Category Archives: Milton Friedman

A quick thought on the additional benefits of the Free Market 

Any reputable economist will tell you that the cure for racism, sexism, and religious xenophobia is not regulation or more government but the Free Market.  When I buy a digital song or a car or a pair of jeans or a TV or a house or some chimichangas, I am unknowingly supporting millions of people from all walks of life and geography — men, women, old, young, black, white, Asian, Hispanic, gay, straight, Christian, Muslim, Jews, atheist​, and even poor and rich.

The Free Market doesn’t care who or what you are. It only cares what value you can bring to the table.  To produce anything, all of the components, parts, assembly, raw materials, financing, transport, warehousing, marketing, sales, and management come together, usually without central planning, without the need for coercion, and without any extra incentives other than individuals seeking out their own self interests. And yet, in the midst of the selfish anarchy of Free Will and Voluntary Association, every day people put aside all of the things that divide us and are able to work together on the majority of the things that unite us.


#Embraceliberty #MiltonFriedman #Rothbard #Hamsandwich #Thepencil #Adamsmith #Invisiblehand

Free Markets Are a Prerequisite for Art and Charity

Catching up on some of the news this week.  Aside from the hilarious, abysmal failure of Obamacare Lite (aka the American Health Care Act (AHCA), the budget has been getting a lot of publicity.  I realize some of my readers are not number crunchers, so for this post, I’ll refrain from digging into those details of the budget plan and focus more on the qualitative aspects.  (No promises for future posts. 😉 )  

Center Stage with the liberal Left this week is PBS, the National Endowment for the Arts, and Meals on Wheels.  From some of the memes and posts you’ve been reading, undoubtedly you know that Humanity as a whole is about to descend into a Dark Age.  Elderly veterans will be callously left to starve.  Our great-grandchildren will have to read about Art and Educational Programming in history books because without Government support, there will be none.

That is if our great-grandchildren are actually reading.  And reading history books.  

Maybe they’ll learn about it on YouTube.  (Wait, isn’t that art?  I digress.)  

Without digging into numbers as promised, I’ll simply mention that the Left loves to point out these programs are tiny budget considerations compared to, say, Social Security or Medicare or the Military policing the world (all of which I’m also in favor of slashing).  But if I’m bleeding trillions of dollars a year, spending money we don’t have and borrowing more, then yeah, I’m looking for every opportunity to save a buck.  Guess that makes me heartless and greedy.

Think about the government slush fund created to support the broad and nebulous space known as Art.  Is all Art good and worthy of our combined, financial support?  To those that defend the NEA and PBS, does it matter where the money goes, just as long as it is labeled as “Art”?  I’ve been around musicians, graphic artists, videographers, photographers, sculptors, painters, poets, dancers, writers, and actors for most of my life.  I can tell you without hesitation that Artists are some of the most critical people I know.  They love to rip into other artists calling them Hacks, Attention Whores, Corporate Shills, Sell Outs and Wannabes.  If they’re being honest, they will even admit Nickelback isn’t as good as Buddy Guy.

For over half a century, our tax dollars have been taken from us for a committee to decide which Art should be supported.  So, let’s say you’re an artist/entrepreneur trying to open a small local gallery in Chicago.  You don’t have a large staff, and you’re barely able to keep your doors open.  You then learn that the Art Institute of Chicago received, yet again, another $20,000 grant from the NEA, despite the fact that they have a budget of tens of millions of dollars and support from corporate and private philanthropists from all over the world.  In fact, in their 2016 Financial Statements, the Art Institute of Chicago declared they had over $70 million in Net Contributions Receivable. (Sorry, numbers, I know.)  

Is this acceptable to you artists and supporters of Art?  In economics, we call these Rent Seekers.  Basically, those that are rewarded are not necessarily the best, the purest, or even the most popular.  The reward goes to those that can successfully navigate the system.  If you’ve got lots of money already and can hire dedicated staff to apply for grants and government funding, chances are you will reap the rewards.  

This is also one of the reasons why you can easily find countless examples on the web of questionable spending of public funds in the name of “Art” — things like almost a half million dollars for medieval smells museums and $100k for Shakespear without Words.  

