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Free To Choose - Milton Friedman on The Welfare System (1978) | Thomas Sowell — Transcript

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0:00[Music]
0:36after the Second World War New York City
0:38authorities retained rent controls
0:40supposedly to help their poorer citizens
0:43the intentions were good this and the
0:47Bronx was one result by the 50s the same
0:53authorities were taxing their citizens
0:55including those who live in the Bronx
0:57and other devastated areas beyond the
0:59East River to subsidize public housing
1:01another idea with good intentions
1:04yet poor people are paying for this
1:07subsidized apartments for the well-to-do
1:10when government at City or federal level
1:12spends our money to help us
1:14strange things happen the idea that
1:24government had to protect us came to be
1:26accepted during the terrible years of
1:28the Depression
1:33capitalism was said to have failed and
1:35politicians were looking for a new
1:37approach
1:41Franklin Delano Roosevelt was a
1:43candidate for the presidency he was
1:49governor of New York State
1:50at the governor's mansion in Albany he
1:52met repeatedly with friends and
1:54colleagues to try to find some way out
1:56of the depression the problems of the
2:01day were to be solved by government
2:03action and government spending the
2:07measures that FDR and his associates
2:10discussed here derived from a long line
2:12of past experience some of the roots of
2:15these measures go back to Bismarck's
2:17Germany at the end of the 19th century
2:19the first modern state to institute
2:22old-age pensions and other similar
2:23measures on the part of government in
2:27the early 20th century Great Britain
2:29followed suit under Lloyd George and
2:31Churchill it till instituted old-age
2:34pensions and similar plans these
2:37precursors of the modern welfare state
2:39had little effect on practice in the
2:41United States but they did have a very
2:43great effect on the intellectuals on the
2:46campus like those who gathered here with
2:48FDR the people who met here had little
2:52personal experience of the horrors of
2:54the depression but they were confident
2:57that they had the solution in their long
3:00discussions as they sat around this
3:02fireplace trying to design programs to
3:04meet the problems raised by the worst
3:06depression in the history of the United
3:08States they quite naturally drew upon
3:10the ideas that were prevalent at the
3:12time the intellectual climate had become
3:16one in which it was taken for granted
3:17that government had to play a major role
3:20in solving the problems in providing
3:23what came later to be called security
3:25from cradle to grave
3:30Roosevelt's first priority after his
3:32election was to deal with massive
3:33unemployment a public works program was
3:38started the government financed projects
3:40to build highways bridges and dams
3:51the National Recovery administration was
3:54set up to revitalize industry Roosevelt
4:00wanted to see America move into a new
4:02era the Social Security Act was passed
4:05and other measures followed unemployment
4:07benefits welfare payments distribution
4:10of surplus food with these measures of
4:13course came rules regulations and red
4:16tape as familiar today as they were
4:18novel then the government bureaucracy
4:20began to grow and it's been growing ever
4:23since
4:28this is just a small part of the social
4:32security Empire today their headquarters
4:34in Baltimore has sixteen rooms this size
4:39all these people are dispensing our
4:42money with the best possible intentions
4:44but at what cost
4:48in the 50 years since the Albany
4:51meetings we have given government more
4:53and more control over our lives in our
4:55income in New York State alone these
4:58government buildings house 11,000
5:00bureaucrats administering government
5:02programs that cost New York taxpayers 22
5:06billion dollars at the federal level the
5:08Department of Health Education and
5:10Welfare alone has a budget larger than
5:13any government in the world except only
5:15Russia and the United States yet these
5:21government measures often do not help
5:23the people they are supposed to richard
5:29brown's daughter
5:30Halima needs constant medical attention
5:32she has a throat defect and has to be
5:35connected to a breathing machine so that
5:37she'll survive the nights it's expensive
5:40treatment and you might expect the
5:42family to qualify for a Medicaid grant
5:45no I don't get it cuz I'm not eligible
5:48for it I make a few dollars too much and
5:51the salary that I make I can't afford to
5:54really live and save anything else I
5:57have a question and I mean I live we
5:59live from payday to payday I mean
6:01literally from payday to payday this
6:04truncal isn't made any easier by the
6:06fact that mr. Brown knows that if he
6:08gave up his job as an orderly at the
6:10Harlem hospital he would qualify for a
6:13government handout and he'd be better
6:15off financially it's a terrible pressure
6:21on him but he's proud of the work that
6:23he does here and he's strong enough to
6:26resist the pressure mr. Brown huh and
6:29you're fully dilated so I'm here to take
6:31you to the delivery room try not to push
6:33please do you want to have a nice
6:35sterile delivery mr. Brown has found out
6:38the hard way that welfare programs
6:40destroy an individual's independent now
6:43we've considered welfare
6:46we went to see about apply for welfare
6:48but we were told that we were only
6:50eligible for five dollars a month and
6:53and to receive this five dollars we
6:58would have to cash in our son savings
7:00bonds and that that's not even worth it
7:03I don't believe in something for nothing
7:05anyway I think a lot of people are
7:07capable of working and are willing to
7:09work but it's it's just the way it's set
7:12up it's the mother and the children are
7:17better off if the husband isn't working
7:20or if the husband isn't fair and this
7:23breaks up so many poor families one of
7:27the saddest things is that many of the
7:30children whose parents are on welfare
7:31will in their turn end up in the welfare
7:34trap when they grow up in this public
7:39housing project in the Bronx New York
7:42three-quarters of the families are now
7:44receiving welfare payments well mr.
