Milton Friedman discusses the Social Security Myth

As a follow-up to Jay Tea’s piece on Social Security, I would like to share an excellent video of Milton Friedman discussing the major myths of the Social Security system:

As always, Friedman’s direct and easy-to-understand explanations of the intrusions of big government are as thought-provoking as they are infuriating.  Friedman makes several observations:

  • There was no underlying public demand for “the greatest sacred cow of them all,” Social Security.
  • Social Security was sold as an insurance scheme, but there is very little resemblence between Social Security and traditional insurance or pension systems.
  • Social Security is a combination of a regressive payroll tax system and a highly inequitable system for distributing income subsidies.  No one today would defend either system separately.
  • Social Security taxes were sugar-coated as “contributions,” while its subsidies are reclassified as “benefits.”
  • Social Security taxes are not invested in a system that allows workers to save for their own retirement benefits; instead, the Social Security taxes that are collected today are directly applied to benefits paid out today.  The young are taxed to subsidized the old.

And make sure you watch the last minute of the video, where Friedman discusses why national health insurance would also be a disaster – “It would bear as little relationship to insurance as Social Security does … It is a program for creating long waiting lines and inferior medical service.  But that isn’t the way its labeled.”

Folks, this speech was given over 30 years ago.  If only we had prominent people today who were willing to be as honest as Milton Friedman.

Wait … strike that last comment.  Check this out, from the New York Times no less – Some Of Sarah Palin’s Ideas Cross The Political Divide:

She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).

… Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.

“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”

… Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.

One of the consistent themes in Milton Friedman’s writings is the extreme dislike of the free market by Big Business. The “too big to fail” attitude embodied by Big Business pushes companies to seek financial and regulatory help from the government in order to secure their place at the top of the totem pole.  And Big Government advocates are happy to comply because they believe that they are helping to control “runaway capitalism” as well as ensure the fair redistribution of wealth.

It seems to me that Sarah Palin understands Milton Friedman, and in a big way.  Somewhere, I think the old man is smiling.

____________________________

ADDEDAnd would you believe … from freaking CHRIS MATTHEWS??  “Today, lots of people fortunately make it past 65.  They live into their 80s and 90s. They’re still getting checks. The system doesn’t work that way anymore. It’s not as healthy as it once was. So, how does a Republican deal with the fact it is a Ponzi scheme in the sense that the money that’s paid out every day is coming from people who have paid in that day. It’s not being made somewhere.”

Um, yeah.  Viewers of MSNBC just heard one of their hosts refer to Social Security as a Ponzi scheme.  I think the patina is finally starting to really rub off of the idea of endless, trouble-free taxing and spending.

Presidential Vaporware
But They Weren't "Hostage-hostages"
  • Anonymous

    What next? The New Yorker runs a story saying that not only is Clarence Thomas not dumb, he may be the smartest person to ever sit on the court. Now a writer for the NYT actually gives Sarah Palin a serious listen and likes what he hears. Surely these are signs of the Apocalypse.

    • Anonymous

      Nah, they’re just running out of Kool Aid.  You can only hear “It’s all Bush’s fault” so many times to explain away current policy failures.  Even someone with 1/2 a brain finally realizes “this ain’t working!”.

      Sort of like that liberal icon “The Great Society”.  How much poured down that rat hole?  The poverty level was 14%, and today – 40 years and trillions later – poverty is at 16%.  Go figure.

      • It isn’t that they’re running out of Kool-Aid — it’s that they’ve been drinking it so long they’re building up a tolerance for what the Kool-Aid’s been spiked with.

        Eventually they’ll start dumping roofies and oxy into the punchbowl, and Teh Whine will once again be aces in their book.

        •  There’s only so long you can ignore Reality – and Reality’s been pounding on their door for years now. 

          Whether they like it or not, in order to survive they’re going to have to start reporting on reality as it is, instead of how they’d like it to be…

          • Drug addicts can ignore reality right up until they OD. The Kneepad Media got Obama elected because he made them feel like they were moral titans and creators of the future.

            When the last drug of choice stops working, hardcore addicts look for something stronger.

    • herddog505

      Joe_Miller[A] writer for the NYT actually gives Sarah Palin a serious listen and likes what he hears. Surely these are signs of the Apocalypse.

      I was equally shocked.  I thought Sarah Palin was supposed to be an ignorant, hateful, bile-spewing snowbilly.  And yet, the NYT saw fit to thoughtfully – dare I suggest approvingly – discuss something that she’s said. 

