Economic Myths and Public Opinion
Friedman, Milton
The Alternative: An American Spectator • January 1976 • Volume 9, Number 4 Milton Friedman Economic Myths and Public Opinion • (This article has been adapted from a William Arthur Maddox...
...When I want to be demagogic, I say that's a system under which the people in Watts send the children from Beverly Hills to college...
...According to its charter and its objective, the Federal Reserve System was supposed to step in and enable banks to meet demands of their customers by buying bonds on the open market or by providing currency through discounting assets of its member banks...
...I was very amused by the parade of special interests who came up to the platform, and one after another said, "It is absolutely essential that we cut the government budget to beat inflation...
...The myth was spread by the reformers, the muckrakers of the early twentieth century, by the intellectuals who contributed to the drastic change that has occurred in our attitude toward the market on one hand and government on the other, which has in turn produced such a drastic change in the character of our society in the past forty or fifty years...
...Much more fundamentally, the program was sold to the American people under essentially false pretenses, on the ground that the ordinary people were so shiftless, so little concerned with their own future that unless they were compelled by government to contribute to a fund and paid a pension afterwards, they would all become charges of the state...
...Imposed social norms among men, like toilet training among infants,represent a limited infringement on the individual freedom to "do one's own thing" in order to prevent a greater evil or bigger mess from piling up...
...It includes the repeal of the provision for compulsory interlock...
...We are able to live as well as we do because of their achievements and their accomplishments, because of what happened during that period of the nineteenth century...
...It includes postal savings, it includes Prohibition...
...For every one hundred dollars of currency or deposits that people owned in 1929, there were 67 dollars available in 1933...
...The great scandal of our times, in my opinion, is government expenditure on higher schooling...
...And that was the case in the nineteenth century...
...The Philosopher's Disease • I believe it was the late Ben Buncombe, hat worldly-wise old British journalist, vho once remarked that the only place ,ne is likely to find the Philosopher's tone is in the gallbladder of a bilious 'edant...
...It was this experience that in the nineteenth century really set the United States on the road to laissez-faire...
...In 1929, just prior to the Great Depression, total government expenditures at all levels, federal, state, and local, were about 10% of the national income...
...I don't believe people realize how extraordinary an episode that is...
...Did Social Security reflect a grass roots demand for services...
...Now, if we were all purely cognitive creatures—if we thought out or could be conditioned (an unlibertarian concept) to think out our problems without acting on the impulses of anger, greed, jealousy, love, whimsy, or even an arbitrary preference for beefsteak over soymeal, this would all make perfect sense...
...The Alternative: An American Spectator January 1976 7 presented as if it was typical...
...In other words, the poor fellow at the bottom has been suckered into paying taxes for more years in order to provide better-off people with benefits for more years, and that's what's known as a program of helping the poor at the expense of the rich...
...Laissez-faire economists objected then as they object now to such tariffs, but in any case the level of the tariff was mild compared to the duties that were imposed later on...
...Let me give a very much simpler and more recent example, which I have already referred to—the safety and antipollution provisions for automobiles...
...Let me give you another simple example...
...It developed much more simply...
...I'm not for the moment talking about that...
...Since time immemorial, government has been granted the function, wisely or not, of controlling the monetary system...
...And, looking around us, it certainly shows no sign of abating today...
...At any rate, the important point is that far from being evidence of a defect in the private enterprise system, the Great Depression is evidence of the deficiency of governmental arrangements to manage the economy...
...For an analysis of the weaknesses of the Traditionalist Conservative case, at least at its most extreme, I heartily recommend her "Libertarian Challenge" which appeared in the October 1975 issue of this publication...
...Unlike the federal government, he doesn't have a printing press in his basement...
...If it weren't so tragic, it would be amusing to read the annual reports of the Federal Reserve System from its inception...
...In the great state of California which has one of the most extensive public higher education systems in the country, over 50% of the students at the institutions of higher education come from the top 25% of the families by income...
...I propose to discuss five myths about American society which are very widely accepted, which have a great deal of influence on public attitudes and public opinions, and yet which in my opinion are wholly false...