7:49Brown wanted to keep away from this kind
7:51of thing for a very good reason
7:53the people who get on welfare lose their
7:56human independence and feeling of
7:58dignity they become subject to the
8:02dictates and whims of their welfare
8:04supervisor who can tell them whether
8:06they can live here or there whether they
8:07may put in a telephone what they may do
8:09with their lives they're treated like
8:11children not like responsible adults and
8:13they're trapped in the system maybe a
8:17job comes up that looks better than
8:19welfare but they're afraid to take it
8:21because if they lose it after a few
8:24months and maybe six months or nine
8:25months before they can get back onto
8:27welfare and as a result this becomes a
8:31self-perpetuating cycle rather than
8:33simply a temporary state of affairs
8:36things have gone even further elsewhere
8:39this is a human state a public housing
8:42project in Manchester England
8:45[Applause]
8:47well we're 3,000 miles away from the
8:50Bronx here but you'd never know it just
8:53by looking around it looks as if we're
8:55at the same place it's the same kind of
8:58flats same kind of massive housing units
9:02- crap it even though they were only
9:04built seven or eight years ago vandalism
9:07graffiti the same feeling about the
9:11place of people who don't have a great
9:13deal in Drive and energy because
9:14somebody else is taking care of their
9:17day-to-day needs because the state has
9:19deprived them of an incentive to find
9:22jobs to become responsible people to be
9:24the real supports of themselves and
9:26their families for the past seven years
9:30Maureen Ramsay has had to buy food and
9:32clothes for her family out of a
9:34government handout for the whole of that
9:36time her husband Steve hasn't had a job
9:39each week he collects what's known in
9:42Britain as Social Security the
9:44government looks after him his wife and
9:47their children but accepting welfare
9:52payments means accepting the rules of
9:54those who hand them out my opinion
9:58anyway you feel it they own you you know
10:02there's no other way of putting it say I
10:04got a job tomorrow because I needed
10:07something well I know that I got to go
10:09down there and report it because I
10:11couldn't go into the job because you'd
10:12be looking over your shoulder thinking
10:13all this tell security is coming in I
10:15want to be done for it it still is just
10:18hopeless you can't fight against them
10:20the jobs alone are these days hit you
10:22only caught about 45 pound a week didn't
10:25eat it up to stand below that you still
10:27finish over about Tata 9 pound it's well
10:30what is he working when he used to get
10:32the same thing you know what I mean
10:33I can't seen any sense of it of course
10:36he's quite right but it may not pay him
10:40to get a job now that's not his fault
10:43and I don't blame him he's acting
10:44sensibly and intelligently for his own
10:47interests in the interest of his family
10:48it's a fault of a system which takes
10:51away the incentive from him to get a job
10:52but suppose you were cruel and simply
10:55took away the welfare overnight cut it
10:58off
10:58what would happen he would find a job
11:01what kind of a job I don't know it
11:03wouldn't might not be a very nice job it
11:05might not be a very attractive job but
11:08at some wage at some level of pay there
11:12will always be a job which he could get
11:15for himself it might be also that he
11:18would be driven to rely on some private
11:20charity he might have to get soup
11:22kitchen help for the equivalent again
11:24I'm not saying that's desirable or nice
11:26or a good thing it isn't but as a matter
11:30of actual fact as to what would happen
11:32there is little doubt that he would find
11:35some way to earn a living the American
11:40government is trying to break the
11:41welfare trap these people were
11:43unemployed they're now being trained at
11:46the taxpayers expense it may or may not
11:49lead to a real job here we have a vast
11:53national welfare system which is
11:56diametrically opposed to everything that
11:58America believes because America was
12:00founded on a work ethic has practice to
12:03work ethic and has said this is what we
12:06want everybody to do the opportunity to
12:09hold a job and in America everyone here
12:13has to clock in and do a full day's work
12:16it's an attempt to make it seem like a
12:18real job we're saying a job as a part of
12:23the American Way of life and we're gonna
12:25help you find a job so that you can get
12:27a piece of the pie you can pay taxes you
12:30can become a a part of that American
