Liberal Democracy

Liberal Democracy
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Friday, October 29, 2010

PBS: The Open Mind with Richard Hefner- Professor Milton Friedman: On The Minimum Wage (1975)

Source:The Open Mind With Richard Heffner- Professor Milton Friedman, on The Open Mind With Richard Heffner, in 1975.
"It is immoral to say that people with low skills are not allowed to work. Milton Friedman discusses the effects of minimum wage, dispelling the myth that it is a Good Thing."

From The Open Mind With Richard Heffner

Those of you who've read my past posts on this blog may be thinking that I'm a libertarian because I'm in favor of legalizing  marijuana, gambling and prostitution.  I'm also for guaranteeing all rights under the U.S. Constitutional to homosexuals as strongly as for straight people and I'm pro choice on reproductive rights.  I don't consider myself a classical libertarian  though I have libertarian leanings. I consider myself a classical liberal in the mode of Jack Kennedy, John Kerry, Bill Clinton or perhaps even Thomas Jefferson, the father of the Democratic Party and, perhaps, liberalism itself.

I do believe in the maximization of freedom and responsibility for the Individual.  If you're a real liberal and not a social democrat, you're truly in favor of having government off our backs out of our wallets and bedrooms.  You believe that government should serve a supportive and empowering role, not an authoritarian role.  The minimum wage, or as I would prefer to call it, the living wage, is a pretty good example of that. 

In the 1930's, when the FDR Administration, with the support of Congress, established the minimum wage as part of the New Deal, it was done to create an income floor that American workers could rely upon to support themselves and their families. Most Americans (with the possible exception of the Koch brothers and other Republican oligarchs) don't want slave labor here.  
70 years after it was created the original concept of the minimum wage has outlived its usefulness and needs to be replaced.  It hasn't kept up with Inflation because it has to rely on a fickle and indifferent Congress that is captive to the corporate employers of the minimum wage workers.  That Congress never incorporated Indexing for inflation in the statute. 

I would replace the Federal minimum wage with a Federal living wage indexed for Inflation.  I would propose giving employers an additional tax deduction based on the fraction of their payroll paid to minimum wage workers so that they don't see a spike in their payroll due to this change. The current Federal minimum wage is a measly $7.25 per hour.  This is  a little over $15,000 per year.  This is well below the poverty level.  The living wage should be at least $10 per hour.

This living wage  would giving minimum wage workers in America a substantial raise that would directly go back into the economy because the recipients would spend virtually all of it.  These workers would still be low-income but their income  would finally be at the Federal poverty level instead of under it.  

Low-income workers contribute a lot to our society and we couldn't survive without them.  They sustain everything from agriculture, food service, groceries, health care, and aviation service Industries etc.  They should be adequately rewarded for the contributions that they make to our society. 

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Wednesday, October 27, 2010

Liberty Pen: Milton Friedman- 'Bad Laws (1978)'






Source:Liberty Pen- Professor Milton Friedman, talking about bad laws, in 1978.
"Professor Friedman discusses how bad laws effect both behavior and morality:Liberty Pen."

My definition of what Classical Liberal  Economist Milton Friedman called bad laws are laws designed to protect people from themselves rather than from the abuses of others.   

For example, a law making it illegal to attempt suicide and fail would be a bad law. Other examples of bad laws would be those requiring adults to wear seat belts or bike helmets. Adults who drive or ride in cars or ride bikes are more than capable of making these fundamental decisions for themselves. We don't need Big Brother to make these decisions for us.  After all if someone crashes in a car or on a bike, they are only hurting themselves.   

I think that seat belt and bike helmet laws make sense for minors because they're not legally responsible. Adults should have the right to make such decisions for themselves. Bad laws are the perfect example of what big government is. Government designed to take care of the people for themselves, instead of the people having the freedom to make their own decisions. 

Laws should be written to protect people from the abuses of others not from themselves.  It 
make sense that murder, rape, battery, terrorism, financial fraud, etc., are illegal because these laws protect innocent people from the abuses of others. 

But anti-gaming, marijuana, prostitution, homosexuality, etc., laws don't make sense because they are designed to protect adults from hurting themselves. We have ourselves, family, friends and colleagues to protect us with their informed advice and we don't need Big Brother doing that for us. 

But with limited government you only have a government that is limited to doing what we the people can't do for ourselves, or do as well. That has the authority under the U.S. Constitution and has been approved by Congress and the President. Who are supposed to represent and be accountable to the people that they represent. 

Instead of having a big government with some welfare state and board of experts there to decide what is best for everyone in the country. Including people they've never even met.  

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Liberty Pen: Milton Friedman- 'Redistribution of Wealth (1978)'

Source:Liberty Pen- Chicago University Economics Professor Milton Friedman, giving a lecture about redistribution of wealth, in 1978.

