Milton Friedman Part III: Friedman vs. Liberal Detractors

There is one man who embodies the spirit of capitalism, but most have never heard of him. That needs to change. It's time for Americans to remember and get to know Milton Friedman, the father of modern economics.

Milton Friedman was a brilliant champion of the free market, capitalism and the American way of life. He was not a politician, just a man who looked at things in a radically different way --- and articulated them simply and persuasively.

Part III: Friedman vs. Liberal Detractors

Milton Friedman was a powerful, passionate, cheerful and reasoned defender of what America and capitalism has done for the country and the world. Friedman's handling of radicals and leftist was done with calm logic grounded in facts and common sense. Many today might be thinking, "Mister, we could use a man like Milton Friedman again."

When Friedman encountered radical extremist Frances Fox Piven, who co-authored the Cloward-Piven plan to overload the welfare system in this country and bring down our economy, he challenged her irrational logic with facts and direct questions.

FRANCES: That so-called free enterprise system has always used government. The entrepreneurs of that free enterprise system have always used government. And the question that you raise is whether other people can use government to achieve their ends.

The free enterprise system, as it is spread around the world, as it is spread to Asia and Africa and Latin America, has spread through the force of alms, among other things. And those alms were wielded by governments. That was government intervention under the name of the free enterprise system, but a government intervention which destroyed the freedoms of many people.

MILTON: You always are talking about mixed systems, and I challenge you to find a single example in history at any time of any society where people have been relatively free, and I don't mean merely --- what you call merely --- economic freedom. I mean freedom in the full sense. I mean freedom of individuals to pursue their own objectives, their own values, to live their lives. I want you to name me any society in which you've had any large measure of that freedom, where capitalism and free enterprise has not been the predominant mechanism for controlling economic activity. Not the sole mechanism, but the dominant one. I want you to name me one exception.

Friedman was continually attacked by leftists who believed socialism or communism were superior to capitalism and the free market. And he continually rebutted their claims with a clear truth based in facts.

Friedman also educated college students who believed the free market to be inferior. When challenged by one student that in a free market system the poor remained poor and the rich remained rich, Friedman had plenty to say.

MILTON: This is not built into the system at all. It's never been true. It's simply a false. If you look at the evidence, there is an enormous amount of mobility from one class to the other. In fact, there used to be a saying, three generations from church leads to church slaves, which reflected the exactly opposite affect. So it's simply not built into the system. On the contrary, there's a great deal of mobility within generations and between generations, and we shouldn't argue on the basis of false factual premises. In my opinion, a society that aims for equality before liberty will end up with neither equality nor liberty.

Contrary to what most economists of his day --- and of this day --- believe, Friedman also felt government was the problem, not the solution for education and unemployment.

MILTON: Why do we have a black teenage unemployment rate from 30 to 40 percent? Because of two failures of government. One, a failure to provide decent schooling, which is a governmental responsibility. Has been. Whether it should be or not, it has been. And second, because of a minimum wage rate, which prevents those kids who haven't had decent schooling from getting jobs at low pay at which they can earn the skills on the jobs that would enable them to ride to higher pay. If you look at the sources of poverty, you will find a very --- most of them are derived from what I regard as wrong-headed government policy.

Rather than just citing problems, Friedman also offered solutions to things like education.

MILTON: In my opinion, there is not a single thing you could do in this world that would do more to improve the condition of the black people who are in the lowest income classes, of the black people who have been most affected by discrimination, there is not anything you could do that would be more affected than the voucher scheme. Why? Because as I said to you before, and I challenge anybody to deny it, that there's no respect in which the black and the slum is more deprived than in the quality of schooling he can get. He's much worse off in that respect than he is even in the quality of the housing he can get and in the quality of the automobile he can buy and the quality of the job he can get with given education.

The only effective device that there is for improving his schooling that anybody has suggested is to give the parents more control, to introduce the competition and the drive of private --- of private market, to improve the quality of the schooling that is available to them.

