reducing unnecessary beds in these reels of tape that record every
payment made every recipient they found evidence that a staggering seven and a
half billion dollars had been lost by fraud waste and abuse in one year doctor’s building contractors hospital
schools welfare recipients everyone had been fraudulently dipping into the pot
and the investigation isn’t over yet the inevitable consequence of having a
huge pot of taxpayers money is that all of us want to get our hands in it you
can be sure that we’ll all be able to find very good reasons why we should be
the ones to spend somebody else’s money somebody or other put up a good case for
spending taxpayers money to subsidize rents in New York City including the
rents of these apartments the people who occupy these apartments pay something
like $200 a month less than the market rent and that subsidy comes out of the
taxes of people most of whom are much poorer than the people who live here
it’s not unusual for this sort of thing to happen when government tries to do
good with our money look at what happened in Chicago for most visitors the immediate
impression is of a rich prosperous bustling city but like every large city in America it
has its problem areas overcrowded slums breeding poverty and crime after World War two one such area
developed in Hyde Park in the 50s clans were drawn up to pull down large areas
of slum building and to rebuild using government funds under an urban renewal
program it was to be a show project replacing a blighted area with an
integrated community who controlled the spending of that government money it was
in fact my own University of Chicago which felt its very existence threatened
by the spread of urban blight in crime government money was used to tear down
an area that contained many small shops as well as families of low-income once
the area was cleared private money rebuilt it with middle-class apartments
townhouses and shopping complexes the blight had been cleared here but only to
be shifted elsewhere in many instances when when government administers large
grants while those funds don’t wind up directly serving the people and
achieving the objectives that were the intent of the programs because the grant
has a feed that large government bureaucracy Joe Gardner helped to set up
an organization of local black people to protect their own inners previously the
blacks had rioted in the streets to try to get their way now it was to be done
peacefully using government money when government funds became available
the Woodlawn organization got controlled they used them to build the kind of
houses they wanted low-rise apartments like these the bureaucrats planners and
architects told them that it was uh nekoma that only high-rise blocks would
work they were wrong a lot of people have this view that the disadvantaged if
you will have no idea of what their problem is on how resolving that it
takes outside professionals to do that and we say that’s baloney because the
outside professional does not feel in his gut what a woman on welfare with six
kids living off a hundred dollars a month in a deteriorated building fields
she can come up with solutions much better than a bureaucrat the intentions
of this local community group are good they want to rebuild the community as
the community wants pretty pleased with the work we’re doing but government
money always corrupts look at the number of people rebuilding this garage it
doesn’t make sense except that these are Sita workers paid for by taxpayers money
government funds have allowed the organization to take over a whole area
of Chicago they now have their own supermarket they’ve built splendid houses for
middle-class occupiers very expensive protected by the latest security systems
all at the taxpayers expense you know since TWU is rapidly becoming a
mini government at this particular point we have approximately 400 employees we
have an operating budget of in excess of 5 million dollars a year so we are large
large and expanding their next project is to redevelop this site and that’s
only the first step in a 20-year plan that will cause 220 million dollars most
of it coming from the taxpayers in the South Bronx they’re very familiar with
government protection like the rent controls that made it on economic for
landlords to maintain their buildings they’ve moved out and the Vandals have
moved in the South Bronx is an area where many of the people are on welfare
and where the crime rate is high but all this could change a group of local
people has begun to renovate these buildings to build new homes they call
themselves sweat equity because at first sweat and effort was all they could put
into the project only later did they accept a small government rent how long
ago did you start working on this building four months ago this building
right here and I tell you what you’re going to do is gut the whole thing from
beginning and right totally cut it and you’ll have to rewire fire put new walls
up two floors and ceiling ready work on a winter working some are going to had a
chance to work how many people you got working here good forty people how do
you keep from working okay you know some of them must want to get tired of it all
off and so on so how do you like it in interests we show them what could be