12:34dream but the dream isn't working
12:39schemes like this run under the
12:42government's comprehensive education and
12:44training act cita have a high dropout
12:46rate and many trainees end up back where
12:49they began on welfare
12:55the men and women who administer Sita
12:57and similar programs the officials of
13:00the Department of Health Education and
13:01Welfare our dedicated people their
13:04motives are good their achievements are
13:07not the results of these programs have
13:11been disappointing why I believe that
13:14the basic reason is is because it is
13:17very hard to achieve good objectives
13:19through bad means and the means we have
13:22been using are bad in two very different
13:24respects in the first place all of these
13:27programs involve some people spending
13:30other people's money our objectives that
13:32are determined by still a third group of
13:34people
13:36nobody spend somebody else's money as
13:39carefully as he spends his own nobody
13:42has the same dedication to achieving
13:45somebody else's objectives that he
13:48displays when he pursues his own beyond
13:51this the programs have a insidious
13:57effect on the moral fiber of both the
14:02people to administer the programs and
14:03the people who are supposedly benefiting
14:06from it for the people who administer it
14:09it instills in them a feeling of almost
14:11godlike power for the people who are
14:14supposedly benefiting it instills a
14:17feeling of childlike dependence
14:20their capacity for personal
14:22decision-making atrophies the result is
14:27that the program's involve a misuse of
14:30money they do not achieve the objectives
14:33which it was their intention to achieve
14:35but far more important than this they
14:39tend to rot rot away the very fabric
14:43that holds a decent society together if
14:48you think that's overstating the case
14:50look what hgw found when it made a
14:53special investigation into the spending
14:55of the vast funds it administers we just
14:58got the plan from the Public Health
15:00Service on reduced
15:01necessary beds
15:05in these reels of tape that record every
15:08payment made every recipient they found
15:11evidence that a staggering seven and a
15:13half billion dollars had been lost by
15:16fraud waste and abuse in one year
15:29doctor's building contractors hospital
15:32schools welfare recipients everyone had
15:34been fraudulently dipping into the pot
15:36and the investigation isn't over yet
15:40the inevitable consequence of having a
15:42huge pot of taxpayers money is that all
15:45of us want to get our hands in it you
15:48can be sure that we'll all be able to
15:50find very good reasons why we should be
15:53the ones to spend somebody else's money
15:56[Music]
15:57somebody or other put up a good case for
16:00spending taxpayers money to subsidize
16:02rents in New York City including the
16:05rents of these apartments the people who
16:10occupy these apartments pay something
16:12like $200 a month less than the market
16:15rent and that subsidy comes out of the
16:18taxes of people most of whom are much
16:21poorer than the people who live here
16:24it's not unusual for this sort of thing
16:27to happen when government tries to do
16:29good with our money
16:35look at what happened in Chicago
16:46for most visitors the immediate
16:48impression is of a rich prosperous
16:50bustling city
16:55[Music]
17:00but like every large city in America it
17:04has its problem areas overcrowded slums
17:07breeding poverty and crime
17:19after World War two one such area
17:23developed in Hyde Park in the 50s plans
17:26were drawn up to pull down large areas
17:28of slum building and to rebuild using
17:31government funds under an urban renewal
17:32program it was to be a show project
17:35replacing a blighted area with an
17:37integrated community who controlled the
17:40spending of that government money it was
17:45in fact my own University of Chicago
17:47which felt its very existence threatened
17:49by the spread of urban blight and crime
17:52government money was used to tear down
17:54an area that contained many small shops
17:56as well as families of low-income once
17:59the area was cleared private money
18:01rebuilded with middle-class apartments
18:03townhouses and shopping complexes the
18:06blight had been cleared here but only to
18:08be shifted elsewhere in many instances
18:11when when government administers large
18:13grants while those funds don't wind up
18:16directly serving the people and
18:17achieving the objectives that were the
18:20intent of the programs because the the
18:22grant has a feed that large government