      The good [capitalists], in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.

      While it’s hard to disagree with this notion, the problem is what to do about the bad ‘uns.  A lib will say that it’s the government’s job to police them.  Unfortunately, the government is, for reasons that Palin identifies, hardly a disinterested party; as we’ve seen quite a bit in the past couple of years, the government is perfectly happy to pick winners and losers, to lavish public money on “good” companies while hounding “bad” ones with investigations, lawsuits, etc., based on politics and not on objective economic facts.  Further, how does one distinguish between profits and profitting “terrifically” (or “obscene profits”, as they are often called)?

      I think that Palin is playing the populist card a little too heavily here.  That being said, I find myself liking her more every time I hear her speak or read her writings.  She comes across to me as pretty sharp, straightforward, and possessed of good instincts.  No wonder the elites hate and fear her.

  • Anonymous

    Two points.

    One, what Palin said had nothing to do with what Friedman said.

    Two, this new populism of Palin’s won’t play well with those who fund Republican campaigns. Palin just ensured her permanent relegation to Ron Paul semi-fringe status. She won’t be taken seriously by the Very Serious Media ever again, even though what she said about the political system makes perfect sense even to a jaded old liberal like me.

    Sounds just like John Edwards’ “Two Americas” schtick, which I always liked and still do.

    • That’s okay Bruce. The Very Serious Media aren’t to be taken seriously themselves.

      • Anonymous

        Don’t kid yourself.

        • Anonymous

          Try some cherry

        • Anonymous

          Try some cherry

    • Jeff Blogworthy

      “One, what Palin said had nothing to do with what Friedman said.”

      You’re not reading closely enough. Michael makes the point the Palin’s statements are very Friedman-like, not that they are expressly stating the same things here. Michael: “One of the consistent themes in Milton Friedman’s writings is the extreme dislike of the free market by Big Business.”

      “Two, this new populism of Palin’s won’t play well with those who fund Republican campaigns.”

      If by that you mean “establishment” Republicans, we already knew that. Blue-bloods are a big part of the problem. We want shed of them. Regardless, why does this matter? Palin isn’t running.

      “She won’t be taken seriously by the Very Serious Media ever again”

      You’re joking, right? As opposed to all those times when Palin has been taken seriously? Palin has been demeaned, disrespected, and ridiculed by big media very consistently and relentlessly already AFAIK.

      “Sounds just like John Edwards’ “Two Americas” schtick, which I always liked and still do.”

      Not in the least. Like all Marxists, Edwards was speaking from the standpoint of class warfare. Palin doesn’t run down the rich and successful just because they exist. Nor does she claim the mantle of virtue for the poor just for being poor. She criticizes government-business “partnerships,” not capitalism in general. Leftists refuse to make distinctions between real and counterfeit capitalists. Palin says “corporate crony capitalism” by which she means a very specific thing, but all simple-minded leftists hear is the word “capitalism.” Corrupt politicians love equally corrupt businesses that they can pay off since they know that large chunks of “gratitude” will be returned to them.

      • Anonymous

        “You’re not reading closely enough.”

        Umm, okay, if you say so. I think it’s a stretch, except inasmuch as all Republicans say vaguely “Friedman-like” things.

        “Why does this matter? Palin isn’t running.”

        Well, maybe she is and maybe she ain’t, but she’s a fairly young woman. My point is if she’s going to adopt this Big-Shots-Are-Colluding-To-Keep-The-Little-Guy-Down schtick she won’t be a serious candidate in 2016 or 2020 either, any more than Paul is now.

        “As opposed to all those other times when Palin has been taken seriously?”

        YOU’RE joking, right? While liberal blogs, Stewart, and Maher DO continue to demean, disrespect, and ridicule Palin (with some justification, IMO), most of the media fawns over her. Every time she goes to a book-signing or a state fair there’s a story on ABC, NBC, CBS, and FOX about how formidable her candidacy would be. See if you can watch a piece about Bachmann without Palin being mentioned. The media sees her a combination of Bush and Jolie, Thatcher and Madonna.

        As for your last paragraph, you obviously didn’t read Edwards’ statements “closely enough.” (Funny how we talk about Edwards as if he was dead, huh?) Instead you make up strawman Jim M-like arguments about what “the left believes.” As a former Edwards supporter I’m telling you that this stuff about government/corporate collusion was EXACTLY Edwards’ point. And I find it funny that Michael, and you, Jeff, speak approvingly of talk like this when Palin says it, but call it “Class Warfare” when Edwards or other Democrats say the same thing.