done future what will be done in the future and take you take it well a face
is kind of hard to prove to somebody that in next 3-4 years what will come
out of it they can’t see it the long range turn we want to see in short we
didn’t need money right now at 200 years sure so we we try to show them that it
will happen it’s true they now accept some
government money but so far they’ve managed to retain their original
philosophy but the best way to get something done well is to do it yourself
okay like what we doing we’re bringing people out of the street giving us
something to look forward to they had their own apartment they’d be
taken care of the area around it they have a garden have something look
forward to they even get off welfare you can give them a job they can drop the
welfare and have some surprise that’s the whole thing about it stop crying
because long as you collected from the government and sitting back there no
worries when that sitting back we’re working we’re making that money come in
and we’re putting it into our building we were building ourselves up as well in
the building some of these people are Sita workers
paid for by the taxpayers but this isn’t as useful as it might appear you ask
these fellows which would they rather have the seed of workers or the money
that’s being paid for the seed of workers which would you rather have the
money paid to but if that’s your answer that’s very expensive help in terms of
what these people could use with the money you give these people the amount
of money you’re paying that co workers now bet they’ll have twice as much three
times as much work am I wrong right XO that’s a very inefficient way to use
their money the problem is you’ve got a bureaucracy and the government
bureaucrats they want to decide what to do they don’t want to let you decide
what exactly ask yourself how did this get place get built up in the first ones
after all this was a pretty respectable solid substantial region when it was
first developed it wasn’t done through a government project it was done by people
individually having an incentive to put up these buildings and occupiers what
these people we’ve been seeing here are going is they’re trying to restore that
feeling and that attitude you’ll have a far healthier community here if it grows
out of the self help of people like the people we’ve been talking to then if
it’s a paternalistic venture undertaken by governmental civil servants and
bureaucrats we’ll have to plan on a large scale for other people we must
find a way to give everyone caught in the welfare trap the kind of initiative
these people have the best or should I say the least bad solution I have ever
been able to devise is something called the negative income tax this is the idea
that we should get rid of a large part of the welfare bureaucracy none of the
demeaning rules that we should help people who are poor fundamentally by
giving the money with the positive income tax you’re entitled to a certain
amount of personal exemptions and deductions and above that amount you pay
tax but suppose you have no income under a negative income tax a fraction of your
unused exemptions would be paid to you by the government
guaranteeing at least a minimum income if you earn something you’d still get a
fraction of your unused exemption and you’d end up better off as your
earnings rose the supplement to your income would become smaller and smaller
until your earnings equaled your exemptions at that point you’d break
even neither paying tax nor receiving a subsidy it’s not an ideal system it’s
not the system we might have liked to get into but it’s a system which would
have the effect of eliminating the separation of the society into those who
receive and those who pay a separation that tends to destroy the whole social
fabric it would mean that we that we could each of us take advantage of
opportunities that opened up without fearing that if by some chance we lost
our jobs it would be a long time before we could get back on assistance it would
be a system that would give all of us an incentive gradually to improve our lives
with perhaps enable us over time to work ourselves out of the kind of mess we’ve
gotten ourselves into a mess we’ve gotten ourselves into for the very best
of motives but with the very worst of results we have become increasingly dependent on
government we have surrendered power to government nobody has taken it from us
it’s our doing the results monumental government spending much of it wasted
little of it going to the people whom we would like to see helped burdensome
taxes high inflation a welfare system under which neither those who receive
help nor those who pay for it are satisfied trying to do good with other
people’s money simply has not worked the discussion is already underway here
at the University of Chicago so let’s join it as I looked at the film I had a
growing sense of anger anger that that position failed to recognize that the
system that was being attacked was necessary in our capitalistic free
enterprise system that by its own failure produces poverty and therefore
requires governmental intervention in the interest of those people caught in
the traps of poverty so as I sat and looked at the film and as I hear dr.