Then there’s Meals on Wheels, as mentioned above.  Their funding is also on the proverbial chopping block.  Or so that’s what we’ve been led to believe from the headlines and memes.  In fact, less than 3% of their operating budget comes from federal grants.  

Again, numbers.

But what is the solution then?  Without Government stealing from everyone, creating slush funds with zero accountability, and rewarding organizations and artists with the means and knowledge to navigate the grant writing maze game?  

The Free Market, of course.  

Take, for example, this blurb from the NEA’s own website.  

Capture

So now, the NEA is an investment vehicle?  If $9 of private investment for the arts is voluntarily given by individuals and organizations, why do we need to steal the last dollar of $10?  Can’t those $9 be used to create catalysts for communities, productive jobs, net adds to GDP, and revitalize communities?  Or is there something magical about that federal $1 bill.  (#fungibility) 

Just can’t seem to get away from numbers, can I?  

The Free Market encourages individuals to support Art in all of its glorious shapes and sizes based on our preferences.  In fact, more people voluntarily support the arts, despite the theft that government practices.  If they had more disposal income to allocate, support for the arts would grow even further.  George F Will wrote in the Washington Post

Americans’ voluntary contributions to arts organizations (“arts/culture/humanities” institutions reaped $17 billion in 2015) dwarf the NEA’s subventions, which would be replaced if those who actually use the organizations — many of them supported by state and local government arts councils — were as enthusiastic about them as they claim to be. The idea that the arts will wither away if the NEA goes away is risible.

A bit dated, but still relevant, the Heritage Foundation wrote that the NEA actually discourages charitable gifts to the Arts.  

But where’s the assurance that people would freely fill the void if the government safety blanket is removed?  Look no further than Meals on Wheels.  When the news was announced that the proposed budget cuts might impact 3% of their existing budget, those silly fools John and Jane Q. Public donated 50 TIMES their normal rate and 5 TIMES as many volunteers stepped forward to get their hands dirty and work at Meals On Wheels.  

How is that possible without the threats of government coercion?  Why would anyone voluntarily support the things that matter to them without the use of force?

It’s a mystery, to be sure, what makes people act so irrationally.  

But let me add one other consideration to this topic which I had alluded to in my post title.  Milton Freedman wrote in his book “Free to Choose” that voluntary exchange is a necessary condition for both prosperity and freedom.  It’s not a guarantee of prosperity and freedom.  But is a necessary prerequisite.  

I’ll add my own variation of Milton’s idea to say that in order for the Arts and Charity to not only survive but to thrive, voluntary exchange or Free Markets are a necessary prerequisite.  If arts and charity were supported more and more by coerced, government participation rather than individual choice, eventually Government will determine what are acceptable forms of art and what causes are worthy of “charitable” support.  As I pointed out above, most likely this road leads to successful Rent Seekers and the Politically Connected grabbing up all of the attention and resources.

Imagine if Trump’s administration was given the reigns to decide not only which forms of art and charity are worthy of support but also if he could decide which forms are ALLOWED.  What if Obama was given that amount of power?  Or John McCain or Hillary or Chad Kroeger of Nickelback?  The Free Market is the single greatest protector of the Arts and Charity because individuals can decide which of the countless choices available should be rewarded with our support, both financially and otherwise.  

The government should not be in the business of deciding which forms of Art and Charity are acceptable or not.


An Evening With Bastiat

Yesterday, my wife and I attended a lecture hosted by the Charlotte chapter of the Bastiat Society.  I was thrilled to learn there was a local chapter in Charlotte and even more excited to learn there was a free lecture being given on Capitalism.  Those who don’t know, Claude Frédéric Bastiat was a 19th century French economist who wrote revolutionary, pro-liberty works such as The Law.  This book was responsible for my first step into the philosophy of Liberty.  If you haven’t read it, download a free copy of it here on audio or pdf at Mises.org.  

Seriously, it’s like 50 tiny pages and will take you less than half an hour.  Go learn something.  

