Broadcast in New York City on WPIX, Channel 11
Sunday, December 7, 1975, 10:30 – 11:00 P.M.
Moderator/Host Richard D. Heffner
Guest: Milton Friedman, economist
FRIEDMAN: Let me give you a very simple example. Take the minimum wage law. Its well-meaning sponsors — there are always in these cases two groups of sponsors. There are the well-meaning sponsors and there are the special interests who are using the well-meaning sponsors as front men. You almost always when you have bad programs have an unholy coalition of the do-gooders on the one hand and the special interests on the other. The minimum wage law is as clear a case as you could want. The special interests are, of course, the trade unions, the monopolistic craft trade unions in particular. The do-gooders believe that by passing a law saying that nobody shall get less than $2 an hour or $2.50 an hour, or whatever the minimum wage is, you are helping poor people who need the money. You are doing nothing of the kind. What you are doing is to assure that people whose skills are not sufficient to justify that kind of a wage will be unemployed.
Interestingly enough, Thomas Sowell published a column today that, among other things, criticizes minimum wage laws, along the same lines as Professor Friedman.
http://jewishworldreview.com/cols/sowell062408.php3
The older I get, the more Milton Friedman makes sense to me. It’s astonishing how many of his ideas – once considered loony – are now mainstream.
I am constantly astonished at those who argue that he was some sort of evil fascist oppressor. It generally tells me more about those people than about Friedman.
He was one of the world’s great classic liberals. Freedom never had a better friend.
Interesting that even in 1975, Friedman was warning against the economic and social path Britian was on. And that is exactly the path that Dion and the Liberals want to push us further along.
Due to that freaky atrsy-fartsy theme, [ not really music], I almost did not watch the clip.
Glad I did though. Friedman seems to know how to think and analyze well.
Unlike whitehouse butterfly economist Kenneth Galbraith who was the most consistently WRONG economist of all time.
Seems minimum wage laws are a silly fixed point idea. Almost like pinning a donkey tail to a dynamic changing picture on the wall.
If our well paid labour relations boards were working properly, there expertise via a phone call should be enough to keep a young worker above the slave labour line.
Never happen. . . too efficient! = TG
Their. . t h e i r = TG
As cold hearted Friedman sounds, he hits the nail squarely on the head with regard to this subject. I’ve learned to work hard to learn both sides of any proposal before endorsing it. Most every proposal (political, tax etc) on TV has a group of “good guys” working to right a wrong. The question is, who is behind them and who benefits.
Wow , thanks for the lesson.
” The special interests are, of course, the trade unions,”
Objective economic science at its most typical, from the quintessential front man.
Thank you Kate. Have heard most of ideas Milton expressed before but it is educational to hear from the source.
Conservatives are really liberals. I have often said that we were really liberals and no one is more “Tory” than the Lib-Left.
Wikipedia: “[1] English and British Tories from the time of the Glorious Revolution up until the Reform Bill of 1832 were characterized by strong monarchist tendencies (BIG Gov. Supporters), support of the Church of England (central authority), and hostility to reform,”
This does not describe my political thinking nor that of any “Conservatives” I know.
dizzy – a conclusion, based on factual evidence, is indeed objective.
Unions are parasites on the workers. Their entire income comes from the wages of the workers. With that money, a set of unionistes set themselves up as essentially, a corporation. Big business.
Their agenda? To increase the profits of this corporation, aka, The Union. Since their base source of income is from the wages of the workers, they must increase and increase these wages. These wages support the Union Management; their wages, their offices. Hmmm. The workers are supporting not only themselves, but a seconodary worker, the parasitic unioniste.
THEN, after those unionistes have taken their wages. Oh, and their expenses. And their trips, and conferences and lunch and dinner meetings, then, they can invest these wages for their second source of income. None of this goes back to the workers.
A manufacturing corporation, on the other hand, has more sources of income. They don’t take deductions from their worker’s wages like the unions. Instead, their income is from the goods and services provided by the the work of workers and management. Both workers and management can be shareholders in the company.
The task of management is manifold: get contracts, purchase raw materials, develop design, develop new technology and new products. Then, manufacture..and sell them.
The income goes to wages for all, new technology, machinery etc etc. And investments to shareholders.
In our modern era, when wages, health care, work standards etc are all legislated by the various govts, what functional purpose is there for a union? Oh? Yes – it operates as a parasitic corporation on the wages of the workers. Hmmm.
That was quite a speech, I thought it was gone forever, thank you Kate, thank you U TUBE. This time I am going to save it so at least when I quote what he said I will be right and not sorta right.
IMO a hundred years from now it is quite possible that MF may come to be viewed as the most influential person of the 20th century. We are only living the the early dawn of the application of market economic theory.
rush limbaugh made a comment on minimum wage once. he asked high high should it be, 8.25, why not 20 dollars why not 30. his point being if all are in favor why not take it up to the point where all small businesses go broke and the people who need entry jobs no longer can get one.
I learned more from Friedman’s Free to Choose Than I did from an undergraduate degree from Colorado University with a major in economics. Large portions of his program were difficult to accept, but once accepted impossible to dispute. His views, which he propounded so eloquently, completely altered my thinking. Now, whenever I think someone a loon economically, it’s by a measure he inculcated. He’s my hero.
Maybe CPC could use portions of this MF interview in combating the Green Shift. Their website contains elements of it but they are not as clear as MF. The intentions, special interests, the inevitability of failure, loss of freedom. Then again, maybe Canada has traveled so far down the collective path that they can no longer understand the logic of classic liberalism.
Friedman said it’s neither feasible and possible to do good with other people’s money because the coercion inherent in the confiscation at the root of it all pretty much obviates the claim of “goodness.” This is an overlooked point, perhaps because we are so universally taxed. But the second reason he gave is that “very few people spend other people’s money as carefully as they spend their own.”