Friedman’s statement I was aroused to the point as I said of anger because
only half the story is told we are really blaming again a victim this time
a system the welfare system for the failure of other systems to operate in
the interest to people let’s get other reactions out of that statement trying
to do good with other people’s money simply has not worked the welfare system
is rotting away the very fabric of society Tom’s all my reaction was just
the opposite or my anger was of what have been created in a city where I grew
up under very different conditions during the period of capitalistic
failure during the period where there wasn’t as humanitarianism and where it
was possible for people to live better and to get out of that poverty now I
think someone living in the very same place where I live would find it much
harder to escape from that poverty of the course of all these things buildings
were not abandoned like the building that we saw in that film when I lived in
Harlem the crime rate there all the things that are blamed upon the failures
of the previous method did not exist I slept out on the fire escapes in
Harlem I would defy anybody to do that in any part of New York City today
traditionally in the United States we have tried to avoid some of the welfare
trap it was referred to by denying eligibility to people who are
able-bodied and not aged and so on and we have therefore tried to close the
welfare door to a good number of categories within the poor population
the second point that was emphasized and I think needs to be put in some
perspective is that some but not all of what we might call welfare
programs broadly have this very strong take back of benefits as you earn some
more money and that I guess is what I would like to single out as the
principal problem identified in the film but it is not common to any and all
welfare programs that one might think of when the family fails when the private
sector fails to create jobs at a fast enough rate you find that people are
unemployed and drift into needing help in order to exist and the welfare system
was created in the thirties to do exactly that when the private sector
essentially failed we have the development of a welfare system it is
not corrupting society it is taking what society institutions have left behind
the family breaking up the economy not expanding fast enough the health system
failing the educational system not doing its job
we have untrained unskilled people looking for jobs in a highly technical
society or jobs that pay so low that people cannot in fact live in a decent
level of humanity I see the welfare system not corrupting but in fact taking
the remains and attempting to help people live in dignity
so rotting away the fabric of society is not supported except perhaps by you
would you back that phrase so loudly you’re saying you’re talking about the
failures of the other parts of society what the welfare system and other kinds
of governmental programs are doing is paying people to fail insofar as they
fail they receive the money and so far as they succeed even to a moderate
extent the money is taken away this is even extended into the school systems
where they will give money to schools with low scores insofar as the school
improve its education the money is taken away so that you are subsidizing people
to fail in their own private lives and become more dependent upon the handouts
we have expectations built in today about the quality of life the quality of
job the level of income for which one expects in return why because we look at
the level around us that it takes us to have otherwise no that’s not why I may
have all sorts of expectations the question
is what can I do if someone else is subsidizing my expectations my
expectations will be far higher or in so far as the server advanced but he was
summarizing my expectations a few years ago I refused to work at UCLA to a
normal full professor salary why should i when I get the same money for being in
the Center for Advanced Study with no hours no duty than no classes let’s look
at another proposition in milton’s case the insidious effect on those who
receive welfare they lose their human independence and dignity are treated
like children and so on now dr. Duncan as a former administrator of a major
program is about a great hazard that is not a great hazard as a matter of fact
that presumes that people get on welfare stay on welfare and therefore have the
result for dr. Friedman statement issues the fact of the matter is that in our
AFDC programs throughout the country in particular it was is true in New York
there is a graduate turnover of the welfare AFDC rolls about a third of them
go off here now if these people were so destroyed by the system when they go off
they wouldn’t go into employment they wouldn’t hold employment they wouldn’t
stay off the road for six months 18 months 24 months as long as they are
able to stay off so there’s something wrong with that argument when one looks
at people and what they do people you know who are poor are no different from
those of us who are not poor and their motivation for self dependency self
support and mobility in the economic scale is no difference in those about
than the motives we have so that they will not let the system you’ll remember
dr. Friedman the welfare rights organizations who refused to let the
system scrub them down as it was attempting to do you can burn the
policies around you and I agree completely that the people who are poor