...By contrast with the situation today, however, they were allowed to go broke and fail...
...Output was growing rapidly, the cost of producing farm crops was going down thanks to great technological innovation in the form of reapers and other agricultural machinery, and the cost of transportation was falling...
...It was an era in which, except for the Civil War, spending by the federal government never exceeded about 3% of the national income, a sum which is derisory by today's standards when federal government spending is approaching 30% of the national income...
...What about the other charges...
...It was an era in which there was, for most of it, no ICC, no FCC, no SEC, and you pick out any other three letters of the alphabet and it wasn't there either...
...Far from being a period in which the poor were being ground under the heels of the rich, exploited unmercifully and the like, there is probably no period in human history in this or any other country in which the ordinary simple man had as large an increase in his standard of living as in the period between the Civil War and the First World War, the period when unrestrained individualism was most rugged...
...To give a very simple example: Anybody who buys a new automobile is required to spend something like $500 to $1,000 on items that he would not voluntarily choose, the safety and anti-pollution devices...
...But if I get it from other taxpayers, ordinarily I would call it a subsidy...
...We are all in favor of helping the poor provided you and I are defined as the poor...
...They built canals, they set up commercial banks and extensive banking systems, they financed railroads, they put up industries...
...although she attaches a codicile to this mental Emancipation Proclamation: to wit, legal protection of most accumulated capital gains...
...Again, was there a grass roots demand for government to step in on that area...
...We may so seize on virtue, that if we embrace it with an over-greedy and violent desire, it may become vicious...
...I don't blame lem...
...It was an era with the closest approximation to pure economic laissez-faire in American history...
...The people who were in the Greenback and the Populist movement were saying, "we want to do still better," but the historians tended to take their exaggerated objections for reality...
...In the same way, the fact that year after year hundreds of thousands of people left the countries of Europe to come to this country and to make their home here was dramatic evidence that they were coming here to improve their lot and not to worsen it...
...Call it the darker side of human nature, original sin, or anything else you prefer...
...therefore, it does not...
...That is a widespread myth, that somehow or other it is possible to spend money with nobody paying for it...
...Now tell me, is an involuntary payment a contribution...
...They turned out to be inefficient in the same sense in which all government enterprises have been inefficient from that day to this...
...Everybody would like to see the price of the things he sells go up, and the price of things he buys go down...
...The Demand for Services Myth Let me come to a third myth: the myth of a demand for government services...
...Spock, Edith Efron, or anyone else may sensibly argue about the degree of imposed control justified in either case—but the need for some degree of imposed control is self- evident...
...Certainly, the prices of farm products did go down...
...There were many people at the time who were urging on the Federal Reserve System a policy which would have prevented this outcome, including people at the Federal Reserve Bank in New York, within the system...
...The facts are, first of all, that the tax which finances Social Security is the most regressive tax in our tax system...
...Of course, our condition is far better than theirs...
...From 1929 to 1933, far from preventing bank failures and bank collapse, the Federal Reserve System actually produced them...
...That was a period when we had completely unrestricted immigration, when anybody could come to these shores and the motto on the Statue of Liberty had some real meaning...
...It was Never in history has the ordinary man had as large an increase in his standard of living as in America when unrestrained individualism was most rugged...
...Nader ran a crusade a few years ago that cars were unsafe and that we ought to have an all-wise government agency step in and protect ourselves from ourselves, require us to fasten the seat belts, require us to have safety devices on the car, etc...
...Indeed, the absurd interlock system whereby you can't start your car unless you have first mastered the mechanics of the gremlins that the manufacturers built into your seatbelts, led to such a national outrage that Congress repealed it...
...That's the myth, and there is hardly any myth, I believe, that is more deeply imbedded in people's attitudes...
...That surely was not a case where there was a grass root demand...
...What was really involved in that story was that somehow the local people do not pay out the money coming down from Washington, somebody else does...
...The rich got richer and the poor got poorer...
...Let me give you the greatest sacred cow of them all, Social Security...
...I happen to think not...
...But the tax that you and your employer pay under Social Security is labeled a contribution...