During a Free to Choose discussion, Friedman was confronted regarding the morality of capitalism.

VOICE: Dr. Friedman, is there an economic system now or historically that has allowed free enterprise alone to determine which direction the economy goes? Secondly, in economics, you have resources. And how to best use these resources is a value judgment. But it seems to me you can either have free enterprise decide or a government decide or some combination. And don't you think combination would be the best alternative? And thirdly -- if I can remember it -- isn't there some benefit to having the government steal our money, which is what they do effectively. They hold a gun to our head and say, "Pay us 40 percent of your income and go to jail." They take this money, and they give it mostly to government employees. Well, the government employees spend it. The marginal propensity to consume is pretty high. So the people who were robbed have to do something creative to get the money back. And isn't this creative activity the real wealth --

MILTON: I take it that they would have to be still more creative if 98 percent were being spent by the government.

No, the third part of your thing is just pure fallacy from beginning to end. Because if those people who are now government employees, who are employed in creative activity and productive activity, they would also be spending their money. And we would have a greater total around. All you're doing -- let's suppose for a moment -- take the extreme case that that 40 percent is being used just to have people sit around. The fact that they spend their money doesn't alter the situation. The only product there is, is what the 60 percent produce. And that 60 percent is divided among 100 percent. If those 40 percent are also producing goods, then there are more goods to go around among everybody.

You are just involved in a fallacy of looking at dollars, which is important sometimes. Instead of looking at the real product, the goods and services that people produce and people consume.

Spending isn't good. What's good is producing. What we want to have is more goods and services. And as I say, the obvious indication that that's clear is that if your logic were right, it would apply at -- for 50 percent. 60 percent. 70. 90. 98. 100 percent. And, obviously, you would see that that would be a bunch of nonsense at that stage.

It is desirable to have some money spent by government for those things, those services that we believe we can get more usefully and more effectively through government. If people are getting their money's worth, fine. That's why it's very desirable to have governmental expenditures take place at as local a level as possible. Because you, as a citizen of a small community, can judge whether you're getting your money's worth. You can decide that you want to spend it. But when it comes to the federal government, you tend to think that you're spending somebody else's money. And you are in a way. But he's spending yours.

Friedman always went back to people and production being the answer --- not government control or programs.

MILTON: The real problem is, in my opinion, that as we move from the local community to the state and from the state to the federal government, it becomes increasingly difficult for us to control the mechanism we have established. And that mechanism tends to control us. That was the great wisdom of the Founding Fathers of this country, of the people who wrote the Constitution. That Constitution was designed to limit government's powers, in order to preserve the freedom of the individuals. And what has happened in the past 50 years is that the fundamental character of the Constitution has really been changed. We have broadened enormously the conception of what is a government mental power and what is not and have departed from that limited government until we have created a Frankenstein, an unlimited government that threatens to destroy us.

Listen to the Full Series on Milton Friedman

Part I: Economics 101

Part II: Evils of Collectivism

Part III: Friedman vs. Liberal Detractors

Part IV: Unapologetic and Unafraid

The themes of healing and redemption appear throughout the Bible.

Our bodies are buried in brokenness, but they will be raised in glory. They are buried in weakness, but they will be raised in strength. — 1 Corinthians 15:43
It is not the healthy who need a doctor, but the sick. I have not come to call the righteous, but sinners. — Mark 2:17.

So, for many Christians, it's no surprise to hear that people of faith live longer lives.

Heal me, O Lord, and I shall be healed; save me, and I shall be saved, for you are my praise. — Jeremiah 17:14.

But it is certainly lovely to hear, and a recent study by a doctoral student at Ohio State University is just one more example of empirical evidence confirming the healing benefits of faith and religious belief.

RELATED: MEDIA BIGOTRY: The New Yorker hates on Chick-fil-A over 'pervasive Christian traditionalism'

Moreover, the study finds that religious belief can lengthen a person's life.

