Milton Friedman: Progressive Social Justice Thinker

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I’ll be posting a link soon to a summary I wrote of Milton Friedman’s book Capitalism and Freedom for LiberalVision.  I’d like to precede that with reasons why Friedman might not be the right-wing villain of much left-wing imagination, and indeed might not be what a lot of people on the right might want him to be, certainly the more socially conservative, authoritarian, national security-nationalist, and big business, orientated parts of the right.

Points listed below, mostly referring to Capitalism and Freedom, but some others as well.

Friedman argues that businesses are guilty of trying to rig markets and get economic favours from governments.  This increases inequality as economic resources are directed to those who are already rich and powerful.

Government should create an unconditional basic income, he teferred to as ‘negative income tax’, because the income information on tax forms would e used to establish a basic income for those with low or zero earnings.

Public housing is bad because it inevitably groups together a disproportionate number of the socially and personally dysfunctional, since some proportion of the poor have low income because of those kind of problems.  Friedman certainly did not suggest that is the only, or main, reason the poor are poor, but obviously it is a factor and Friedman thought that a very negative atmosphere would be created for the poor by concentrating such people together.

The poor should have a choice of schools, and not just those rich enough to afford private schools.  This is why Friedman advocated ‘education vouchers’ which can be used to purchase education at a number of schools.

Minimum wages are bad for the poor, because they make a few people better off while making others even poorer because they cannot find work at the legal minimum, depriving them of a chance to move up the ladder of income levels in the labour market.  This effects the poorest, most marginal, and most discriminated against groups the most.

Rent control is bad for the poor, because it reduces the incentive to rent out property, and build for rent.  Those who receive the benefits of lower rent are a minority and find that low rent leads to bad service from landlords who are not making money.  Everyone else loses out even more because less housing is available.

Government should provide public goods, which Friedman referred to as positive neighbourhood effects, that is generalised goods which cannot be charged for in any kind of practical way.

Government should act against public bads like pollution, bad neighbourhood effects, because the more individualistic reactions to them as in court action cannot hope to compensate everyone harmed.

Inflation control should be at the centre of economics.  This protects the incomes and savings of the poorest, the people who are closest tot he margin of destitution if the value of incomes and savings rapidly diminishes.

High income taxes for the richest entrench inequality and prevent social mobility, because if we lose most of every extra bit of income we earn as we move up the income scale incentives are strongly reduced to make it into the highest income brackets.  High social mobility evens out inequality over time, though it can increase it at any one moment, because over time individuals move between income levels.

These objections to high taxes on high income were recognised by two Democratic presidents who reduced such taxes: John F. Kennedy and Lyndon Baines Johnson.  LBJ was the most left-wing president in office after Franklin Delano Roosevelt, and massively increased social spending in his ‘Great Society’ project.  Even under Reagan, one of the major tax cuts cam about through a bill co-sponsored by two Democrats: Richard Gephardt and Bill Bradley.

Highly regulated industries prevent competition, by making it more difficult for new and small businesses to enter the market, which raises prices for consumers and slows economic growth.  This had an influence on deregulation of airlines and road transport in the 1970s, sponsored by Senator Teddy Kennedy, one of America’s most famous left-liberal political figures in US history, and was supported from outside Ralph Nader, then a consumer rights activist, and now the most famous American politician to the left of the Democratic Party.

Friedman was a social libertarian who advocated legalisation of drugs and an end to military conscription in peace time.

Friedman, and free market ideas, have been adopted by the conservative tight,  but that does not tell you much about reality.  Friedman thought that some policies of Thatcher and Reagan were in line with his ideas, but definitely did not think that they had followed his position of a real break with the corporate-political  nexus, the way that regulation and intervention always suits entrenched interest groups.

A standard accusation thrown at Friedman is that he was connected with the dictatorship of Augosto Pincohet in Chile.  It’s true that some of Chile’s more market oriented policies were welcomed by Friedman, but he never endorsed the dictatorship.  It’s true that many regime economic advisers came from the economics department at the Pontifical Catholic University, where there was a partnership with the Chicago department where Friedman was a professor.  However, the Chicago department, then as now, was a large department with many big names in economics, so there is no way that links with Chicago could have turned the ‘Chicago boys’ in Chile into instruments of a Friedmanite plan. though they were certainly ell educated in his ideas.  Friedman visited Chile in the early years of the regime, and met Pinchet, but did not endorse the regime.   Advice is not endorsement.  The speeches Friedman gave in Chile mentioned the role of government in undermining centralised government, far from an endorsement of authoritarianism.  Later on Friedman made a explicit link between the economic advice he gave and the intended gaol of weakening the power of a strong state.  Friedman gave advice and lectures throughout the world in countries with every possible kind of government.  Though Friedman welcomed market oriented economic changes in Chile, how could he not welcome such changes in any country, some of Pinochet’s policies were in direct contradiction with his views, most obviously keeping the copper industry nationalised.  The massive corruption that Pinochet and his family were later found to have been engaged in, was exactly the kind of consequence of political intervention in the economy that Friedman warned against.

