Milton Friedman on Guaranteed Income / Negative Income Tax / Basic Income


This is Milton Friedman. The Nobel Prize winning libertarian economist… …who adamantly opposed big government. The government is too big. It’s becoming our master instead of our servant. We’ve got to redact against it and cut it down to size. So it may come as a surprise… …to learn that Milton Friedman… …proposed a government program… …to guarantee everyone a minimum income. In my book “Capitalism and Freedom”… I propose something called a negative income tax… …essentially a minimum income. How could a free market capitalist like Milton Friedman… …propose essentially the same idea… …as a democratic socialist like MLK? “A guaranteed minimum income for all people…” “…and for all families of our country.” So many dollars a week or a month… …and they would get it in weekly or monthly payments. 1. Freedom I agree that as a moral principle those of
us who are paying taxes to provide subsidies for others have every moral right to say what
it shall be used for. If we want to say we’ll give you money only if you use it to buy toothpaste and not for anything else. , that’s our right. But I think we are very unwise to exercise it. I think we would be wiser… …and more truly charitable… …and do both them and ourselves more good… …to tell them to use it to buy what
they will. The people who get on welfare… …lose their human independence. They become subject to the dictates… …and whims of their welfare supervisor… …who tell them whether they can live here or there… …what they may do with their lives. They’re treated like children. …by requiring them to come before e government official… and be told that you may spend X dollars on rent… …Y dollars on food, etc… …and then be given a handout. They would be far better off if we just gave them the money and let them spend it. Because in doing so… …we not only give them more help immediately… …we will strengthen their responsibility. Milton Friedman understand individuals
know best how to spend money… …for their own sake… …than any government bureaucrat. The fundamental idea is that people should be free to choose. 2. Cut Government Bureaucracy We have too many separate individual programs. Welfare in the U.S. is a complex maze… …of 126 separate anti-poverty programs. The result: monumental government spending. Much of it wasted. Little of it going to the people… …whom we would like to see helped. Now what it seems to me you aught to do… is to give people money… …instead of a whole lot of separate little baffles… …and get rid of the bureaucracy that is involved in all these programs. 3. Enable Work You could have a program that would be far
superior to the present structure in that it would help people who are poor because they are poor. It would help them in a way which would retain an incentive for them to work. Many of the current welfare programs punish people for working. If you take a job and increase your income… …you lose your benefits. 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… …it may be six month or nine months before they can get back onto welfare. A guaranteed income removes that disincentive to work… …and allows everyone to earn more without being penalized. They can earn an extra $100 or $200 and be better off. With a guaranteed income it always pays to work. It would mean we could each of us take advantage of opportunities that opened up without fearing
that by some chance if we lost our jobs… …it would be a long time before we could get back on assistance. 4. Equality It treats everybody the same way… …and there’s none of this unfortunate discrimination among people. Friedman wrote: In other words, a program
that is guaranteed to all citizens, is preferable to the current programs that divide us up
into subcategories. It’s a system which would have the effect
of eliminating the separation of a society into those who receive and those who pay. A separation that tends to destroy the whole social fabric. There was no freedom to work and spend as
you choose in the Soviet Union. With a guaranteed income the profit motive remains intact and everyone is still free to earn as much more as they’re willing to
work for. So what do you think of a guaranteed income? If it’s had so much support all through American history… Why don’t we have it yet? Why don’t governments learn? Because governments never learn. Only people learn.

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