A joyful heart is good medicine, but a crushed spirit dries up the bones. — Proverbs 17:22
Lord, your discipline is good, for it leads to life and health. You restore my health and allow me to live! — Isaiah 38:16

The study analyzed over 1,000 obituaries nationwide and found that people of faith lived longer than people who were not religious. Laura Wallace, lead author of the study, noted that "religious affiliation had nearly as strong an effect on longevity as gender does, which is a matter of years of life."

The study notes that, "people whose obits mentioned a religious affiliation lived an average of 5.64 years longer than those whose obits did not, which shrunk to 3.82 years after gender and marital status were considered."

And He called to Him His twelve disciples and gave them authority over unclean spirits, to cast them out, and to heal every disease and every affliction. — Matthew 10:1

"The researchers found that part of the reason for the boost in longevity came from the fact that many religiously affiliated people also volunteered and belonged to social organizations, which previous research has linked to living longer. The study provides persuasive evidence that there is a relationship between religious participation and how long a person lives," said Baldwin Way, co-author of the study and associate professor of psychology at Ohio State.

Prayer is good medicine, and faith is a good protector.

In addition, the study showed how the effects of religion on longevity might depend in part on the personality and average religiosity of the cities where people live, Way said.

Prayer is good medicine, and faith is a good protector.

And the power of the Lord was with him to heal. — Luke 5:17
Heal the sick in it and say to them, The kingdom of God has come near to you. — Luke 10:9.

In early June, the Social Security and Medicare trustees released their annual report on the fiscal health of these programs, and the situation looks dire. Medicare is scheduled to run out of money in 2026 (three years sooner than anticipated), while Social Security is expected to run out in 2034. The rising national debt is only one of the well-known financial struggles the millennial generation faces. The burdens of student loan debt, high housing prices (thanks to zoning restrictions), stagnant wage growth, the rising cost of healthcare and lingering aftershocks of the Great Recession are among the biggest sources of economic anxiety millennials feel.

Progressive politicians have been very successful at courting the youth vote, partly because they actually promote policy ideas that address many of these concerns. As unrealistic or counterproductive as Senator Bernie Sanders' proposals for single-payer health care or a $15 an hour minimum wage might be, they feel in theory like they would provide the economic stability and prosperity millennials want.

RELATED: Time to reverse course: America is being corrupted by its own power

Republicans, on the other hand, have struggled to craft a message to address these concerns. Fiscal conservatives recognize, correctly, that the burden of the $20 trillion national debt and over $200 trillion in unfunded liabilities will fall on millennials. Some conservatives have even written books about that fact. But the need to reform entitlements hasn't exactly caught millennials' attention. Pollster Kristen Soltis Anderson, in her book The Selfie Vote, notes that millennials generally view protecting the safety net as more important than reducing the deficit.

Clearly, Republicans have a problem. They need to craft solutions that address the millennial generation's struggles, but they can't seem to sell entitlement reform, their biggest policy preference that addresses those problems. The Republican approach to wooing millennials on policy is failing because talking about stopping the debt from reaching an unsustainable level is long-term and abstract, and offers few immediate tangible benefits. A new approach to both pave the way for entitlement reform and give millennials an immediate financial boost is to first reform not entitlement spending, but the payroll tax: specifically, by partially (or wholly) replacing it with a value-added tax.

Under the current Social Security model, workers pay for the benefits of current retirees through the payroll tax. This system creates the illusion of a pension program, in which what you put in is what you get out, but in reality Social Security is a universal safety net program for the elderly paid for by taxes. The payroll tax falls on workers and is a tax on labor, while the value-added tax (VAT) is a tax on consumption imposed at every part of the production process. Assuming that this policy change is revenue-neutral, switching to a VAT will shift the responsibility for funding Social Security and Medicare away from workers, disproportionately poorer and younger, and onto everyone participating in the economy as a whole. Furthermore, uncoupling Social Security funding from payroll taxes would pave the way for fiscal reforms to transform the program from a universal benefit program to one geared specifically to eliminating old-age poverty, such as means-testing benefits for high-income beneficiaries, indexing benefits to prices rather than wages or changing the retirement age.