        • Jeff Blogworthy

          Well Bruce, I thought you just might say in your reply that you get it. That maybe some don’t but you do. But all you did was prove my point. You are fundamentally incapable of understanding the vast difference between what Palin says and what Edwards said. Their meanings and intent are so different as to be polar opposites. Yet all you hear is some vague spiel about economic differences.

          John Edwards explains exactly what he means here: http://www.youtube.com/watch?v=RlkPMdoTVLw

          He claims he does not simply to the “rich vs. poor” but the the VERY rich vs. the rest of us. (Sure, that’s better.) He makes no mention of the culpability of government in the arrangement and instead spends the rest of his clarification explaining why we need more and bigger government.

          • Anonymous

            I followed Edwards for years. I live in NC and voted for Edwards for senator in 1998. The 3 minute clip of the stump speech you posted is NOT the entirety of his Two Americas concept. He spoke many times about how the game is rigged, how big corporations scratch the back pf politicians who scratch theirs. But perhaps I should have said “sounds a lot like” instead of “sounds just like”.

            BTW, I dig that Edwards is, personally, a loathsome scumbag. However, his message, and Palin’s new one if that’s what she really means, is something worth thinking about.

            But, just regarding that 3 minute clip, which you seem to be claiming represents the class warfare of “all Marxists,” perhaps you can point to where Edwards “runs down the rich and successful,” or where he claims the “mantle of virtue for the poor.”

          • Jeff Blogworthy

            “…perhaps you can point to where Edwards “runs down the rich and
            successful,” or where he claims the “mantle of virtue for the poor.””

            You are not going to want to admit this, but no elaboration is necessary. The depravity of the rich and the virtue of the poor are the understood Pavlovian responses among leftists. Note how Edwards mentions “the very rich” vs. “everybody else” and stops there. No further clarification is necessary. Edwards knows that mere mention of “the rich” is the bell at which his audience is preconditioned to salivate. The rapport in the “rich vs. everybody” meme is built in. In the minds of the minions of the left, “rich” is synonymous with other words like “evil” “haves” “corporate jet owners” “CEO’s” “selfish” “greedy” “white” “tax cheats” and people who refuse to “pay their fair share” while “poor” is synonymous with “victims” “have-nots” “needy” “deserving” “people down on their luck” “single mothers” and “black.*” Though often implicit through decades of Marxist training, the suppositions are ALWAYS there. ALWAYS.

            The idea that government actually subsidizes and encourages poverty is ridiculed among the left. And you will virtually never find a leftist so much as intimating that the so-called “poor” even might bear some responsibility for their own fate. Their virtue is always assumed and defended. If they commit crimes, it is because they have been exploited. If they fail to succeed it is because society has “kept them down” or “not given them a chance.” Listen to Edwards again. If you open your eyes, you will see.

            * You might take umbrage with my characterization of the racial interpretation the left imposes on poverty. If so, it is easily illustrated. Gingrich calls Obama “the most successful food stamp president in American history” because it is a fact that more people are on food stamps under Obama (at least 44 million) than any other time in history. Gingrich is immediately attacked as a racist by the left even though race should never have entered the question.

          • Anonymous

            Well, Jeff, you are the one who said that Palin doesn’t “run down the rich” or “claim the mantle of virtue for the poor,” in contrast to leftists like Edwards, who, presumably, DOES. But when asked to point to WHERE he does, you claim that it isn’t necessary to demonstrate that he ACTUALLY does. It’s understood, you assert. Humbug.

            Anyway, we’ve rather strayed from our original point of disagreement. I say that Palin’s new, populist rhetoric sounds a lot like Edwards’. You say it’s not. Guess we’ll have to agree to disagree.

             But if Palin means what she says, good for her. I hope she convinces many of her followers of how they’ve been duped. Maybe she’ll wind up doing the country some good after all.

          • Jeff Blogworthy

            Bruce, Yes I suppose we will. Like I said, Edwards condemns “the very rich” in his speech. Why? Because they are “very rich.” The simple condition of being “very rich” is enough to warrant said condemnation. It illustrates my point exactly. So I’ll see your humbug and raise you a humbug. 🙂 If you don’t see it, you don’t see it.

          • Anonymous

            And you don’t think the “very rich” got to be — and continue to be — “very rich,” by rigging the game in collusion with politicians? Edwards does. And I do. And, apparently, Palin does.