18:25bureaucracy Joe Gardner helped to set up
18:28an organization of local black people to
18:31protect their own inners previously the
18:34blacks had rioted in the streets to try
18:36to get their way now it was to be done
18:38peacefully using government money
18:43when government funds became available
18:45the Woodlawn organization got control
18:48they used them to build the kind of
18:50houses they wanted low-rise apartments
18:53like these the bureaucrats planners and
18:58architects told them that it was unequal
19:01that only high-rise blocks would work
19:03they were wrong a lot of people have
19:06this this view that the disadvantaged if
19:09you will have no idea of what their
19:11problems aren't heart resolving that it
19:12takes outside professionals to do that
19:14and we say that's baloney because the
19:16outside professional does not feel in
19:18his gut what a woman on welfare with six
19:21kids and living off a hundred dollars a
19:23month you know in a deteriorated
19:26building fields she can come up with
19:28solutions much better than a bureaucrat
19:37the intentions of this local community
19:40group are good they want to rebuild the
19:42community as the community wants the
19:48government money always corrupts look at
19:52the number of people rebuilding this
19:54garage it doesn't make sense
19:56except that these are seated workers
19:58paid for by taxpayers money government
20:03funds have allowed the organization to
20:04take over a whole area of Chicago they
20:07now have their own supermarket
20:13they built splendid houses for
20:16middle-class occupiers very expensive
20:18protected by the latest security systems
20:21all at the taxpayers expense
20:35in a sense twee is rapidly becoming a
20:37mini government at this particular point
20:39we have approximately 400 employees we
20:42have an operating budget of in excess of
20:44five million dollars a year so we are
20:46large large and expanding their next
20:51project is to redevelop this site and
20:54that's only the first step in a 20-year
20:57plan that will cause 220 million dollars
21:00most of it coming from the taxpayers in
21:05the South Bronx they're very familiar
21:08with government protection like the rent
21:10controls that made it on economic for
21:13landlords to maintain their buildings
21:14they've moved out and the Vandals have
21:17moved in the South Bronx is an area
21:22where many of the people are on welfare
21:23and where the crime rate is high but all
21:27this could change a group of local
21:33people has begun to renovate these
21:35buildings to build new homes they call
21:38themselves sweat equity because at first
21:40sweat and effort was all they could put
21:43into the project only later did they
21:45accept a small government grant how long
21:48ago did you start working on this
21:49building four months ago on this
21:51building right here and I tell you what
21:53you're gonna do is gut the whole thing
21:55from beginning there and right totally
21:56gutted and you'll have to rewire
21:58[Music]
22:03ceilings worked on a winter working
22:06summer how many people have you gonna
22:10work meet her a good 40 people how do
22:12you keep them working okay you know 10
22:1411 most want to get tired of it hold off
22:17and so on well how do you like it an
22:19interesting we show them what could be
22:20done future what will be done in the
22:22future and take it take it well at first
22:25its kind of hard to prove to somebody
22:27that in next 3-4 years what will come
22:30out of it they can't see it the long
22:32range turn we're gonna see in short they
22:34need money right now in that 200 years
22:36sure so we we try to show them that it
22:39will happen
22:41it's true they now accept some
22:44government money but so far they've
22:46managed to retain their original
22:48philosophy but the best way to get
22:50something done well is to do it yourself
22:53okay like what we're doing we're
22:55bringing people out of the street giving
22:59us something to look forward to
23:00they had their own apartment they'd be
23:02taken care of the area around it they
23:05have a garden to have something look
23:07forward to they even get off welfare you
23:09even give him a job so I can drop the
23:11world fair and have some self pride
23:13that's the whole thing about itself
23:15crime because long as you collect upon
23:17the government and sitting back you got
23:19no worries when that sitting back we're
23:22working we're making that money come in
23:24we're putting it into our building we
23:26were building ourselves up as well in
23:28the building
23:36some of these people are Sita workers