"Milton Friedman clears up misconceptions about wealth redistribution, in general, and inheritance tax, in particular:Liberty Pen."

     From Liberty Pen 

This problem will not be solved simply.  Aggressive government efforts to redistribute wealth (very high taxes on high earners) distort the natural operation of the economy by discouraging the creative energy that expands it. Generous payments to low earners create another distortion by signaling that acquiring the education and skills for success in life is not necessary because income support from the government will be unconditional.  The progressive nature of the current federal income tax provides some redistribution.  A substantial increase in this effect is probably unwise. 

Attempts to solve this problem should focus on the creation of more wealth that benefits society as a whole.   Low and middle income people should be empowered to increase their income through education and training.  Government can also improve the  economic environment with trade agreements that are beneficial to the American labor market. These should provide that  American companies have the same access to foreign markets that foreign company's have here and that American companies pay no more in tariffs than foreign company's pay here.   Respect for and compliance with the rule of law should be required in any trade agreement.  

Taxes and regulations need to be monitored continuously so that their burden is no more than necessary for the desired result.  Through bureaucratic creep they can easily overwhelm employers, workers and consumers without any additional benefit.  Job outsourcing needs to be monitored so that laws and regulations don't encourage American companies to ship jobs oversees where slave labor, or slave wages, under unsafe working conditions, will be competing with American workers.

Elimination of the income gap in America is desirable.  Reduction of the gap, with benefit to the GDP, is both desirable and possible by increasing the productivity and earnings of the lower economic strata.  This will not be achieved through   forced redistribution of wealth but by creating an economic environment that stimulates wealth creation and benefits  society as a whole. 

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Monday, October 25, 2010

Brittle 13: Milton Friedman- 'Responsibility to the Poor (1978)'





Source:Brittle 13- Professor Milton Friedman, in 1978.
"Milton Friedman 1978. From a lecture given at Stanford University."

Source: Brittle 13

In the 1930's, the FDR Administration had an agenda called the New Deal.  They passed a lot, if not most, of it.  It included legislation designed to help the lower and middle classes in America.  Before this, America didn't have a safety net, assistance for people who fell through the cracks of American capitalism and needed temporary financial assistance. It included legislation like Social Security so people who were too old or no longer physically and mentally capable of working would have a source of Income that they could rely on.  It also had welfare to provide financial assistance to people who didn't have the skills to support themselves.

In 1965, when over 1 in 4 Americans lived in poverty, President Lyndon Johnson announced the "War on Poverty."   It had an  agenda for a 
Great Society with legislation like Medicare which guaranteed senior Americans medical insurance, public housing so low-income people could afford housing, Medicaid so low-income people would be guaranteed some medical insurance,  aid to public education such as Head Start and other social welfare programs for the needy in American society.

Almost eighty-years later, after the New Deal, Great Society, and every other social welfare program created by the Federal Government, poverty is still a big issue in America.  Today, almost 1 in 5 Americans lives in poverty.  The so-called War on Poverty and its forbears have come well short, despite all of the good intentions behind them.  They haven't solved the problems because these social welfare programs were  improperly designed. They subsidized low-income people indefinitely (hoping their low-income would go away) instead of dealing with the causes of their low-income. 

Government's responsibility to the poor is pretty simple (though poverty as an issue is as simple as the Middle East peace process) but the problems can be handled simply by empowering the poor to get themselves out of poverty and into the middle class so that they are self-sufficient. 

The only viable path out of poverty is temporary, not indefinite, financial assistance so that people have income while  making the transition to self-sufficiency. 

Education is key so that people can finish their high school education and get a diploma or GED.  Beyond that,  college and vocational schools provide skills for good jobs and self-sufficiency.  Then, assistance with job placement can move low-income people from the welfare class to the working class.

The good news is that there's experience in empowering low-income people to be self-sufficient. In 1996 the 104th Republican Congress and President Clinton, back when Republicans and Democrats actually worked together for "the good of the country," passed Temporary Assistance for Needy Families (
TANF), better known as "Welfare to Work"  It took this approach by reforming welfare, transforming it to a temporary, instead of indefinite, financial assistance program.

No longer are low-income people  stuck in a "Culture of Dependency."  People on Welfare are 
provided an opportunity to get themselves an education and job training to get the skills they need to get a good job. TANF also provides job placement assistance.  Almost fifteen-years later the results are in and look very good. Millions of people who were once on welfare have moved from the welfare class to the working class. 

Poverty is not a simple issue but it can be reduced by simple solutions and investments that might seem expensive at the time but pay off in the long term by moving people from the welfare class to the working class and making them taxpayers, perhaps, for the first time in their lives. We need to go back to the future and return to this approach, especially, now, when almost 1 in 5 Americans live in Poverty. 

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Thursday, October 21, 2010

Reason: ‘Prop 19: Legalization of Marijuana in California’

Source:Reason Magazine- with a look at the war on marijuana.

