BEST interview with economy genius Milton Friedman on Government Departments: Abolish or Keep?
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Department of Agriculture: Abolish – Friedman sees no need for this department.
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Department of Commerce: Abolish – Similarly, he believes it can be eliminated.
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Department of Defense: Keep – Defense is crucial for national security.
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Department of Education: Abolish – Friedman is against government control of education.
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Department of Energy: Mostly abolish, with exceptions – Energy functions related to military (like nuclear materials) should be under defense.
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Department of Health and Human Services: Half should go – He suggests keeping public health activities like those for preventing contagions but not research functions like the National Institutes of Health.
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Housing and Urban Development: Abolish – He criticizes its negative impact on urban areas and supports the idea of selling public housing to residents.
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Department of the Interior: Abolish – Suggests selling most government-owned land, keeping only what’s necessary for government buildings.
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Department of Justice: Keep – Essential for maintaining law and order.
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Department of Labor: Abolish – Believes in reducing government intervention in labor markets.
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Department of State: Keep – Necessary for international relations.
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Department of Transportation: Abolish – Friedman argues for less government in transportation.
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Department of the Treasury: Keep – Needed for tax collection.
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Veterans Affairs: Abolish – Proposes paying veterans a lump sum instead of maintaining the department.
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(0:00) Introduction to the discussion
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(0:08) Department evaluations begin
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(3:09) Friedman’s stance on dictatorship
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(3:38) Summary of departments to be kept or abolished
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Born: July 31, 1912, in Brooklyn, New York, USA.
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Death: November 16, 2006, in San Francisco, California, USA.
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Education:
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B.A. from Rutgers University (1932)
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M.A. from the University of Chicago (1933)
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Ph.D. from Columbia University (1946)
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Academic Career:
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After his Ph.D., he worked at various institutions but is most associated with the University of Chicago, where he was a professor from 1946 to 1977. He became a leading figure in what was later called the “Chicago School” of economics.
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Economic Theories:
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Monetarism: Friedman was a proponent of monetarism, which argues that the money supply is the primary cause of economic activity fluctuations. He famously advocated for a steady growth rate in the money supply to control inflation.
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Permanent Income Hypothesis: He developed this theory stating that people’s consumption is determined not by their current income but by their longer-term income expectations.
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Quantity Theory of Money: He reasserted this classical theory, linking inflation to the money supply.
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Public Policy Influence:
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Advocacy for Free Markets: Friedman was a vocal advocate for free markets, reduced government intervention, and deregulation. His ideas significantly influenced the economic policies of the 1980s, particularly during the Reagan administration in the U.S.
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Friedman’s Flat Tax Proposal: He proposed a system where individuals would pay a fixed percentage of their income for taxes, simplifying the tax code.
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School Vouchers: He supported the idea of school vouchers to promote competition in education.
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Books:
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“A Monetary History of the United States, 1867-1960” (with Anna J. Schwartz)
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“Capitalism and Freedom” (1962)
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“Free to Choose” (1980) – both a book and a TV series
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Nobel Memorial Prize in Economic Sciences: Awarded in 1976 for his achievements in the fields of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.
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Presidential Medal of Freedom: Awarded by President Ronald Reagan in 1988.
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Friedman’s ideas have had a lasting impact on economic policy, with his advocacy for free-market capitalism influencing economic thought worldwide. His work has been both celebrated and critiqued, particularly regarding the social consequences of some of his policy recommendations.
(0:10) Gone. (0:11) Department of Commerce? (0:13) Abolish. (0:14) Gone.
(0:14) Department of Defense? (0:16) Keep. (0:16) Keep it. (0:17) Department of Education? (0:18) Abolish.
(0:19) Gone. (0:19) Energy? (0:21) Abolish. (0:22) Except that energy ties in with the military.
(0:26) Well then we shove it under defense. (0:27) The little bit that handles the nuclear- (0:29) Right, that ought to go under defense. (0:30) Plutonium and so forth goes under defense, but we abolish the rest of it.