23:38paid for by the taxpayers but this isn't
23:41as useful as it might appear you ask
23:44these fellows which would they rather
23:45have the seat of workers or the money
23:47that's being paid to the seat of workers
23:49which would you rather have the money
23:52paper but that's your it that's very
23:56expensive help in terms of what these
23:58people could use with the money you give
24:00these people the amount of money you're
24:01paying that see to workers now bet
24:03they'll have twice as much three times
24:04as much work am I wrong right oh that's
24:08a very inefficient way to use their
24:10money the problem is you've got a
24:11bureaucracy and the government
24:13bureaucrats they want to decide what to
24:14do they don't want to let you decide
24:16what exactly to ask yourself how did
24:19this get place get built up in the first
24:21place after all this was a pretty
24:23respectable solid substantial region
24:25when it was first developed it wasn't
24:27done through a government project it was
24:29done by people individually having an
24:31incentive to put up these buildings and
24:32occupy them what these people we've been
24:35seeing here are doing is they're trying
24:37to restore that feeling and that
24:38attitude you'll have a far healthier
24:40community here if it grows out of the
24:43self help of people like the people
24:45we've been talking to then if it's a
24:47paternalistic venture undertaken by
24:49governmental civil servants and
24:51bureaucrats who have to plan on a large
24:53scale for other people we must find a
24:57way to give everyone cut in the welfare
24:59trap the kind of initiative these people
25:02have the best or should I say the least
25:06bad solution I have ever been able to
25:08devise is something called the negative
25:11income tax this is the idea that we
25:15should get rid of a large part of the
25:16welfare bureaucracy of the demeaning
25:18rules that we should help people who are
25:20poor fundamentally by giving the money
25:22what's the positive income tax you're
25:25entitled to a certain amount of personal
25:27exemptions and deductions and above that
25:29amount you pay tax but suppose you have
25:34no income under a negative income tax a
25:36fraction of your unused exemptions would
25:39be paid to you by the government
25:40guaranteeing at least a minimum income
25:44if you earn something you'd still get a
25:47fraction of your unused exemptions
25:49and you'd end up better off as your
25:56earnings rose the supplement to your
25:58income would become smaller and smaller
26:00until your earnings equaled your
26:02exemptions at that point you'd break
26:04even
26:05neither paying tax nor receiving a
26:07subsidy it's not an ideal system it's
26:11not the system we might have liked to
26:12get into but it's a system which would
26:15have the effect of eliminating the
26:17separation of the society into those who
26:20receive and those who pray the
26:23separation that tends to destroy the
26:25whole social fabric it would mean that
26:29week that we could each of us take
26:31advantage of opportunities that opened
26:32up without fearing that if by some
26:34chance we lost our jobs it would be a
26:37long time before we could get back on
26:38assistance it would be a system that
26:41would give all of us an incentive
26:42gradually to improve our lives
26:44with perhaps enable us over time to work
26:48ourselves out of the kind of mess we've
26:51gotten ourselves into a mess we've
26:52gotten ourselves into for the very best
26:55of motives but with a very worst of
26:57results
27:03we have become increasingly dependent on
27:06government we have surrendered power to
27:08government nobody has taken it from us
27:10it's our doing the results monumental
27:14government spending much of it wasted
27:16little of it going to the people whom we
27:20would like to see helped burdensome
27:23taxes high inflation a welfare system
27:27under which neither those who receive
27:30help nor those who pay for it are
27:33satisfied trying to do good with other
27:37people's money simply has not worked
27:41[Music]
27:46the discussion is already underway here
27:49at the University of Chicago so let's
27:51join it as I looked at the film I had a
27:54growing sense of anger anger that that
27:58position failed to recognize that the
28:02system that was being attacked was
28:04necessary in our capitalistic free
28:06enterprise system that by its own
28:08failure produces poverty and therefore
28:12requires governmental intervention in
28:14the interest of those people caught in
28:17the traps of poverty so as I sat and
28:19looked at the film and as I hear dr.