...This morning I'm going to deliver a sermon, and my theme comes from Josh Billings, the famous American humorist of the nineteenth century who said, "the trouble with people ain't ignorance, it's what they know that ain't so...
...The reason we had the Great Depression was because government failed in that task...
...Somehow people believe that the Great Depression occurred because private enterprise could not organize society properly, that it was necessary for government to step in in order to save society, that the New Deal and all that followed was a necessary corrective to the mistakes and disasters produced by the deficiencies of private enterprise and unbridled competition...
...In the 1830s, state governments throughout the country proceeded to engage in what we would call socialist enterprises...
...You will have learned from the standard history book that the farmers in the Middle West were being ground between the millstone of falling prices for the products they sold and higher prices for the products they purchased...
...There was a story in the local Florida paper about a proposal to expand bus service, which had been put up to the local voters three years in a row in the form of approval of a bond issue...
...The "unfettered mind" is attached to a fettered being and, if not a soul, at least a series of noncognitive drives and feelings...
...Until then the depression had been a more or less garden variety recession...
...We would then include that money as part of government spending and it would raise the 40% figure...
...Let us suppose that instead of government mandating that those be on every car, government had imposed a tax of $1,000 on every new car and had used the proceeds to buy those attachments...
...That meant it could be deposited to his account at another bank but it would not be honored for currency unless he were a regular customer at the bank who had been accustomed to getting currency for payroll purposes...
...But if between age 65 and 72 he should work, and gets his income from labor, then not only doesn't he get any benefits if he earns more than a modest amount, but he also has to pay additional taxes on the wages he earns...
...From an economic point of view there is no difference between these two procedures...
...Maybe government cannot spend money at nobody's expense, but after all, we all know that government spends money to benefit the poor at the expense of the rich...
...I was in Florida not long ago, just the week after Congress had passed a mass transit bill providing for billions of dollars to be spent in local communities on mass transit...
...It is a myth which is promoted because, of course, everybody wants to do things for good purposes...
...It has demonstrated beyond a shadow of doubt that on the average the effect of Social Security is to redistribute income from lower income groups to middle income groups...
...And yet—or should I say because—in every aspect of private charitable eleemosynary activity, it was a boom period...
...It was the period when so many colleges were founded throughout the country...
...Aside from the protection of property, though, she urges us to jettison the works...
...Where are we going to raise the money...
...There is no more dramatic way in which people can vote than with their feet...
...The populace has had to be brought kicking and screaming to approve them...
...Did people come to this country to be ground under the heels of merciless capitalists...
...A corporate executive may sign the check, but where does he get the money...
...In the Orwellian language that is used to sell Social Security, what you and I would call taxes are called contributions...
...It's a payroll tax on wages up to a maximum, the reverse of what is regarded as a graduated tax...
...That's a program that is widely regarded as helping the poor at the expense of the middle and upper income classes...
...Anyone who has ever had the least Jimpse of the malice, pettiness, and ca;als roiling in the average university phi)sophy department should thank God hat there never has been, and probably Lever shall be, such a thing as a nation of .hilosophers...
...In an absolute sense their level of living was low...
...Every year which is a year of prosperity and of good times, the Federal Reserve report says, "Thanks to the wise and farsighted policy of the Federal Reserve, the United States had a good year...
...The situation of the Great Depression when people became charges of the state because of the state's mismanagement of the money was The elementary truth is that the Great Depression was produced, not by the failure of private enterprise, but by government mismanagement...
...But they went down because the great fertile areas of the Middle West were being opened up and brought into production...
...On the contrary, it allowed the runs to develop and banks to fail, until finally in March 1933 there was an absolutely unprecedented catastrophe in which all banks of the United States were closed for a week, including the Federal Reserve Banks which had been set up to prevent such anoutcome but instead ended up by producing by far the worst and the most disastrous panic in American economic history...
...It went broke, the public at large got worried about the stability of banks, there were runs on banks, and this led to what was called the banking panic in which the banks of the country suspended the convertibility of their deposits into currency...
...Banks continued to operate but you could not walk into a bank, give it a check, and have it give you currency—at that time gold or greenbacks or national bank notes...