(0:33) Health and Human Services? (0:35) There is room for some public health activities to prevent contagion. (0:42) Such a thing as, for example- (0:44) So you’d keep the National Institutes of Health, say, and the Center for Disease Control down (0:48) in Atlanta? (0:48) No, no, not the National Institutes. (0:49) Those are mostly research agencies.
(0:51) No, no. (0:52) That’s a question of whether the government should be involved in financing research. (0:57) And the answer is no.
(0:57) Well, that’s a very complicated issue, and it’s not an easy answer with respect to that. (1:03) We’ll eliminate half of the Department of Health and Human Services? (1:05) Yes, something like that. (1:06) Okay, one half.
(1:06) There we go. (1:07) Housing and Urban Development? (1:08) Out. (1:09) Oh, didn’t even pause over that one.
(1:11) Department of the Interior? (1:12) Oh, but Housing and Urban Development have done an enormous amount of harm. (1:16) My God. (1:17) If you think of the way in which they’ve destroyed parts of cities under the rubric of eliminating (1:25) slums- (1:26) You know, you remember that Martin Anderson wrote a book on the federal bulldozer, describing (1:33) the effect of the urban development.
(1:36) There have been many more dwelling units torn down in the name of public housing than have (1:43) been built. (1:44) Jack Kemp has proposed selling to the current inhabitants of public housing their unit, (1:51) their townhouse, their apartment for a dollar apiece, and just shifting the ownership to (1:57) the people who live in it. (1:58) If you got rid of the Department of Housing and Urban Development, it would be worth (2:02) doing that.
(2:02) All right, done. (2:03) That’s gone. (2:04) Department of the Interior, your beloved National Park Service.
(2:08) Well, given that the problem there is you first have to sell off all the land that the (2:13) government owns. (2:15) But that’s what you should do. (2:16) But it could be done pretty quickly.
(2:17) It could be done. (2:18) You should do that. (2:19) There’s no reason for the government to own.
(2:20) The government now owns something like one-third of all the land in the country. (2:24) And that’s too much. (2:26) Should go down to zero.
(2:28) Should go down. (2:29) Well, not entirely zero. (2:30) They ought to own the land on which government buildings are.
(2:34) Okay, terrific. (2:36) Department of Justice. (2:37) Oh, yes.
(2:38) Keep that one. (2:38) Keep that one. (2:39) Labor.
(2:40) No. (2:40) Gone. (2:41) State.
(2:42) Keep. (2:42) Keep it. (2:43) Transportation.
(2:44) Gone. (2:45) Gone. (2:46) The Treasury? (2:47) You have to keep it to collect taxes.
(2:49) All right. (2:50) Collect taxes through the Treasury. (2:51) Veterans Affairs? (2:52) You can regard the Veteran Affairs as a way of paying, essentially, salaries for services (2:59) of those who have been in the armed force.
(3:01) But you ought to be able to get rid of it. (3:03) You should be able to get rid of it. (3:04) Pay it off? (3:05) Pay it off.
(3:06) Pay off lump sums, perhaps. (3:07) That’s right. (3:07) And just get rid of it.
(3:08) Okay. (3:09) Milton Friedman, if you are made dictator for one day, the next day the American government… (3:14) No, no. (3:15) I don’t want to be made dictator.
(3:16) You wouldn’t. (3:16) I don’t believe in dictators. (3:18) Okay.
(3:18) I believe we want to bring about change by the agreement for the citizens. (3:25) I don’t believe in arbitrary rule. (3:27) Let me put it this way, then.
(3:28) Your proposal… (3:28) If I can’t persuade, if we can’t persuade the public that it’s desirable to do these (3:33) things, we have no right to impose them, even if we had the power to do it.(3:37) All right. (3:38) From 14 departments down to four and a half.
(3:41) To our basic fundamental functions. (3:43) What are its fundamental functions? (3:46) Preserve the peace, defend the country, provide a mechanism whereby individuals can adjudicate(3:53) their disputes. (3:54) That’s the Justice Department.
(3:56) Protect individuals from being coerced by other individuals. (4:01) The police function. (4:03) And now, this is both the central government and the state and local governments.
(4:10) The police function is primarily local and central. (4:13) And those are the fundamental functions of government, in my opinion. (4:17) Milton Friedman, thank you very much.
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