Switching from the payroll tax to the VAT would address both conservative and liberal tax policy preferences.

Switching from the payroll tax to the VAT would address both conservative and liberal tax policy preferences. As the Tax Policy Center notes, the change would actually make the tax system more progressive. The current payroll tax is regressive, meaning that people with lower incomes tend to pay a higher effective tax rate than people with higher incomes. On the other hand, the value-added tax is much closer to proportional than the payroll tax, meaning that each income group pays closer to the same effective tax rate.

For Republicans, such a change would fit conservative economic ideas about the long-run causes of economic growth. A value-added tax has a much broader base than the payroll tax, and therefore would allow for much lower marginal tax rates, and lower marginal tax rates mean smaller disincentives to economic activity. According to the Tax Foundation's analysis of a value-added tax, the VAT would be a more economically efficient revenue source than most other taxes currently in the tax code.

Not only would replacing part or all of the payroll tax provide an immediate benefit to millennial taxpayers, it would also open the door for the much-needed entitlement reforms that have been so politically elusive. Furthermore, it would make the tax code both more pro-growth and less regressive. In order to even begin to address the entitlement crisis, win millennial support and stimulate the economy in a fiscally responsible manner, Republicans must propose moving from the payroll tax to the VAT.

Alex Muresianu is a Young Voices Advocate. His writing has appeared in Townhall and The Federalist. He is a federal policy intern at the Tax Foundation. Opinions expressed here are his only and not the views of the Tax Foundation. He can be found on Twitter @ahardtospell.

Glenn was joined by Alanna Sarabia from "Good Morning Texas" at Mercury Studios on Thursday for an exclusive look at Mercury Museum's new "Rights & Responsibilities" exhibit. Open through Father's Day, the temporary museum features artifacts from pop culture, America's founding, World Ward II and more, focusing on the rights and responsibilities America's citizens.

Get tickets and more information here.

Watch as Glenn gives a sneak peek at some of the unique artifacts on display below.

History at the Mercury Museum

Alanna Sarabia interviews Glenn Beck for "Good Morning Texas" at Mercury Studios.

Several months ago, at the Miss Universe competition, two women took a selfie, then posted it on Instagram. The caption read, "Peace and love." As a result of that selfie, both women faced death threats, and one of the women, along with her entire family, had to flee her home country. The occasion was the 2017 Miss Universe competition, and the women were Miss Iraq and Miss Israel. Miss Iraq is no longer welcome in her own country. The government threatened to strip her of her crown. Of course, she was also badgered for wearing a bikini during the competition.

RELATED: Media's anti-Israel, pro-Islam bias sweeps THIS fact under the rug

In an interview, Miss Iraq, Sarah Idan, said:

When I posted the picture I didn't think for a second there would be blowback. I woke up to calls from my family and the Miss Iraq Organization going insane. The death threats I got online were so scary. The director of the Miss Iraq Organization called me and said they're getting heat from the ministry. He said I have to take the picture down or they will strip me of my title.

Yesterday, Miss Iraq, Sarah Idan, posted another selfie with Miss Israel, during a visit to Jerusalem.

In an interview, she said that:

I don't think Iraq and Israel are enemies; I think maybe the governments are enemies with each other. There's a lot of Iraqi people that don't have a problem with Israelis.

This is, of course, quite an understatement: Iraq, home to roughly 15,000 Palestinians, refuses to acknowledge Israel as a legitimate country, as it is technically at war with Israel. The adages says that a picture is worth a thousand words. What are we to do when many of those words are hateful or deadly? And how can we find the goodness in such bad situations?