Link of the Day: Left-Libertarian Theory in Steiner

Primary version of this post at Barry Stocker’s Weblog

Download pdf of ‘Left Libertarianism and the Ownership of Natural Resources’

Hillel Steiner in Public Reason: Journal of Political and Moral Philosophy, Volume 1, No 1. February 2009

This paper by Hillel Steiner explains a position which I think needs to be better known: equality can be promoted without a big state and a complex redistributive tax and benefit scheme. The theory is left because it is egalitarian, it is libertarian because if favours a minimum state. It is important to understand that libertarian arguments for a minimal state are not necessarily tied up with inequality, and that libertarianism in politics is not necessarily ‘right wing’ and only concerned with the rights of those who have a lot of property.

The argument in summary builds from a claim that property in natural resources should be equally distributed, which itself derives from a reading of John Locke’s Essay on Civil Government (also known as the Second Treatise on Government or Second Treatise on Civil Government), particularly Chapter V ‘Of Property’. The non-egalitarian reading of of Locke’s argument is that we have an absolute and natural right to our property, beginning from the (pre-)historical point at which we labour on land. In this view there is no limit to how property we can accumulate in land, natural resources of anything else. The egalitarian reading is that Locke only allows for unlimited accumulation of land and natural resources where there is an unlimited amount. Where we approach the limit, we have to divide equally. We are near the limit of the cultivation of land and the use of it to extract natural resources, in the sense of the amount of the Earth’s surface. Therefore Locke’s argument should lead us to distribute land and natural resources equally. This provides a basic form of property equality which avoids the need for complex big state schemes to redistribute income from the rich to the poor through income transfers or public services. Given property equality, there is more possibility for all individuals to be in a position to purchase those kinds of goods and services. Property equality is achieved by equally dividing ownership of land and natural resources; or taxing land and natural resources to finance a minimum income and unavoidable state activity.

Steiner additionally argues for taxing genetic inheritance, that is taxing parents for genetic outcomes in their children which give those children better life chances and make it easier for those children to be raised. This is offered as an alternative to a assistance for the disabled by taxing the non-disabled, which Steiner associates with John Rawls, I do not find this very convincing, but this kind of scheme to help those who might still suffer hardship in an equal distribution of property/natural resources seems typical of left libertarian thinking, as in Libertarianism without Inequality Michael Otsuka, which suggests supporting the disabled through the work of prisoners. I’m not really convinced of the argument in general, but I think it is worth of study and reflection, and certainly I’d like to keep some of the basic impulses behind it, in particular, a limited state combined with a social minimum.

The simplest point I wish to convey is that libertarian thought is not in itself anti-equality or conservative or right wing. The massive complex state machines used to regulate the economy and social risk, and administer tax and benefit schemes, surely create some economic social cost which bears on the poorest, and which spills over into the authoritarian attitude that state agencies always know best and cannot be challenged. Even from a very socialist point of view, it is surely appropriate to be concerned about economic and social resources going into a state bureaucracy which is inevitably hierarchical and seeing for power and privilege. Surely left-liberals, social democrats and socialists should be concerned with limiting state power and expenditure on administration to the smallest level possible.

Even if we look at more ‘right wing’ libertarians like Milton Friedman, we can see support for universal minimum income, which Friedman calls negative income tax. Another major idea of Friedman’s, school vouchers to give everyone a choice of schools funded by public money, is designed to help the poorest who do worst out of uniform no-choice public education. Other ideas of Friedman might be considered more left than right, like opposing military conscription, supporting legalisation of drugs, and supporting unlimited immigration. Friedman’s emphasis on strict control of inflation benefits the poorest the most, since they inevitably suffer the most when high inflation quickly destroys the value of low monthly incomes or small cash savings. One of today’s international left heroes, Lula, the President of Brazil has made that the cornerstone of pro-poor policies.