and our on welfare roles are no different from the rest of us of course
not they are human beings and they deserve
every sympathy and every possibility of making their own way but the welfare
system makes them different you give an exit in their inner stupid if account
for them going off the rolls well it is home but I figures or figures and you’ve
got to be careful with figures the fact that a third there’s a turnover of a
does not mean that there aren’t half war on all the time people come on go off
come on go off and we ought to have the other things later leave dr. fish right
34% of the people on AFDC are on two five years or longer and when one thinks
of the purpose of the AFDC program which was the rearing and support of children
dependent children minor children I would submit to you that five years is
not a terribly long time for a mother and children to have to be dependent if
there’s no other source of income I think the other data we have a program
in Pennsylvania for essentially all of those who are not taken care of by the
AFDC program it’s called a general Assistance Program and they’re less than
15% are on more than 18 months so we have a great turnover we have
essentially young males moving into the welfare system after unemployment
compensation and then moving out when a job opportunity comes along this I you
know I think the notion of generations of people on welfare is is a very small
minority in the whole system that doesn’t mean that the system as
presently defined and as the set of programs that we have put together don’t
often contradict each other I’m the first to agree with with dr. Friedman
that some of the programs are conflicting however I think it is it is
overly broad to say that we turn people into helpless children I don’t remember
talking to any ones out there on welfare who didn’t think they were being treated
like children while they were on it because I you know you must make a
difference a distinction between the system that was set up to help people
and the people who are employed in that system look at any public welfare system
around the country and we have no practically fuel train people to work
with people we employ the ill trained people who are not equipped to be
helping people we say they’re social workers they’re not social workers I
have neither the skills the attitudes and some of them not even the concern so
I think one has to separate out a conceptual framework of a system
designed to help people and what this the country and community puts
into that system to implement those programming separate the hopes from the
reality I separate the skills that are available in order to implement what the
objectives of the program are I think we have to separate whether we’re talking
about program objectives or we’re talking about how it operates I would be
the first to say that the system that I administered had ill-prepared people to
do the job that we were set up to do and I would not say that the system that we
set up I focus on social welfare people who think that in fact they were so
hamstrung by the system that there was very little they could do to help people
to get off welfare that is to build up skills get jobs do where was necessary
to get off welfare they thought there was a system welcomed ystem that we’re
stereotyping is one of a great deal of paternalistic interference in individual
families lives and in fact isn’t this true dumps in the caseload is so high
for an individual welfare worker that they can’t do a lot of interfering
individual family lives moreover in the last decade there’s been a real attempt
to ease this welfare trap in AFDC by changing the take-back rate and by
administering work expenses and childcare expenses in such a way as to
facilitate work by those who may want to do it so it’s not quite as harsh a
picture as we sometimes get that there is this omniscient welfare worker who’s
right there in the living room with the family making all their decisions for
them I’ve never heard of a government program which it was defective in which
the people who ran it didn’t say if only we had more money to spend on what we’re
not being able to accomplish with the amount were spending now just move on
now some of your prescriptions in that film because that is good ground for
discussion the most drastic one was when you said speaking of an unemployed man
supposing you were cruel and took away welfare from this man he would find a
job in some at some wage there always be a job he could get he might need some
charity enroute private charity but he would get a job I want you to react
those of you before we come back to Milton
is that a picture that seems plausible to you it may get a job but he will get
may get a job in what we refer to as the underground economy and that’s where a
number of our youth are now going to get their jobs those activities that are
illegal and the only opportunity they have for earning
part of the livelihood I think the other issue is that you have a whole group of
people who are the single female head of a household and yes cut off welfare
tomorrow what will they do what will be their immediate response at what price
to their small children and to their middle-aged children yes they’ll get a
job in fact the statistics show that women in fact are the most successful
through the Employment Program but what has to supplement that
typically it’s the provision of some kind of daycare arrangement either the
individual woman has to earn enough money to be able to pay privately for