          • Jeff Blogworthy

            Often, yes. Not always. Palin makes the specific distinction. Edwards does not. In fact, Edwards champions the corrupt other 50 percent of the equation. Edwards is the union booster, yet unions are some of the worst offenders of all. Do you really think that Edwards is a champion of limited or restrained government? Really? There is no such thing in the Democrat party. I do not think even 50 percent of the Republican party truly is either. Consider that Romney attacks Perry over his criticism of the bankrupt SS program, for crying out loud. Hence the Tea Party, and the very reason for Palin’s success.

          • Anonymous

            Still, rabble-rousing talk like that will relegate Palin to Ron Paul status, as I said. She will never, not in 2012, 2016, or 2020, get nominated for President by the GOP. Mark my words.

          • Anonymous

            You voted for John Edwards really? Damn I think I would have kept that to myself if I were you Bruce.

          • jim_m

            Well it certainly explains why he considers the MSM the “Very serious media”.  He is one of the dupes who refused to believe that johnny could have been using his dying wife to become President while he was screwing someone else.  He probably thinks that the media still shouldn’t have covered it (unless they were covering it up).

          • Anonymous

            Umm, for you and this Jwb person, Jim, I repeat my reply to 914: “I put Very Serious Media in caps to denote sarcasm, genius.” Damn, Jim, I thought you were at least smarter than 914.

            And, like I said, who knew Edwards was such a personal scumbag? Not me. The worst character flaw I was aware of in Johnny was his vanity about his hair. Now that I know, of course, I wouldn’t ever vote for such a man. But weird sexual immorality and infidelity doesn’t seem to bother some voters — like Republicans in Louisiana, for instance.

          • Anonymous

            Who knew he was a scum bag? You do know how this POS made is millions right? The guy of the 2 America’s that gets $400 hair cuts? Seriously, you have to be a blind partisan not to know this guy was a poser from the very beginning

          • Anonymous

            Yeah, the case that made him famous had to do with a little girl who was sucked to the bottom of a swimming pool by a defective drain. She suffered irreparable brain damage, and her guts were sucked out of her body through her anus. The defective drain, the subject of repeated lawsuits that had been settled by the manufacturer’s insurance company, could have been fixed at the price of a few cents per unit. Edwards got her an award that will allow her to be taken care of for life, as she can’t care for herself.

            What a bottom-feeder, right? Real POS!

          • Anonymous

            What ever you say Bruce, you want him he’s all yours. And yes as far as I’m concered the guy is a bottom feeder.

          • Anonymous

            My answer has more to do with the assumptions “implicit” (as Jeff would say) in your reply than it does about Edwards himself. You ask if I know how Edwards made his millions — the assumption being that he made it suing “hard-working” “God-fearing” “Real American” “producing” “honest” doctors and businessmen. After all, he’s a “bottom-feeding” “ambulance-chasing” “opportunist” of a damn smartypants lawyer, right?

            Edwards made his millions being one of your favorite targets – a trial attorney. And the picture in your head of what that is is about as accurate as some on “the left’s” characterization of all businessmen as greedy scum-sucking bastards.

          • Anonymous

            I can’t get my ancient, virus ridden laptop to link it, but while you’re on Youtube, check out “John Edwards – Take Them On”. It’s only a couple of minutes. See if it doesn’t sound a LOT like what Palin seems to be saying in the NYT piece.

      • herddog505

        Jeff BlogworthyLike all Marxists, Edwards was speaking from the standpoint of class warfare. Palin doesn’t run down the rich and successful just because they exist.  Nor does she claim the mantle of virtue for the poor just for being poor. She criticizes government-business “partnerships,” not capitalism in general. [emphasis mine – hd505]

        Well stated!

      • herddog505

        Jeff BlogworthyLike all Marxists, Edwards was speaking from the standpoint of class warfare. Palin doesn’t run down the rich and successful just because they exist.  Nor does she claim the mantle of virtue for the poor just for being poor. She criticizes government-business “partnerships,” not capitalism in general. [emphasis mine – hd505]

        Well stated!

    • Anonymous

      “Very serious media”

      Have some more grape!

      • Anonymous

        I put Very Serious Media in caps to denote sarcasm, genius.

        • You certainly know “serious.”

    • Anonymous

      Palin now sounds like she’s been reading my thoughts on the oligarchy.

      Of course, she’s probably bullshitting the way Obama did.