...People who are going to be in the upper classes or upper middle classes go to college and graduate school...
...His man was Montaigne, a fellow who withdrew from the world only to view it more clearly, and then only after an extended participation in war, lust, politics, passion, and the rest of that long gauntlet of experiences that makes life interesting, dangerous, and fathomable...
...Buncombe had an odd but plausible exlanation for it all...
...There is a bestial side of the human character that rises with equal virulence to the summons of Left or Right, Priest or Philosophe...
...Without going into forbid detail, there were two key sympams: an insanely tenacious clinging to ne-phase answers to multi-phased quesions ("a philosophic mania for skeleton eys," Ben called it), and an inherent inbility or unwillingness to recognize the oncrete consequences that would follow teral application of abstract ideals...
...On a very different aspect of this experience, was it a period of heartless monopoly capitalism...
...But in the recession, panic, depression, whatever you want to call it, of 1837, many of these government enterprises went broke...
...It was a period when about the only interference with what people could do, aside from the taxes that were being imposed to finance a small armed force, courts, legislatures, and the like, consisted of a protective tariff on imports...
...There was no objection to doing this...
...As a connoisseur of governmental intervention, I have tried to accumulate over the course of years the number of occasions on which a governmental intervention has been eliminated...
...Wherever you name it, it was the poor and the miserable who flocked here and they found here a home and the opportunity to improve their lot...
...Spock has nothing further to contribute to this discussion, Miss Efron does...
...A man who has a million dollars income a year from securities will receive his full Social Security benefit after age 65...
...What people mean by inflation is not the rise in their own wages but the rise in the prices other people are charging them...
...Every government agency will inform you that anything bad that happens is the result of forces outside its control...
...I hasten to add that the venerable Ben At the same disdain for hidebound Conervatives who worship an abstract kind f "freedom of our fathers," hopelessly ntangled in a web of ritual hocuspocusand stale rhetoric...
...The Myth of the Great Depression The second myth is the Great Depression myth, the myth that that decade-long catastrophe—at the worst of which, in 1932 and 1933, 25% of the labor force was unemployed—reflected the failure of private enterprise...
...Aram Bakshian, Jr...
...It was factually false that, the Great Depression aside, any significant number of people had become charges of the state because they had failed to provide for their own old age...
...The fact that East Germany had to build a wall to keep people from going from East Germany to West Germany is dramatic evidence in which country the conditions of life were better...
...I am reminded of what happened recently when I was at the summit conference that President Ford called in Washington...
...But since what one man sells another man buys, that's hardly a feasible situation...
...What was the actual course of events...
...From 1929 to 1933 the quantity of money in the United States fell by one-third...
...That we needed to have a greenback movement and a Populist movement and a William Jennings Bryan...
...But we do not...
...We have been moving in a direction in which we have an increasingly limited control over our own lives and that movement has been nourished by a series of arguments which, quite simply, are untrue...
...Take any other program you name and you will find a similar distributional effect...
...Quite the contrary, it was the period of the greatest private eleemosynary activity in the history of the United States...
...Take the Libertarins_ think about it for a moment...
...Five percent come from the bottom 25...
...The result was a great outpouring of production which produced a decline in the prices of farm products at the same time that it produced a very rapid rise in the incomes of farmers and induced many people to enter farming...
...But what happened...
...Purist conservatives and purist libertarians alike are all too likely to smother their ideals with a lethal ardor...
...If agriculture was in a bad state and being exploited, you would expect the price of farm land to go down, but the price of farm land went up rapidly...
...At the same time, it was a very traumatic episode...
...But the failure of the Bank of the United States set off runs on banks...
...it has always been there...
...The elementary truth is that the Great Depression was produced by government mismanagement...
...The pohe Alternative: An American Spectator January 1976 9...
...It was the rugged individualism that induced the developments in industry, in trade, that offered opportunities for people...
...I could go on and on along this line, but I conclude by urging you to be a little bit more skeptical of some of these myths that are going around, to be skeptical of the myth of the robber baron, the myth of the Great Depression, the myth that there is an underlying demand for government services, the myth that government can spend money at nobody's expense, and the myth that government has benefited the poor at the expense of the rich...
