Friday, May 11, 2012

Free to Choose

If you watched Milton Friedman on Donahue that I provided a while back you heard Friedman talk about a 10 part special that was about to be shown on PBS that he put together making a basic case for his economic theories. Guess who suffered through the whole thing? All 10 hours. Yours truly. That's commitment right there, eh?

Actually it's really good so it wasn't a chore for me. Not that I agree with Friedman for the most part, but it's a really well done series. You get 30 minutes of Friedman making his case. Then you get a discussion with critics and supporters for the remaining 30 minutes. And unlike O'Reilly or the typical debate you see on today's cable shows you get people that are allowed to make their case without too much by way of interruption. It's very worthwhile and informative, especially relative to today's television.

I'm going to record some brief thoughts here which may be imperfect since I'm going from memory.

FTC1 Power of Market - Friedman's argument is that the more free an economy the more prosperous the country. In my view this is just dubious in terms of the way Friedman defines freedom. The socialist on the panel makes a critical point. The US in fact has not been a free market society. Labor history was extremely violent. Railroads were subsidized by the government. Friedman's reply is that government spending was only 3% of GDP back then, so it's still not a lot of government involvement. He will later note (FTC3) that the growth in government has been in the welfare state measures (Social Security and Medicare). There is a Motorola executive involved that mostly sides with Friedman. I'd point out that in S Korea it wasn't government expenditures, it was government control (tariffs, incentives, restrictions, etc) that really distinguish it from what Friedman would recommend, but it did really well.

FTC2 The Tyranny of Control - The claim is Hong Kong is awesome. Don Rumsfeld is involved in the discussion. He was a sort of Friedman protege. Friedman claims that societies that don't govern economics do better. A woman on the panel says in fact Hong Kong does have government intervention (roads, other items) and points to South Korea and it's heavy hand with regards to industrial policy. Friedman doesn't deny this but maintains that Singapore is free market.

FTC3 Anatomy of a Crisis - Friedman says we must contrast societies that MORE CLOSELY resembled free market conditions, and these are the ones that prosper most. No society is entirely free market. He also claims that the period after WWII up to 1973 was in fact a rather difficult economic time period. There is discussion of a recession in '58 I believe. He says that things in the US could be much better. He says that Keynes was right that government stimulus was needed in the wake of the Great Depression but it's gone well beyond where it should have been. He claims that if Keynes hadn't died he's the one person that could have prevented this vast overuse of government. The key failure of the Great Depression was the Fed's failure to provide the needed cash to prevent the runs on the banks.

FTC4 From Cradle to Grave - The thrust of the argument is that welfare makes people dependent and treats them as children. Despite that Friedman still does think the government should provide some assistance to the poor in the form of what he calls the negative income tax. The liberals in the discussion effectively dispel some myths about what the level of recidivism is and also some distortions from Thomas Sowell about the total welfare expenditures per person in poverty. He says if you divide welfare expenditures by the number of people in poverty the number looks absurdly high. But Sowell's critic notes that not everyone that receives monies from the government which are designated as welfare is poor. Social Security recipients for instance are not all poor. A good point from Friedman is that as much as he doesn't like welfare he must give it some credit in that at least it does transfer money from the rich to the poor, as opposed to most other government programs which are clever wealth transfers to the rich in disguise.

FTC5 Created Equal - Friedman argues that striving for equality of results is counter productive and wrong. The discussion after his presentation is really interesting. Friedman is hammered for straw man characterizations of the goal of the left and for misrepresenting the facts in England. His assertion that economic freedom brings political freedom is challenged aggressively by Frances Fox Priven on the issue of Chile and other Latin American dictators. Friedman falsely pretends that things are not much worse for the poor in Chile. The British panelist is awesome. He will not let Friedman get away with this straw man that equality of results is the goal. Friedman deftly attempts to sidestep the question, but his critic won't let go. Sowell likewise tries to sidestep the question. Priven talks about how blacks have struggled for equality and Sowell falsely pretends that no, blacks are not interested in this, only intellectuals, as if the black liberation movement was a movement of intellectuals rather than a grass roots movement. Sowell is totally wrong on this point, and even if you do look at the leadership (Malcolm X, MLK Jr, Jackson) you see that Priven's claims about their goals are correct.