You know? Ezra recently looked at the travel expenses of a certain HRCer, including $2,900 for a flight to Saskatoon for a one day mediation session. A $3g flight is not necessarily a big deal, really, but ask yourself this: If Athanasios Hadjis was a small businessman and a taxpayer with the same take home pay he has as a bureaucrat, would he drop eight times more money on a flight than he had to?
A while ago I was telling a friend about the CBC bureaucrat who stayed in an $800 a night hotel in Istanbul. She considered that figure to be impossibly high; she said everything was so cheap there that even nice hotels don’t cost anywhere near that, so I went to TripAdvisor. The highest-rated (by travelers) hotel at the time cost $296 a night, and was praised for its luxury and its impeccable, attentive service. Most of the other highly rated hotels, described as “magnificent” and “everything you want in a luxury hotel” went for between $100 and $200 a night. And there, standing out only for its ridiculous price was the Cirigan Palace where the CBC exec stayed.
Here’s what those who stayed at the hotel had to say:
“If you’re one of the ‘happy few’ who don’t care about cost, you will be very happy indeed.”
“By far one of the finest, most luxuriously appointed hotels I have ever stayed at in my life. Yes, it’s ridiculously expensive…”
“Outrageously expensive.”
“I probably wouldn’t have spent quite so much if it was on my own dime, but the room and the service were really great…”
“You’ll feel like a sultan!”
“J.F.K. Junior honeymooned here!”
“I wouldn’t stay there again unless someone else was going to pay. This is not a hotel for the rich and famous, this is a hotel for the rich, famous and spendthrift.”
“The prices are out of sync — especially when you realize how CHEAP everything else is in Istanbul. There is no other word for it: it’s highway robbery.”
In fairness to that particular CBC exec, his accommodations were a bargain compared to those of the head of CBC sports, whose five night stay in Berlin at the Kempinski Adlon, the — surprise surprise — the Ciragan Palace’s “sister hotel”, cost more than $1700 per night. Outrageous, to be sure, for a bureaucrat, but then of course from the CBC exec’s point of view it was FREE. It WAS free. He didn’t pay for it, the taxpayers paid for it.
“Very few people spend other people’s money as carefully as they spend their own.”
His speech blew my mind with his clear and concise logic. I know those ideas are right, but living in a leftist world it’s nice to hear them articulated.
Thank you, Thank you, thank you for that one. I’m sure most of us held these ideas on our own, but it was a treat to here them so eloquently and yet simply put. This kind of stuff should be taught in elementary schools as one of the very first things kids learn. Maybe if this was taught in school we wouldn’t be in such a mess right now and perhaps, just maybe we might truly be able to claim that we are “strong and FREE”.
As much as I appreciate Dr. Friedman’s efforts, citing a plethora of economic facts will neither defeat the enemy – the Left – nor convert those who are ignorant or on-the-fence.
Only a demonstration of and insistence upon the inalienability of *individual property rights* will sway the battle. Once the nature of rights is fully grasped, one sees that no man’s income should be taxed directly, so income taxes are immoral. Taxes pay for services provided by government, services which should be limited to the maintenance of law and order, such as the police, the military and the courts – and only these three. We only need these government services as a result of our interactions with others in society, so men should only be taxed on their activities in a social context – their trades – and not on their income.
The main reason why the Left – and the powerlusters on the Right – must be fought and condemned is not just that taxes “hurt the economy” or “the poor” but rather because they violate individual rights by denying you the rewards of your labor, a situation akin to slavery.
I too wish this could be taught in school. I turned from Jr. socialist to libertarian in a couple of university lectures on basic economics when we studied the supply and demand curves. The knowledge of the fact that markets meet human needs most efficiently when left alone was, well, ‘liberating’.
Another important point that MF made that I wish more people could grasp is that companies do not really pay taxes, they simply pass the costs on to customers, employees and shareholders. That is, all business taxes are double taxation of individual customers, employees and shareholders.
Just tonight I spoke about fast rising property taxes in front of the Board of Directors for my area.
One of the points of rebuttal they made to my contention that salaries and benefits for public sector workers are out of line (11.5% increase this year alone), was that “they pay taxes, too”.
My question to them was, “and where exactly do they get the money from that allows them to pay their tax?”
Bureaucrats. They just don’t get it.
In a total market driven competition for jobs, some jobs will have wages running lower than the current minimum wage. Unfortunately, we have never seen a total market driven economy. It is impossible to say what the price of unskilled labor would be in a free market, because no such free market exists.
In Saskatoon, the minimum wage is mostly irrelevant. How many jobs that are offering minimum wage are being filled? Effectively none. You can get about 50% over minimum wage just for pumping gas or stocking shelves, and most employers are desperate enough to hire almost everybody who asks for a job.
Pointing at China as an example of how a lack of minimum wage laws work is rather ludicrous, when you stop and consider just how much of the Chinese economy is *FIRMLY* in the control of the government.
I am not typically a fan of Rush Limbauch, but the reductio ad absurdum argument he uses on minimum wages is spot on. If setting it above zero brings benefits, why not set it higher?
Decreasing the cost of labor means that the cost of producing goods and services decreases. In a competitive market, this means the price will also decrease which lowers the cost of living. If it costs less to subsist, the motivation for theft is reduced.
Consider this as well: How many fully employed individuals are involved in stealing “everything they can get their hands on to make ends meet”, even those at the current minimum wage? The numbers say that employment keeps people out of crime. So, increasing the minimum wage, though it does increase the earnings of those who stay employed, will tend to increase crime by reducing employment levels.