...One-third of all the banks in the United States were permitted to fail...
...The evidence of this is to be found in the statistics that economists have constructed of what was happening to national income, but it is documented in a much more dramatic way by the numbers of people who came to the United States during that The Alternative: An American Spectator January 1976 5 period...
...Wall Street was set against the working man...
...It was an era of rugged unrestrained individualism...
...It's an utter misnomer, it's a program whereby you impose a very bad tax in order to provide very inequitable benefits...
...But anything good that happens—who do you suppose produced that...
...All of this is documented in great detail in that book I mentioned earlier, A Monetary History of the United States...
...were infected [and] we corrupt by touching things that in themselves are fair and good...
...In your courses in history—ordinary political history, to a lesser extent even in courses on economic history—you will have learned that the nineteenth century in the United States was an era of rugged, unrestrained individualism in which heartless monopoly capitalists exploited the poor unmercifully, ground the helpless under their heels, and profited at the expense of the rest of the community...
...this was a great era of government enterprise...
...And the answer is that it's well over 40% if we include these mandated expenditures...
...I must say, it seems to me disgraceful for so many people to denigrate the experience of their parents, when that experience has made it possible for them to live in a free society at their present high level...
...This situation did not develop, interestingly enough, out of any philosophical belief in laissez-faire...
...It might be good to have such devices on cars, or it might be bad, but that isn't the question...
...Government cannot spend money at nobody's expense, which in turn leads me to my final myth...
...The excesses of Free Thinkers in power—during the Terror in France and the twentieth-century revolution in Mexico, to cite only two examples —were remarkably similar to those of the Inquisition, even, in some cases, down to the torture and burning of victims...
...Any student of democracy would say that that was pretty clear evidence that it wasn't something which the populace desired...
...But onetheless, I have a great deal more ympathy for that program than for al-lost any other, because it's about le only one that really contributes people in lower income classes rather than to the people who pay the taxes...
...You will have learned that that was the reason for interest in the greenback political movement, the reason for the development of the Populist sentiment in the Middle West and the South,the reason for that magnificent speech by William Jennings Bryan in 1896 when he asked whether mankind shall be crucified on a cross of gold...
...The first myth that I want to talk about is what you might call the robber baron myth...
...Once again, the evidence against that is very simple and very clear...
...Much more fundamentally, the young men from poorer families, the people who are going to be poor in our society, go to work and start paying Social Security taxes at the age of 16 or 17...
...This was a country of hope and of promise for immigrants and their children, and as many as a million immigrants a year came in 190607-08...
...And, even as Miss Efron kicked the stuffing out of the Tory mentality, she exposed a charming but vulnerable Libertarian Achilles' heel...
...The immediate occasion was the banking panic of 1907, when the Knickerbocker Trust Company went broke, like the Franklin National Bank, except that unlike the Franklin National Bank, tax money was not used to bail it out...
...The Free Lunch Myth This leads me to my next myth—the myth that government can spend money at nobody's expense...
...In 1930 on December 11, the Bank of the United States failed...
...The benefits are related hardly at all to the amount of taxes anybody has paid and in any event are to a large extent inequitable...
...But we must compare their level of living not to ours but to the level of living they left in Europe...
...Government does...
...This was easily preventable and I can say that not merely from hindsight...
...The period of unrestrained rugged individualism was a period when the modern type of nonprofit community hospital was first established and developed...
...I have been making this statement for many years so I am delighted to inform you that a recent study by the Brookings Institution, which can hardly be regarded as biased on my side, has documented the charge in great detail...
...when ou boil down all the Libertarian fustian bout abolishing moral, ethical, and traitional restraints—all of the socio-reliious dogma of the past—what it comes 3 is the most dogmatic (and self-contraictory) absolute of all: 'Thou shalt ave no Commandments.' Why, Ayn .and and her acolytes might just as well ave graven their words on tablets of tone...
...But business corporations can't pay any taxes...
