fatvegan

I watched an interview with Milton Friedman from the 1960s on Google Video last night. It was very interesting and basically was one half hour opportunity for him to sell his ideology. He is a fantastic salesman and comes across as compassionate but lucid and practical. He talks about how much he agrees with all the "soft hearts" and wishes he could achieve the ends they want to achieve, but says that none of their policies work and only make things worse. He very cleverly mixes together rather silly ideas (like rent control) with much better ideas (like age pensions).

But you realise how awful he is when he looks the interviewer in the eye and says "Even if you were to say that 5% of the aged weren't able to care for themselves no matter, does that justify taxing the other 95%?" To him it's entirely unreasonable to burden 95% of the people to solve the poverty of the 5%. That's what it comes down to. Nobody is denying it causes problems and distorts people's incentives. But the "soft hearts" have decided that helping the 5% that need the help is more important than liberating the 95% who don't need liberating.

Friedman described taxes as "violence" and "coercion". With language like that it's no wonder they call him liberal. True enough, taxes are coercion. But not all coercion is equivalent. I'd rather be "coerced" into paying 70% income tax in the top income decile, than free to work tax free for minimum wage (or lower if Friedman had had his way) in the bottom decile.

Speaking of a tax-free minimum wage I reckon Friedman's idea of a flat tax is a great one. I believe that taxes should be levied on people who are most able to give up the money. A flat tax does that. Progressive taxation isn't necessarily the best reflection of people's ability to pay. However, I would change one thing. I'd only levy tax on "disposable" income. You'd have to decide what that level was, but it would probably be some number a tad higher than the poverty line, and it would probably relate to the number of people in a house. So your flat tax would have to be 50% or something like that and only the middle class and wealthy would pay it. Over the long-term it might encourage compression of the income distribution, because that would be one way for governments to increase the tax base. Although it might also do the opposite, because the government would have an incentive to give the income of the poor to the wealthy so it could be taxed.

There may be some problems with that idea, but it sure would be fun.