Shockingly Progressive Friedmanism

Scott is reading the Shock Doctrine and makes an extremely important point:

My biggest gripe is not with the content itself, but rather the interplay of Klein and the content. In terms of demonstrating how a particularly virulent form of free-market capitalism, espoused by the likes of Milton and Friedman and Frederich Hayek, can run amok in the intentional absence of any restraints, I feel like the data is all quite available and compelling. The problem; however, is that Klein herself keeps getting in the way of that data with her much more narrow and insidious goal of crucifying Milton Friedman himself and all of his adherents.

And to be fair to Friedman for a second (as well as Hayek) Milton was well aware of the failure of trickle down theory to reach the poor. And designed programs to aim at that very problem–he still believed the market was the best solvent in that arena, just that the market would have to be brought in….not via privatization but via wages/income.

Below is an article by (liberal if it needs mentioning) Columbia economist Robert H. Frank detailing Friedman’s work on the Earned Income Tax Credit–one of the biggest progressive successes–and his proposal for a progressive consumption tax. [You read that correctly]. Friedman’s original idea for a negative income tax (i.e. essentially wage subsidies) was never fully realized (and is also at work in Charles Murray’s argument in In Our Hands) as a way to give more income to the poor in exchange for ending the welfare state. Frank augments the argument by stating that government could act as a employer of last resort along with the wage subsidies as a counter to the fear of the negative income tax incentivizing poor work ethic.

November 23, 2006: “The Other Milton Friedman: A Conservative with a Social Welfare Program”

Frank’s homepage, here.

On his website, under the Academic Papers tab look for the link to this article outlining Frank’s proposal for a progressive consumption tax: Frank, Robert H. (2005) “Progressive Consumption Taxation as a Remedy for the U.S. Savings Shortfall,” The Economists’ Voice: Vol. 2 : Iss. 3, Article 2.

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