...The business of organized society—the only reason why man, from the beginning, has always tolerated the imposition of some degree of societal control, has been based on the common sense, consensus recognition of this fundamental problem...
...In 1914 we had a supposedly great reform...
...With Montaigne, Buncombe warned that it is "as if our sense of feeling...
...If you and I are fools enough to lake it to their advantage to subsist on 'elfare rather than work, they would be )olish not to take advantage of it...
...Again, maybe Social Security is a good thing...
...Even in 1932 and 1933 you have such statements in the Federal Reserve Board's annual report...
...The answer is no...
...By 1914 roughly' a third of the population of the United States was foreign-born or the immediate descendants of foreign-born...
...Once again, however, this is a myth...
...So the only way he can pay money to the government is by imposing a burden on somebody...
...We find the same inconsistency today when people talk about inflation...
...The elementary fact is that almost all government programs are either a complete waste and help nobody, or they benefit the middle and upper middle classes at the expense of both the very poor and the very rich...
...The Alternative: An American Spectator • January 1976 • Volume 9, Number 4 Milton Friedman Economic Myths and Public Opinion • (This article has been adapted from a William Arthur Maddox Memorial Lecture at Rockford College, given by Mr...
...Whatabout the charge that the agricultural community was being ground down, that it was being exploited by the Wall Street bankers...
...Not a bit, it was a manufactured crusade which produced laws, the results of which most people don't like...
...Far more effective evidence, I believe, than any statistics on per capita real income which show that real income went up decade after decade at a rate of about 2, 21/2, 3% per year...
...That was done in order to prevent banks from failing...
...I don't know how many of you remember that wonderful description of government by the French economist Frederic Bastiat who said that government is that fiction whereby everybody believes that he can live at the expense -of everybody else...
...Of course, the truth of the matter is that the money makes a round trip between Florida and Washington and there is a discount taken off for cash as it passes through Washington...
...It was not produced by the failure of private enterprise, it was produced by the failure of government to perform a function which had been widely assigned to it...
...I'm here concerned with the myth...
...It was the period of the Carnegie Libraries and their spread through the philanthropy of Andrew Carnegie...
...He called it the Phi)sopher's Disease...
...Today, the comparable figure is about 40% of national income, and even that greatly understates government expenditures in a true economic sense, the control over expenditures by government...
...So much for economic development...
...We stand on their shoulders...
...Three years in a row it had been turned down...
...Did they come to this country to make their own conditions worse...
...So, I believe that the generally accepted historical picture of the nineteenth century is an extraordinary myth...
...6 The Alternative: An American Spectator January 1976 established supposedly to prevent what were called banking panics...
...The question is what is the fraction of the national output whose use and allocation is determined through the political mechanism rather than through the decisions of individuals deciding separately how they want to spend their own money...
...Friedman in December 1974, and printed in Rockford College's Widening Horizons...
...We all know that from the 1930s onward there has been an enormous expansion in the scope of government...
...They came here from the most deprived groups in the old world, from Czechoslovakia, from Germany, from Italy...
...Almost every single expansion of governmental activity has had to be sold to the populace at large by misleading advertising that Madison Avenue would blush at...
...But under Social Security, subsidies to people are called benefits...
...In this particular case the great "reform" was the establishment of the Federal Reserve System, the establishment of a central banking system...
...Take away all religious, traditional, and social "fetters" on our minds, according to Miss Efron's optimistic brand of Libertarianism, and all will be well, or at least better...
...On the other side of the picture, it is a well-known demographic fact that richer people live longer than poorer people, and so they will receive Social Security "benefits" for more years...
...It was the period of the founding of the Society for Prevention of Cruelty to Animals, and the spread of foreign missions...
...The only trouble with these beliefs is that they are completely wrong...
...In the first place, it has nothing to do with social and it has nothing to do with security...
...You have everybody yelling and screaming that we ought to have new, bigger, and more generous government programs...
...There was no income tax, no deductibility of contributions, so what people spent on charity came out of their pocket and not, as now, largely out of taxes they would otherwise pay...
...In the first place, if agriculture was being especially exploited, you would expect the number of people on farms to go down, but the number of people on farms rose by leaps and bounds during the period...