her daycare or in fact she is quote subsidized through this insidious
corrupting program set of programs run by the federal government which in fact
makes our employable in a tax payer it’s a it’s an interesting notion of trying
to get people in a productive mode Tom so it’s incredible the way you start the
story in the middle as if there’s a predestined amount of poverty a
predestined amount of unemployment and the welfare system is not itself in any
way responsible there is a predestined 20% of the bottom half of the population
I have never well that’s always been sure said economy it’s also through a
20% of the bottom population those have to be living on the government and ruled
by the government you mentioned for example the female-headed households
many of those in addition is a grown woman who has all the kids are teenage
pregnancies there’s not a predestined amount of teenage pregnancy I grew up in
an era of when people and particularly blacks were a lot cooler than today
faced a lot more discrimination than today and in which the teenage pregnancy
rate was a lot lower than today I don’t believe there was a predestined amount
of teenage pregnancy a predestined amount of husband desertion or the
government has done a study of the black family showing that this whole notion
that this is the black family has always been disintegrating
is nonsense this lady’s got the 1925 the great bulk of black families were intact
two-parent families up to 1925 and going all the way back through the era of
slavery so it is now only within our own time that we suddenly see this
inevitable tragedy which the welfare system says it’s going to rush in to
solve the which it was itself a part that a very small group we’re talking
about 12% of the families are not intact are not two-parent families at any one
usual among wealthy overs of no public at large we’re talking about 12% of the
families 12% what’s rude that’s a small number
but you got a local welfare we’re still talking about a significant component of
the bottom 20% that are the bottom 20% whether they are above the poverty line
or below the poverty line they are still the bottom 20% and the issue is what is
the responsibility of the other 80% if any does your program plan to eliminate
there being a bottom 20% no but it intends to raise the bottom 20% there
raising them by having more by having more legitimacy more unemployment I’m
not making me have a legitimate children I hope that’s clear
oh I don’t you know how does that you say they subsidize we as human beings
don’t have a responsibility but I hope we have a compassion and interest in the
bottom 20% and I only want to say to you that the capitalist system the private
enterprise system in the 19th century did a far better job of expressing that
sense of compassion than the governmental welfare programs are today
the 19th century the period which people denigrate as a high tide of capitalism
had was a period of the greatest outpouring of eleemosynary and
charitable activity that the world has ever known and one of the things I hold
against the welfare system most seriously is that it has destroyed
private charitable arrangements which are far more effective far more
compassionate far more person to person and helping people who are really for no
fault of their own and disadvantaged situation I have to disagree with you
though because I think that the the whole notion of private property was
excluded whole segments of society were excluded from the notion of private
property in the 19th century namely women idiots and imbeciles and so I
don’t go back to the 19th century and hold it up as any Paragon that we would
want to replica today anyway I want Milton now to come
to your major prescription which I know you don’t say is on the agenda for
tomorrow but it lies ahead that is the negative income tax and I’m not sure
people fully understand how it would work we can’t I think go to the details
of it but I’d like to get a reaction around the panel first of all is this a
viable approach to the enduring problems of poverty negative income tax I think
it’s a viable approach to some part of the problems of poverty it involves
first of all cash payments rather than in-kind payments as I understand it
involves payments on a non categorical basis but it being done that is to say
it doesn’t matter whether you’re a female headed family or a male headed
family or whether you’re young or old you’re sick or well if your income falls
below a certain level you pay some guaranteed income level for people based
on family size and then it has a take-back rate which is modest I suppose
by definition now the question is how many things you want to use that program
to replace how many things you want to replace with such a negative income tax
program would you replace everything with district Lehr that point up would
you virtually wipe out the remaining forms of welfare if you got this program
going yes I would not I think its purpose is precisely to provide a
transition between where we are now and where we would like to go because while
because I agree with you that given that we’ve corrupted the people on welfare
and gotten them on there we do have an obligation not to throw them out on the
street and put them in the difficult adjustment you’ve made we’ve got easy
okay he’s an offensive but I would want to replace all president al Farah let’s
get reactions to this we’ll come back to you well I saw some figures recently
