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Free Markets vs. Socialism ...

Do low and middle income families benefit more from free market capitalism or socialism? The first video is of Milton Friedman at his best explaining to Phil Donahue why socialism can't hold a candle to capitalism and free markets.

The text of the video is included below;

Donahue: When you see around the globe the mal-distribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have-not's, when you see the greed and concentration of power, aren't you ever, did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?

Friedman: Well, first of all, tell me, is there some society you know that doesn't run on greed? Do you think Russia doesn't run on greed? Do you think China doesn't run on greed? What is greed? Of course, none of us are greedy. It’s only the other fellow that’s greedy.

The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way. In the only cases in which the masses have escaped the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst, worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way, so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

Donahue: But it seems to reward not virtue as much as the ability to manipulate the system.

Friedman: And what does reward virtue? Do you think the communist commissar rewards virtue? Do you think a Hitler rewards virtue? Do you think, excuse me, if you’ll pardon me, do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest?

You know, I think you’re taking a lot of things for granted. And just tell me where in the world you’d find these angels who are going to organize society for us.

Donahue: Well,

Friedman: I don’t even trust you to do that.

The second video demonstrates Friedman's understanding that a government that has grown too large works against the interests of ordinary businesses and workers.

Text of the video: "Unaccustomed as I am to agreeing with Michael Harrington, I will agree in part with what he’s just said. I do not believe it’s proper to put the situation in terms of industrialists versus government. On the contrary, one of the reasons why I am in favor of less government is because when you have more government industrialists take it over. And the two together form a coalition against the ordinary worker and the ordinary consumer.

I think business is a wonderful institution provided it has to face competition in the market place and it can’t get away with something except by producing a better product at a lower cost and that’s why I don’t want government to step in and help the business community."

Here are my thoughts: Corporate capitalism, often referred to as crony capitalism, is more socialism than it is free market capitalism. Socialism, as an economic system, is a system whereby government controls the means of production. In the U.S., government accomplishes this through regulations, subsidies, tax breaks and tariffs that benefit certain businesses and labor unions.

If, for instance, steel companies and labor unions are able to use their influence to convince a president to impose tariffs on foreign steel, then U.S. steel companies and their employees will benefit though it is not clear how long lasting the benefit will be. Sadly, hundreds of millions of consumers will be forced to pay more for everything from toasters to automobiles. The very wealthy barely feel it if import tariffs increase the cost of an automobile by $1,000. The same is not true for low and middle-income families.

Whenever socialist policies cause the price of the goods and services we purchase to increase, it has a far greater impact on low and middle-income families than it does on high-income earners.

Our 27 year old son was able to purchase a health insurance plan for $156 per month prior to the implementation of Obamacare. That policy provided for a $10 co-pay for prescription drugs, a $25 co-pay for doctor visits and a maximum annual out of pocket cost of $3,000. That plan was cancelled under Obamacare. Now, four years after its implementation, the most similar “Bronze” plan under Obamacare costs a similar 27 year old $275 per month and the out of pocket costs for medications, doctor visits and the maximum annual out of pocket costs have all more than doubled. Again, these increases have a far greater impact on low and middle-income families than they do on the wealthy.

Understanding the impact increased costs have on low and middle-income families vs. the impact they have on high-income families is one key to understanding why, as socialism causes the cost of consumer goods and services to rise, the wealth gap between the wealthy and the middle class continues to grow.

Socialism may work for the elites and the wealthy, but it devastates low and middle income families. As Friedman has said, “The world runs on individuals pursuing their separate interests … So that the record of history is absolutely crystal clear, that there is no alternative way, so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”


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