...That's Myth Number One, a myth which has done enormous harm, in my opinion, by leading people not to recognize the true sources of the strength of this country and the true origins of our greatness...
...In response to the panic of 1907 there was a Congressional investigation, and the Federal Reserve System went into operation in 1914 to prevent any such development in the future...
...That proposition would itself be the subject matter for a longer talk than I have so far given, so I only want to illustrate it with a few examples to show you that it is not entirely a demagogic statement but has some backing...
...The same gentleman once put he lie to Plato in a single sentence...
...Everybody, of course, always wants to improve his lot...
...This potential for cruelty, for intolerance (whether of belief or disbelief) and for violence seems, on the basis of human experience, to lie within every society and every individual...
...The newspaper story was "Now that Washington has passed a mass transit bill we'll be able to have that bus system" because the money will come from Washington...
...You will find it hard to add very many to that list...
...While the nineteenth century was a period of rugged unrestrained individualism, almost every other feature of the myth is false...
...There remain the weaknesses of Doctrinaire Libertarianism...
...It was the biggest bank that had ever failed in the United States up to that time...
...Tax business...
...It failed to perform this function...
...This is a myth that could not be farther from the truth...
...In our Constitution government is given the power to coin money and determine the value thereof...
...In admirably stating the case against repressive Conservatism she revealed an almost sentimental Libertarian faith in what she called the "unfettered mind...
...I will tell you how to cut the government budget: spend more on me...
...They came here with empty hands...
...Ever since, I have had rouble taking The Republic quite as seriusly as perhaps I should...
...After about two or three months, confidence was restored in the banks, the suspension of convertibility was ended and there were almost no bank failures...
...It's a bad program not beause it gives money to the poor but beause it produces poor people, because it ncourages people to be on welfare in-read of being on wages...
...In the process of going from 10% to well over 40 % , the myth developed that these expansions in programs occurred in response to an overwhelming public demand, that the government has had to step in because the failure of private markets produced a grass roots demand that government do these things...
...As an economist, I was simply appalled by the level of ignorance of economic matters that was displayed in those history books, by the extent to which the historians were willing to take the cries and the claims of reformers and political agitators for reality...
...I would go a bit further: it will sometimes be twisted beyond recognition or actually crushed to death...
...Private enterprise has no press agent...
...8 The Alternative: An American Spectator January 1976 eople who pay taxes, and that's one of le worst programs we have, namely diect welfare...
...There is no program which is so perverse in its distributional effects...
...I happen to think it's a terrible program, but maybe it's a good thing, maybe I'm wrong on that...
...they don't start paying Social Security taxes until age 24, 25, or 26...
...The reason for the Great Depression myth is very simple...
...It was sold to the public under false pretenses and has since been expanded under similar false pretenses year after year by people who are in the business of selling government programs to the country...
...While Dr...
...If you gave someone a check it would be stamped on the back, "payable only through the clearing house...
...If you buy an insurance policy or a retirement annuity or a pension, and you ultimately get your pension, well that's a benefit, you paid for it...
...Years ago I wrote a book with a collaborator on the monetary history of the United States, and in the course of writing it I read agreat many of the general histories of the nineteenth century...
...I say "reform" but I would like to put that in quotes because experience shows that not all reforms are improvements...
...Yet that was the argument that was used to sell Social Security...
...There is only one element of that myth that is correct...
...The poor old sticks are blindered by heir own one-dimensional paper truths," luncombe would chuckle over his randy, "even when they believe they're he freest of spirits...
...The list is very short...
...And they found it not despite rugged individualism but because of rugged individualism...
...Every year of recession or depression the Federal Reserve annual report reads, "Despite the best efforts of the Federal Reserve System, events beyond our control...
...There is only one program I know which probably gives more money to people in lower income classes than to the Unless they help nobody, most government programs benefit the middle and upper middle classes at the expense of both the very poor and the very rich...
...It's either from his stockholders or from his customers or from his employees...
...Consider the case I mentioned earlier—Social Security...
Vol. 9 • January 1976 • No. 4