which said that if you took all the money spent on poverty in the United
States and divided by all the poverty families you’d come up with a figure of
$32,000 per family now the average property family apparently is not
getting the $32,000 and so clearly someone in between the Treasury and
those families is getting an awful lot of that money and I think that if you
simply eliminated the middleman as they say in the commercials
that there’d be an awful lot of benefit both to the pool and to the taxpayers
I’m supportive of the negative income tax concept and the objective of it I’d
like to point out however that administrative ly we have another
bureaucracy set up somebody has to take into account earnings someone has to
decide when to pay back that which they’re entitled to there’s a time lag
between the paying back the earning and the paying back the variety of problems
in there that I will be prepared to accept but I want you to know that
government intervention is not going to be eliminated the issue that I have is
where do children come in what are their rights under a negative income tax and
are we by building in a negative income tax in fact subsidizing the illegitimate
see that Tom soul is so concerned about the major reason it is not feasible
today to have a negative income tax is because the present welfare bureaucracy
would be out of work they are the major objectors as Senator Pat and now he’s
now Senator Pat Moynihan man demonstrated in his book on the Nixon
program the chief obstacle to getting an enacted was a welfare bureaucracy so
that I don’t believe these administrative problems if you’ve got it
enacted would be at all serious I think the other assumption under the negative
income tax and it’s one that I’m not sure I can buy is that everybody has a
minimum level of understanding about how to spend money in other words how to use
the marketplace to satisfy wishes and and I as an economist could say yes we
do we every buddy from age four to a hundred knows how to use money to
satisfy wants and that’s that what they don’t they don’t know all the problems
of people who are not going to be able to but that’s a minority problem that’s
a problem for private activity and private charity one thing is sure
they’re spending they would be spending their own money and that however
knowledgeable you are about me spending my money hey I would be finding my money
but it would be one stage less bad right now the welfare worker is spending mr.
age money to help you’re sick and there’s a big take off
in the middle as Tom Sowell says the question is not whether people are
wealthier on low incomes can all spend their money effectively the question is
how effectively do they spend it as compared to how effectively the
bureaucrats spend it for them comparing anything to perfection or to some
arbitrary standard acetyls nothing the same thing is true in the education area
they’re saying would families be able to select elect schools for their kids
under a voucher system for example well the question is could they possibly
do much worse than the corrupt bureaucrats are doing in the public
school system we’re going on education another program I’ve an equivalent
something you said about a half of the money not going to the poor or something
that doesn’t shouldn’t lead the viewer to think that all that money is going to
the administrators of programs a lot of what you’re talking about
goes to non poor recipients for example Social Security as a program pays a
roughly half of its benefits to people who otherwise would not be poor
unemployment insurance pays about 2/3 of its benefits or so to non poor persons
and those are in some definitions welfare or anti-poverty programs and
that’s how statisticians come up with this horrendous sounding discrepancy
between the total amount of money spent and the total cash benefits that go to
the poor one thing I think is apparently valid point though because supposedly we
were not setting up unemployment benefits and social security in order to
keep the affluent affluent well this goes back to this big philosophy debate
we might have and it’s easy to oversimplify things and say that all of
these programs including the public schools are there to be of help to the
poor and the poor only but I already mentioned that the negative income tax
has some of its impetus in that it would be a way of confining benefit payments
to people who are in sanh poor yes and it would cut out benefits or an awful
lot of people who now have expectations that they’re going to get them not in
the form of public assistance but in the form of social insurance as we use the
anointment could be made forms not disappointing expectations on which
people built their lives for one generation but not a continuing for
eternity in order to avoid one generational transition what are the
other hurdles to it getting underway now you said I know how seriously the
biggest and the almost the only hurdle is the welfare bureaucracy
now there they’re the biggest immediate group of lobbyists that will lobby
against it yeah the big eternal – getting it over at the moment is that
there is no way of constructing a sensible negative income tax system that
will not hurt some people there will be some people who will get less money than
they are now getting under particularly those in the upper income groups
particularly the affluent who are now being subsidized by the wealthy and they
will make it politically difficult for the people to put it into effect that