FTC6 What's Wrong With Our Schools - Friedman makes the case for private universities and private K-12 school. Kids that go to public universities largely aren't there to learn. It's a social club. But kids at private school want to learn because they are paying for their schooling. Friedman's critic makes a key point that in my view he never addresses satisfactorily. A private school does well because they can turn away the tough cases. We spend the bulk of the money on the tough cases, but we value the fact that we have a system where everyone gets a chance. Who's going to take the hard cases?

FTC7 Who Protects the Consumer - The argument is that the free market is better able to provide products that protect the consumer than government imposition can. The FDA does block harmful drugs. But what you don't hear about is the drugs that were blocked by the FDA that would have saved lives. Those people won't know that they could have been saved, so you won't hear loud objections. The Corvair was a decent car by the standards of the time despite what Ralph Nader claimed. I think the Friedman claim sounds plausible but is just empirically false. It's seems plausible that the market would clamor for safety measures in vehicles if there was value in it. But it doesn't seem that they did. The markets didn't get lead out of gasoline. They didn't produce a populace that clamored for safety measures in cars. In fact Ralph Nader prior to 9-11 was trying to get airlines to lock cockpit doors, but the industry refused. It's really interesting to hear Friedman say that he wears his seat belt sometimes and other times doesn't, and he should be free to decide. It is extremely foolish to fail to wear a seat belt. People didn't come to recognize that until the government imposed it. Today, 30 years later, largely because of government imposition, people have internalized what Friedman hadn't internalized at the time. You have to wear your seat belt.

FTC8 Who Protects the Worker - Unions are really about protecting people within their own group at the expense of the poor outside of that group. Places that get away from unions are more prosperous. The discussion includes Walter Williams. Unfortunately this was the least useful discussion as I recall because people talked over each other so much.

FTC9 How to Cure Inflation - The down side of inflation is emphasized. We all know what that is. You can be making more money from one year to the next in nominal dollars and less in real dollars, and this makes things tough. That's obviously true. The extreme example of post war Germany is discussed. But that's not all that informative in my view. What about the less extreme, but still high cases of inflation, like South Korea? You can have 15% inflation and still have a prosperous economy. To talk about Germany doesn't really prove anything.

FTC10 How to Stay Free - High concentrations of power, wherever they reside, are dangerous and destructive. Friedman makes it clear that this is true in a variety of areas, not just government. So in that we agree. In this discussion Friedman focuses on government and how we must curb its power. But here we are 30 years later. Where is the concentrated power today? Take Wall St. Today they engage in enormous crimes and they are not prosecuted. So where is the real root of power? It's not in government. Government is the tool that concentrated power today uses for their own benefit. Corporate power is the real concentrated power today and in my view should be the focus of our resistance. When corporate power is beaten back then I think it does make sense to look at the abuse of government. On this Friedman and I are not so far apart.

5 comments:

Examinator said...

Well Said Jon,
I admire your forbearance, to sit still and not be inclined to, based on what you wrote been arrested for 'public disturbance' (throwing my TV into the street while screaming abuse at it! I suspect I would have ) ;)

FTC 2 Singapore a market state!? What part of reality doesn't he understand? Singapore is a gerrymandered state in that it's dominated by one ethnic group.
Cronyism is rife to that group as are the 'racist' laws limiting opportunities to other races.
It's biggest Corporations are part of the Government run and controlled Investment fund. Hardly free enterprise... shall we mention the requirement for Singaporean partners (read govt friends)

SINGTEL. Is virtually a Telecommunications monopoly. Optus is a subsidiary.
They were using Singapore money via their government corporation to extend loans to highly placed people to buy and sell weapons to The Burmese Junta breaking sanctions.
Shall we talk about the abuse of “guest” slavery (oops I mean workers).
6 days a week 16 hr days...no standing under the law ...therefore they are abused ! Maids are badly paid, beaten , raped redress is non existent. Particularly if the perpetrator is of the preferred ethnicity .

FTC4 He needs to define poor as in money or access to comparative opportunities, education, employment, health care. Most Americans , even the poor are better off in absolute term than the majority of the population in those countries who have tried Neo Conservative Economics.

FTC5 He clearly doesn't understand the difference between Equality and Equity. Equality is a fanciful ideal....everyone the same and as his critics including you rightly point out.
Equity, however in this context means Equality in Opportunity..... he should read a bit more?