"November 2, 2010, California voters will decide whether or not to legalize marijuana.

If passed, Proposition 19 would control marijuana like alcohol, allowing adults 21 years of age and over to possess up to an ounce of pot for personal consumption and grow marijuana at a private residence in a space of up to 25 square feet. The initiative would also allow local governments to tax and regulate the commercial cultivation, transport, and sale of marijuana.

In order to get a handle on the debate surrounding. Prop 19, we spoke to both supporters and opponents of the initiative.

So what do you think? Should Californians legalize marijuana?

Approximately 6 minutes. Produced by Paul Feine and Alex Manning.” 

From Reason Magazine 

Just from listening to a couple of the law enforcement officers in this video, you hear the same big government arguments in favor of continuing the War on Drugs and marijuana as we’ve heard before: “Do we really want another legal, toxic substance on the market.?” Which is just acknowledging that we already have toxic substances on the market and we already have legal narcotics on the market with alcohol, tobacco, and a whole host of prescription drugs, including painkillers, which are all addictive.

The same argument against marijuana, can also be used against alcohol and prescription drugs, which are legal narcotics in America. So I don’t have a question here because I already know the answer, but what makes marijuana so special when it comes to the War On Drugs is the alcohol and tobacco industries. Those industries don’t want the new competition that could come from a legalized marijuana industry and have subsidized the political campaigns and career of politicians and other public officials who keep marijuana illegal in America.

When you live in a free society, you are acknowledging that there are real risks that come with that personal freedom, including dangerous and risky choices. It then becomes a question of how you deal with those risks: do you make criminals of people for what they do just to themselves or do you acknowledge the obvious and except the fact that just because you criminalize something, that doesn’t mean it goes away, it just means it’s illegal. And that maybe we’re just better off with making the best out of risky choices and trying to make those choices as safe as possible. Which is what we decided to do as a country with alcohol. 

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Sunday, October 10, 2010

Professor Milton Friedman: 'The Role of Government in a Free Society (1978)'




Source:Basic Economics- Professor Milton Friedman, talking about the role of government in a free society, in 1978.

"Milton Friedman - The role of government in a free society"

My idea of an ideal society, or a "Utopia," is a society where the people are in charge of not only their government but also their own individual lives. Where people have what Classical Liberal economist Milton Friedman called maximized freedom and responsibility for the individual: where people have the right to live their lives as they see fit as long as they are not hurting anyone else.

I don't agree with Milton Friedman on economics, at least not on everything. For example, he believed that government had no role in the economy from a regulatory or a supportive standpoint.  I think government does have those roles, not a dictatorial role, but a supportive role, to provide a safety net and (not a welfare state) for people who fall through the cracks of capitalism. For example, welfare, unemployment insurance, and Social Security.  These empower people at the bottom to acquire the skills and sometimes retraining they need to be self-sufficient.

Economist Friedman believed in a completely free market when it came to the economy and that government had no role in it.  I believe in American capitalism, which has a mix of private market economics and a robust private sector, but with solid regulators to prevent and punish abuses in the system such as slave labor, slave wages, and unsafe working conditions. We need these regulators along with a strong but affordable safety net, not welfare state, to empower people to become self-sufficient.

When I talk about maximizing freedom, I mean maximizing the freedom of people to live their own lives as they see fit as long as they are not hurting anyone else.  That means legalization with regulation of marijuana, not that I would ever smoke or use it except for a medical condition. Legalize, with regulation, gambling, including casinos, and it looks like casinos will be headed to my Free State of Maryland, which will bring in thousands of much-needed jobs if the industry is regulated properly.

Legalize, with regulation, prostitution.  Again I believe government shouldn't be involved in how people live their own lives, and as long as the prostitution industry is regulated properly, it can be as safe as possible while controlling the spread of disease.  As things stand, the oldest profession in the world is still in business and thriving, but we currently have little, if any, control over it. Again, I would never pay for sex, but I don't have the right, nor does Government in my opinion have the right, to make this decision for others. 

Under the U.S. Constitution, homosexuals have the same rights as straight people, but their constitutional rights aren't protected completely, with adoption and marriage as good examples. But under the Constitution, since gay people (note the word people) have the same rights as straight people, so also should their constitutional rights be protected. 

As on most things, I'm pro choice on reproductive rights, because again I don't believe government has the right to make medical decisions for women, or men for that matter.  I'm also pro choice on physician-assisted suicide for mentally competent patients who have unbearably painful medical conditions without a chance for cure, again because I believe Government doesn't have a role in making medical decisions for people.  These decisions should be left to individuals and their doctors. 

As I've said before, if people have all the options in front of them, they'll generally make the best decisions for themselves and their families. So let's let them and let government do what they do best, and perhaps the only thing it does well, which is to play a supportive role and protect people from abusing each other. Laws should be written to protect people from hurting others, not themselves.  


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