Apolitical Staples

Are you implying that a huge simplification of the welfare system is OK, as long as it is accompanied by a huge simplification of the tax system?

Sounds like another central-planning pipe dream. In any case, whether simple or complex, the welfare and taxes will keep on doing what they do best - plunder and destroy everything that is good and noble.

A negative income tax is actually one of the best ways to go about it. The Wiki explains it quite well and the poster above me knows nothing about economics.

You abolish the minimum wage (which, of course, distorts markets), welfare (many many bad things about welfare), and most income tax collection in one fell swoop.

Plus you get a flat tax which seems to be working quite well (although this is disputed heavily) over in Eastern Europe.

I don’t think anybody has the guts to go this far, though Roger Douglas came close.

If you get money for doing nothing (a negative tax), and that money was given to you after it was taken by force from people who did something (a positive tax), then it is a welfare system.

Did you think that it’s not a welfare system, as long as nobody calls it a welfare system?

Friedman has come to understand that monetarism, which he initially invented, results in a guaranteed level of unemployment in order to ensure stability in an economy. So the goal of full employment went out the window, and so did all the ethics we developed because of that. No more could we claim that there’s a job for everyone. Because of that, he recognizes the need to have stabilizing programs to allow people to survive between jobs. Futhermore, with maintained unemployment becoming policy, the labour market becomes distorted because non-specialized labour loses what little bargaining force it had (unless unionized).

So minimum wage laws are either necessary, or strong social safety systems need to be in place to compensate.

I argue that both are necessary.

The first thing to realize about a standing level of unemployment is that our measures of unemployment are generally snapshots. It doesn’t matter what portion of a year (or more) a person is technically unemployed if he has at other times earned income on which he can support himself (and family, if applicable).

The social problem is people who are permanently unemployable (can’t or won’t work) and are not dependents of income earners. That group must be further divided into the people who can meet their needs on a reasonable public stipend, and those who can’t or won’t. The former, who can be broadly characterized as people who are able to make prudent choices, can be helped by a negative income tax (or any other welfare scheme). The latter, can not. At the worst extreme, a negative income tax won’t help someone who pisses his money into a liquor bottle or into his veins. If it turns out there simply aren’t very many people who are in the former group, or are only in that group for brief intervals of their lives, the point of a negative income tax is lost and the idea doesn’t survive it’s test outside the frictionless academic laboratory.

Friedman has come to understand that monetarism, which he initially invented, results in a guaranteed level of unemployment in order to ensure stability in an economy.

I know it’s a Nobel prize-winning economist who’s selling this stuff, but I say it’s baloney, and I’m not buying any of it. Monetarism is just a fancy way of saying “governments printing money to buy elections while enriching their friends”. The Austrian school of economics has a far more intellectually rigorous and honest approach to understanding what money is, what is government’s proper role in monetary policy, and what causes panics and depressions. Austrian economists don’t win Nobel prizes however (except for Hayek, who was only given half of a prize, as a bone is thrown to a dog), because they believe that government central banks are essentially criminal organizations. I am in agreement with this opinion. When someone tries to tell you that people must be forced into unemployment, and that employed people must be forced to support them with welfare, and that you should be happy that this is so, then you should realize that someone is pulling the wool over your eyes.