FTC6 His conclusion is a rash generalisation and displays his bias. Those people who can pay for their education are generally from the Privileged class... Bush 2? was there to learn? He was admitted because of who is father was and money.....he did learn about drugs....was that recreational or curricular. Romney and his scissors attack sounds like.
Public Universities pick up the rest those from bad environments ….Like I said statistical Bias on steroids.

FCT7 I wonder how he would feel if as a result of his 'choice' he was thrown about killing another passenger and he or his estate were consequently sued into the stone age? Or if HE was injured as a result would he sue? Red herring/ cod/ shark, jelly fish too.

FTC8 I wonder if he has actually read the history of the US steel industry riots in the early 1920's . The reason unions came into being was that the owners wouldn't have safety standards/ measures despite the number of “Accidents” (read unsafe conditions).
Child labour in Dickensian times and the appalling industrial conditions... The owners didn't stop the practices by their own volition...they were forced too.
Oh yes my favourite Bopal. The owners weren't interested in safety or responsibility and when it went pear shape they hid behind a complicated corporate structure and their size to avoid and obscenely minimise their payout.... Crux Business puts Profit and self benefit above all else.
More recently James Hardy industries (asbestos) changed country and structure to avoid liability .
The list goes on and on. Left to their own devices business wouldn't change.
Don't forget who is stirring up opposition to all aspect of Anthropomorphic Climate Change.

In short his argument were all false in that they were selectively chosen. He made a decision (theory) first then went to find the evidence to support it...omitting inconvenient observable facts.
Too long?

Jon said...

Not too long for me.

On FTC5 (equality) what Friedman was called out for his straw man Sowell tried to shift the argument and pretend that really what they are arguing for is equality of opportunity. The British panelist hammered away and said that the arguments presented only rebuted equality of results, which as I said is a position nobody holds. But then Priven said that we you have no concern whatsoever with outcome then equality of opportunity is a sham. When one child doesn't know if his next meal is coming and the other has a trust fund, are we to believe this produces equality of opportunity?

I was seeing not just omission of important facts, but straight false claims. I suspect Priven was pretty irritated with the whole thing. She was getting talked over a bit and kind of bullied, and she had to politely listen to false assertions that I could tell she wanted to address.

Examinator said...

Jon,

It sad really that such so called 'conservatives'(sic) prefer technique rather than substance in almost every level of debate(sic).
As I've indicated before the far far greater part of their strategy is based on the old sales maxim
" emotion makes the decision and reasoning justifies it".
Note I said 'reason'
I've yet to hear a 'conservative'(sic) argument that comes half way to being able to stand up to moderate examination.

Having spent my 'Jesuit' years
('give us a boy [at 6 to puberty] and We'll give you the man' in a 'third world' country there is NO way the average indigenous child has as much as “a paper airplane in a Hurricane's chance' of an outcome near say a Romney.
Likewise my 10 years in Volunteer Crisis intervention counselling has convinced me that a for large proportion ( 60-70%) of average children that with the best will in the world their futures are severely limited by the lack of opportunity; Either genetic or circumstantial.
To suggest otherwise simply to ignores the extremely well researched evidence. To me it's not a strawman argument as much as it is either gross incompetence (non sec) or as I suggest an out and out LIE.
Again I return to Bopal
In those slums the children actually work from Sunrise to Sun set 7 days a week ....To SURVIVE...many with just1 small meal a day. To suggest that they are lazy bludgers is palpably nonsense.(no social security or education there) wages were exceedingly low even by their standards. So hiring these ignorant people and maximising profits by not providing safety equipment or enough training because it wasn't mandated was a recipe for the inevitable a catastrophe. It was culpable depraved indifference i.e. “bean counting”, Opportunity Cost V Payout.
Now my point, that no matter how hard these work and given the long term harm to suggest that a private school(charging money) would improve their lot.
Likewise, given the gamesmanship (corporate capitalist bean counting) of the American parent company it is clear that the argument that “the unfettered market” (sic) forces improvement/opportunities for any one other than the capitalists is at best demonstrable nonsense at worst a deliberate LIE.
By their own demented reasoning *so long as there are more people wanting jobs than Jobs available the market forcing * argument is, forget the red herring ...more like a red plankton (singular).
Logic dictates the same principal applies to opportunities. It is by any sensible deduction a built in distortion to 'the market forcing improvement' argument.