      • Anonymous

        Like most other areas of leadership, Palin has a record, unlike Obama.  Check out her disagreements with the establishment Rs in Alaska.  Can you find something similar in Obama’s record?

        • Bob Armstrong

          A record of quitting when the job is half done.

          A record of quitting when the going gets tough.

          A record of quitting when she’s offered a chance to get wealthy.

          A record of lying about whether she’s running or not – we all know she is.

          A record of extravagant spending on personal items including hundreds of thousands of dollars in designer clothes.

          A record of playing the victim everytime someone sneezes in her direction.

          A record of supreme irony, like the defeated GOP candidate in 2008 calling her movie “The Undefeated” – talk about f&cking clueless.

          The list is long, and she’s a moron. I’ve already spent more time that Sarah Palin is worth.

          The plain fact of the matter is that Sarah Palin’s stupidity reduced her chances in this election to zero. Better luck next time, Caribou Barbie.

          • Anonymous

            Damn Bob I thought you only looked down on African Americans, I didn’t realize you had a problem with women too. You really do belong on the left.

          • Anonymous

            Bob, again, such hatred is un-American.

  • jim_m

    the money that’s paid out every day is coming from people who have paid in that day. It’s not being made somewhere.

    But, but, but… Chico said that I was a fool to think that the money wasn’t there.  He said that it had been invested in government bonds and was going to be waiting for me when I turned 67.

    It’s in  trust fund!!

    There’s a lock box!!!!!!!

    Boy I hate it when memes collapse.

    • Anonymous

      Well, don’t buy any Series EE bonds for your relatives, the money paid out will be paid out of current accounts, too.

      • jim_m

        Reputation is a lagging indicator.  Just because the US has a AAA or AA+ rating right now doesn’t really mean that it deserves either.  Depending on the time to maturity I wouldn’t invest seriously in any US backed security until the federal government straightens its act out.

        • Anonymous

          I guess you could buy some of those Eurobonds they’re going to float.  Or gold.  Or Google.

          • jim_m

            Touche!  Who knows if the euro will be here in another year or two. My guess is that the pain of breaking it up is too great for Germany and France and they will continue to endure the current situation.

            England’s decision to stay with the Pound looks pretty good right now.  And you can scoff at gold but it’s actually been a good investment for the last couple of years. The real question is whether it remains that good or if it is near a peak.  Commodities are risky.  Almost as risky as a Ponzi scheme, but not quite.

          • Metals are traditionally recession investments – when the economy contracts and the stability of currency and of “paper investments” comes under question, people start buying metals and their price goes up accordingly.  As long as the economy and currency-dependent “paper” investments are shaky, metals will be a good investment.  However, metals have risen appreciably in the last two years, which makes buying them now (at near all-time highs) somewhat risky, because future economic stability will mean that a lot of current metals investors will want to move their money somewhere else, and when they start selling, the price of metals will fall significantly.

          • Bob Armstrong

            Like “tulip mania” there will be a gold collapse.

            I hope Glenn Beck, the guy who is even to moronic for Faux News, is crushed under the weight of it.

          • Anonymous

            You’re a poster child for the left Bob, nothing but hate. You continually wish bad things on people just because you disagree with them, do you think that’s becoming?

          • Anonymous

            Mr. Armstrong,

            There are those who don’t buy insurance for their home, in the “hope” that disaster will never strike them.  While others buy home insurance, in case it catches afire and burns to the ground; not that they expects that it will… but just in case.  Their “hope” of course, is that such disaster never arrives, but preparations are made nonetheless.  Thus, the “hope” expressed in both accounts is the same; however, their wellspring comes from very different mindsets.

            There are many fables and parables which make the same analogy: the ant and the grasshopper, the biblical seven year feast and famine, as well as Noah’s Ark easily come to mind.  The antagonist in these stories are always the same arrogant, condescending types, who not only reject someone else’s point of view, but have to denigrate and ridicule them in order to justify their own self righteous superiority and intellect.

            It does them no harm, if the disaster for which they prepare never comes; just like the antagonist will not be harmed with the same favorable outcome.  So, if one wants to build an ark of gold, or stock up on provisions for lean times yet to come… then why not just let them be?

            Well, we all know how these “stories” end.  They expresses in a very stark way, the difference between a prudent man and a fool. 

            Semper Fidelis-
            Brucepall  

             

              

          • Anonymous

            Which is why US Treasuries are still a refuge.  I’d say you can’t go wrong with land right now.  I’d look at the Sri Lankan or Brazilian equities markets if you’re adventurous.