The speaker for the evening was Clemson University Professor of Economics Dr. Bradley Hobbs.  He was very entertaining and informative, engaged the audience well, and gave a lot of excellent, historical and contemporary data about the benefits of Capitalism, why Socialists and the Left seem to be gaining popularity, particularly among the young and senior-aged cohorts, and gave some perspective on many of the common debates often heard on social and traditional media around the evils of Capitalism.  Dr. Hobbs will be sharing some of his presentation notes and references with us soon, so I hope to pass them on when I get them.  

One interesting exchange took place between me and an older, self-proclaimed Crony Capitalist (I’m 90% sure he doesn’t know what that means.  Pretty sure he thinks because he’s an entrepreneur and aged, that makes him one.)  Anyway, the exchange went something like this:

CC:  The problem with Capitalism is that people aren’t concerned about all these larger, global issues.  They’re selfish and only want to think about themselves.  They don’t think about what’s best for society.  That’s just human nature.

Me:  And so you are making an argument that because Human Beings are selfish and short-sighted, we should put Human Beings in charge of determining what’s best for everyone to deal with these issues?  Milton Friedman once asked “Who are these angels that are going to come down and organize society?  Where do we find them?”  

He didn’t like me tone, I guess, because that got him going.  

Somehow, we got to the topic of Public Safety and Motorcycle Helmet Laws.

CC:  Someone has to take responsibility for protecting us and keeping us safe.  The government enforces things like motorcycle helmet laws. . . .

Me:  So if I want to ride my motorcycle without a helmet, breaking the law, and I get into a crash, who is the victim?  

CC: Society is when my money has to take care of your family and loved ones because of your selfishness.  

Me:  So you are protecting Me from Myself [on behalf of my family]?

CC:  Yes because when you’re in the hospital and don’t have the money for emergency care, my money is going to pay for your care. 

Me: No, I do not want any of your money.  

CC:  You will someday.  When you’re laid up and have nowhere to turn.

It’s like a broken record, but I have this same exchange almost everywhere I go (physically and virtually) to talk about Free Markets, Choice, and Liberty.  I even had a similar exchange with a co-worker the other day.  The idea that elected officials, people who were slick enough to convince 50.1% of the voting population to put them into power, know what is best for the hundreds of millions of people in our country is beyond my tiny brain to comprehend.  

Invariably, Statists proclaim that the reason why Free Markets and Liberty fails is because people can’t be trusted.  Thus, People need to be placed​ in charge of everyone.  They also arrogantly claim responsibility and authority over my own free will to make choices about my life.  Because somehow they know what’s best for me.  

Updated edit – The organizer of the Charlotte chapter said I should lead one of the next lectures.  Hmmmm. . . .

 

What Would You Say, Ya Do, Here?

Just a short thought prompted by an exchange I had recently on Facebook with a former student of mine. When it comes to Labor, there’s a difference between Value and Activity. In the free market, Value is determined by the Consumer. Whoever is buying decides if the good or service offered has enough Value to justify the price. As I’ve written before, in a free market, Price is simply the agreement of terms set by the Buyer and Seller. If the Buyer doesn’t see enough Value at a given price, he doesn’t buy. If the Seller doesn’t see an adequate return on his labor, she doesn’t sell.

The Free Market demands Producers give their best in order to attract the most Buyers. Now, a Seller could very well try to cut corners, use inferior materials, or cookie-cutter mass produce his goods to get them to market at the lowest price. And the Buyer might favor affordability over quality. Choice. That’s the magic of the Free Market.

Activity is also known as busy work. I’m sure you can identify someone with whom you’ve worked that seems to always be busy, but you can never really articulate what it is that they do or what their contribution to the organization might be. If you’re familiar with the movie Office Space, one of my favorite scenes is when Tom is meeting with the Bobs, trying to explain what did at Initech. People skills!

Now, this is not a rant against management or some Proletariat rallying cry for the Workers. Good managers absolutely add value to an organization. But the biggest culprit of Activity promotion is Government. Government thrives on pushing paper, filling out redundant forms, following arbitrary procedures and protocol, perpetuating outdated equipment, and generally making you wait. And the reason is simple. Government has very little accountability. They’re not measured on whether their Activity produces anything efficiently. They usually have no competition, so there’s little incentive to make any improvements to the status quo.