In essence Corporatism aka Capitalism (sic) as practised is Fatally flawed the only logical choice remaining is either come up with a totally novel system or continue with Government intervention only do it better.
The nature of the argument by extremes/ absolutes is a bit like standing under a Eucalyptus tree during weather changes then being surprised by the inevitable falling limb.

Examinator said...

Jon,
I guess I have two problems that bothers me most by F and their ilk is not that they have different opinions to me. Something God, the giant spaghetti monster(amusing book)or any other omnipotent sky spirit, would also know, is almost as common as supernatural deities to humans. ;)
Rather it's the denial of the undeniable in favour of a smoke screen largely to hide their obsessive self interest. I often wonder if this level of denial if genuine wouldn't be indicative under some psychologically defined syndrome or state.

A philosophy is by definition is an idealised (aspirational goal ?) perspective. What it isn't is a scientific method or absolute conclusion.
It's logically demonstrable “a squillion way to Xmas” that Pure (insert any philosophy) can't exist in it's absolute state.
Reality/logic also dictates that one can't prove absolutes from generalities or aggregation analysis i.e. Statistical analysis can *indicate * probabilities of mass trends but can't predict absolute precision at the specific level (absolutes).
In the context of economic debates they can't logically about free market capitalism V interventionist capitalism (aka ) but rather how much intervention and therefore specifics. It is then logical that any serious true Free market advocate should be looking to intervention to compensate/counteract the effects of externalities that distort their treasured philosophy.

As they clearly don't and it can clearly arguing for distortions IN THEIR FAVOUR it is reasonable conclude that their objective isn't the necessary level playing field necessary to achieve 'Capitalism Nirvana' (free market, which today is code for Lase faire or Malthusian Economics= Corporatism) .
It is at this point in the logic tree that my second objection kicks in.

In the absence of that goal or objective their arguments tend to be about myopic economics, those benefiting them ( a contradiction in terms, economics is one of those aggregation analysis topics ) not the truth or even capitalism per se. Clearly then their verbal gymnastics tend towards the substance and therefore the validity of a advertising message akin to selling a floor cleaner as achieving “whiter than white” or a soft drink that claims “ the real thing”, “things go better with....” . They are designed to appeal to the emotions and are substantively, virtually meaningless. Can you imagine running pages and pages or 10 hr programs predicated on the above slogans?

In conclusion I'm arguing that a debate about how much, when and when, for an intervention or devising an other novel system is meaningful. However, 'absolutely no intervention will suffice' or “tilting the market to benefit me and perhaps some by some magical undefinable process everyone benefits” fails at the first hurdle of reason and isn't.

eds d said...

@Examinator

Hi there.

I have some problems. I hope you will be able to provide an answer!

FTC2
It seems to me that gerrymandering is concept which has to do with the political process and thus resides outside the market. Also I would probably argue that an example of an existing monopoly or the existence of a public investment fund doesn’t really challenge the view that Singapore is predominantly a market system. Thus compared to other countries I do not think that it is entirely incorrect to claim that the Singapore system is relatively free market oriented.

FTC4
“He needs to define poor as in money or access to comparative opportunities, education, employment, health care.”
Why does he need to adhere to your definition?

What exactly does Neo Conservative Economics entail?

FTC5
May be.

FTC6
I’m not quite sure what your point is here. But you probably should read up on Friedman’s views on education. I think they might surprise you.

FTC7
I read your comment a couple of times, but I simply can’t understand it. Could you elaborate?

FTC8
Well, unions are a complicated topic. Friedman’s arguments regarding unions were mainly about their effect on wages and possible disemployment effects. I do not think his intention was to argue against worker safety.

With regards to child labor: It is true that in Charles Dickens time child labor was a very big problem. However child labor is luckily almost completely eradicated in the west today. This was in part due to anti-child labor laws. But one also has to remember that child labor was declining rapidly before the advent of these laws.

“He made a decision (theory) first then went to find the evidence to support it...omitting inconvenient observable facts.”
This just seems like speculation. You have made no supporting arguments for this statement.

Thank you for your time. Have a nice day!

/eds