the attempt is to put a negative income tax in effect which costs less money is
easier to administer and yet which doesn’t pay anybody in the society one
dollar less cities now getting there’s no way in which you can construct such a
program but although it’s not politically feasible now the course of
history is on its side it’s going to become political thing doesn’t let’s not
say that the give the impression that welfare administrators were against
negative income tax the fat program for example as Moynihan says because they
would lose their jobs for example many of us were opposed to it because of
certain features in that program a 2424 hundred dollar level for a family of
four we were opposed to that and if one goes down the Congressional Record those
who testified will be shown to be saying yes we’re for conceptually but we’re
against this piece and this piece if you change that you have our support I was
in the same position I have first proposed the negative income tax 25
years ago but I testified against the final version of the Nixon plan why
because the welfare bureaucrats had led them to introduce changes in it which
converted it from a decent satisfactory well negative income tax to one which
would have been just as bad as what you now have would have been added on top of
everything else now it’s political reality but political
reality changes and that’s the important thing I want to say one more thing about
this this whole problem that we’ve been talking about and that is going back to
Bob lampkins comment there is one thing that can be said in favor of the welfare
program unaccustomed as I am to saying anything in favor of it and that is that
it is the own a social program I know of which at
least on the average gives money to people who are in lower income classes
than those who pay the taxes every other welfare program not only does a lot of
money go to the people who are well-off but on the average the poor are taxed
and the well-to-do are subsidized we in the upper income classes have been very
clever at conning the poor suckers at the bottom to pay us nice well salaries
as bureaucrats and to provide us with nice benefits at their expense and at
least a welfare program doesn’t do that and what you state with great confidence
that it will come the negative income tax even though you recognize the
hurdles why are you so sure it will come because the present system has within it
the seeds of its own destruction there is no way in which a system constructed
like the prison in my opinion can avoid creating more and more social problems
and something is going to have to be done
nobody has proposed any alternative so far as I know there is no effective
alternative to the negative income tax and so it gets knocked down and it keeps
rising it gets knocked down and it keeps yeah but finally raised the question
though whether in any modern industrial democracy like this one it’s conceivable
system can be run without a fairly elaborate welfare underpinning of some
kind but to fill this moment I I don’t think
it can be because I think essentially the welfare set of welfare programs
reflect the values of this society that if it didn’t there would have been
revolt long before now yes there are rumblings about its cost and I think
that’s primarily a function of rapid rates of inflation eroding real income
earning power of the middle-class taxpayer but I think on one level we
wanted to give up the responsibility of caring the responsibility of day to day
actual caring and in a technical modern industrial society like we have the tax
system in the government system is probably as if isn’t viable alternative
I don’t think we’re going to get out of it I don’t think you’re going to see
private charities who can take my money that I am free to
give or not give and essentially make a difference in people’s laws of any
substance on any level I don’t think that has anything to do with society
being modern technological or industrial has to do with an ideology and
particularly an ideology that is very strong among academic intellectuals and
in the media and I think that as time goes on and more and more intelligent
ideas replace the kinds of vague diseases that dominate today that the
political climate will change and that’s the only thing that stands in the way of
reform right now Jim doesn’t I don’t think you’re going to get rid of the
system that I’m interested in welfare system I’m interested in Tom’s last
statement about accommodations and theorists and so forth we forget that
we’re talking about people and we may sit in the ivory tower and talk about
whether this system will work and either logically or ideologically why it won’t
work at the same time there are masses of people outside who are locked out of
the system that you and I are part of and somehow we’ve got to make sure those
people are taken care of and the short of not doing it of course means that
your safety and my safety in the vital the vitality of this government and of
our country is at stake the mayor of the city of New York asked me when we had to
strike what would I do if I couldn’t get checks out to people when our workers
were on strike and I said to him after the first month khaosan he said what do
you mean I said no man or woman in the street of the city of New York
you included mr. mayor will be faith if we cannot take care of people or relieve
this discussion and hope you’ll join us to the next episode of free to choose I




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