I remember seeing news stories of the Soviet Union where everyone was given Activities to perform. Someone might have been responsible for cutting pipes. Another person might have been instructed to produce the joints. Another made the valves. Turned out that the pipe cutters used ¾ inch pipes. The joint makers used ½ inch. The valve makers used 3/8 inch fittings. Because they each had an Activity to perform and no incentive to make sure their product was useful or compatible with others, they just kept making their daily quotas. And what happened? Well, if you were trying to build a house, you probably ended up using a lot of duct tape.

Only in the Free Market, where Producers are rewarded for Value they create and Consumers are empowered to choose the products and services that exactly fit their needs, can a nation thrive, overcome poverty, innovate and explore, and progress ahead. Government, almost universally, stands as the greatest inhibitor of progress. It is a parasite on the Free Market, rewarding Activity and not real Value creation.

Why do you make so much trouble, arguing with your friends?

It seems nowadays having strong opinions about anything can get you into deep trouble.  Not only do you risk offending the people who challenge your views, but there are countless others that don’t say anything and simply write you off or agree to disagree with you.  (click – unfriend button).

Not sure why this is.  Is it that people don’t have strong convictions anymore?  Is it that we have forgotten how to rationally debate ideas without feeling personally attacked?  Are we afraid to step out on a limb and stand for something that’s unpopular, counter-cultural, or even rebellious?  And why does dissenting opinion anger those in the majority so much?

I’ve always fancied myself to be a very logical person.  If I’m presented with information that challenges some notion that I’ve held for my whole life, I’m open to being corrected.  I’m open to testing the results of your theory.  Oftentimes, ideas require a partial leap of faith because not everything can be ‘proven’ to everyone’s satisfaction.  But it doesn’t take much discussion or debate to look at root causes, priorities, motivations, and results.  You just have to be open to being honest.

I speak and write with passion and conviction.  My tone is oftentimes authoritarian (meaning I sound like I know what I’m talking about), but that’s not to say that I am never wrong.  I make mistakes all the time.

When it comes to Liberty, there’s very real evidence you and I witness every day that shows when left alone, people generally are better at knowing what decisions will make them better off or worse off than some outside party.  There’s also ample historical evidence that shows when any group tries to control us and our choices (usually under the umbrella of the ‘greater good’), bad things happen.

That doesn’t mean people don’t make bad choices or that short-term happiness doesn’t cost them long-term suffering.  What it means is the cost of sacrificing Individual Liberty for the sake of the flock is too great to ignore.  Individual freedom is the safeguard against the tyranny of the elite and powerful.  It places responsibility and benefits squarely on the people making the decisions.  It thus creates incentives for us to make good, wise choices.  It motivates us to seek out professional or expert guidance in areas we lack understanding.  It rewards those that innovate.  It compels us to be productive in society, not just busy.  Individual liberty actually encourages cooperation and interaction, not isolation and selfishness.

Milton Friedman was asked once in the clip below what the consequences are of continuous erosion of Individual Liberty and why We, as a society, allow it to happen.

The consequences are very straightforward, and that’s the eventual eradication of all Liberty.  The why, as Friedman points out, is a little more difficult to explain.  I personally agree with Milton that the reason why WE head down this path is because of ignorance – not fully comprehending both the intended and unintended consequences of the choices we make, the politicians we elect, the goals we set as a society, and the Total cost it takes to get there.

That is why I write.  That is why I speak out.  That is why I read and study and discuss and watch and listen and learn — To prevent intellectual atrophy.  To challenge my perceptions.  To strengthen my courage and bolster my resolve.  To gain wisdom but also learn humility.  To seek solutions to problems rather than sit back and let someone else do the thinking for me.

The Atlantic put out a story that showed that American adults spend more money on Lottery Tickets than the combined total of Sports Tickets, Books, Video Games, Movie Tickets, and Music.  I personally don’t care what you spend your money on, because that’s your business.  But it says a lot about Americans when they devote that much of their money into what they perceive to be the answer to their problems — a statistical impossibility of winning a big sack of cash they did nothing to earn and will most likely blow through wastefully in less than 10 years.

Get in the fight.  Take a stance.  Stop making excuses for yourself and the things you can’t do.  Discuss ideas, debate solutions and be open to criticism.  Those that have different opinions or values are not your adversaries.  They are your opportunities.