28:21Friedman's statement I was aroused to
28:24the point as I said of anger because
28:26only half the story is told we are
28:28really being again a victim this time a
28:32system the welfare system for the
28:35failure of other systems to operate in
28:38the interest of people let's get other
28:39reactions out of that statement trying
28:41to do good with other people's money
28:43simply has not worked the welfare system
28:45is rotting away the very fabric of
28:48society Tom salt my reaction was just
28:50the opposite for my anger was of what
28:52had been created in a city where I grew
28:54up under very different conditions
28:55during the period of capitalistic
28:57failure during the period when there
28:59wasn't as humanitarianism and where it
29:01was possible for people to live better
29:02and to get out of that poverty now I
29:05think someone living in the very same
29:06place where I live would find it much
29:08harder to escape from that poverty
29:10because of all these things buildings
29:12were not abandoned like the building
29:13that we saw in that film when I lived in
29:15Harlem the crime rate there are all the
29:17things that are blamed upon the failures
29:19and the previous method did not exist
29:21I slept out on the fire escapes in
29:23Harlem I would defy anybody to do that
29:25in any part of New York City today
29:26traditionally in the United States we
29:29have tried to avoid some of the welfare
29:31trap that was referred to by denying
29:33eligibility to people who are
29:36able-bodied and not aged and so on and
29:40we have therefore tried to close the
29:43welfare door to
29:45good number of categories within the
29:47poor population the second point that
29:51was emphasized and I think needs to be
29:53put in some perspective is that some but
29:55not all of what we might call welfare
29:57programs broadly have this very strong
30:01tape back of benefits as you earn some
30:03more money and that I guess is what I
30:06would like to single out as the
30:08principle problem identified in the film
30:11but it is not common to any and all
30:12welfare programs that one might think of
30:15when the family fails when the private
30:17sector fails to create jobs at a fast
30:19enough rate you find that people are
30:22unemployed and drift into needing help
30:25in order to exist and the welfare system
30:29was created in the 30s to do exactly
30:32that when the private sector essentially
30:34failed we have the development of a
30:36welfare system it is not corrupting
30:38society it is taking what society
30:41institutions have left behind the family
30:44breaking up the economy not expanding
30:47fast enough the health system failing
30:49the educational system not doing its job
30:52we have untrained unskilled people
30:55looking for jobs in a highly technical
30:57society or jobs that pay so low that
31:01people cannot in fact live in a decent
31:04level of humanity I see the welfare
31:07system not corrupting but in fact taking
31:09the remains and attempting to help
31:12people live in dignity
31:13so rotting away the fabric of society is
31:17not supported except perhaps by you
31:19would you back that phrase absolutely
31:21you're saying you're talking about the
31:23failures of the other parts of society
31:24what the welfare system and other kinds
31:26of governmental programs are doing is
31:28paying people to fail insofar as they
31:31fail they receive the money and so far
31:33as they succeed even to a moderate
31:35extent the money is taken away this is
31:37even extended into the school systems
31:39where they will give money to schools
31:40with low scores insofar as the school
31:44improves its education the money is
31:46taken away so that you are subsidizing
31:48people to fail in their own
31:49lives have become more dependent upon
31:51the handouts we have expectations
31:53built-in today about the quality of life
31:56the quality of job the level of income
31:59for which one expects in return why
32:02because we look at the level around us
32:04that it takes us to have that's not why
32:07I may have all sorts of expectations the
32:09question is what can I do if someone
32:11else is subsidizing my expectations my
32:13expectation will be for hire or in so
32:15far as the Center for Advanced Study was
32:17subsidizing my expectations a few years
32:18ago I refused to work at UCLA for the
32:21normal full professor salary why should
32:23i when I get the same money from being
32:24in the Center for Advanced Study with no
32:26hours no duties and no classes let's
32:29look at another proposition in milton's
32:30case the insidious effect on those who
32:33receive welfare they lose their human
32:35independence and dignity are treated
32:37like children and so on now doc Thompson
32:41as a former administrator of a major
32:42program is that a great hazard that is
32:45not a great hazard as a matter of fact
32:47that presumes that people get on welfare
32:49stay on welfare and therefore have the
32:52result that dr. Friedman statement
32:54issues the fact of the matter is that in
32:57our AFDC programs throughout the country
32:59in particular it was as true in New York
33:00there is a graduate turnover of the
33:03welfare AFDC rolls about a third of them
33:07go off each year now if these people
33:10were so destroyed by the system when
33:14they go off they wouldn't go into
33:15employment they wouldn't hold employment
33:17they wouldn't stay off the rolls for six
33:19months 18 months 24 months as long as
33:21they are able to stay off so there's
33:23something wrong with that argument when
33:25one looks at people and what they do
33:27people you know who are poor are no
33:30different from those of us who are not
33:32poor and their motivation for self
33:34dependency self support and mobility in
33:38the economic scale is no different than
33:39those about than the motives we have so
33:42that they will not let the system you
33:44remember dr. Friedman the welfare rights
33:47organizations who refused to let the
33:50system sculpt them down as it was
33:52attempting to do you turn the policies
33:54around you and I agree completely but
33:56the people who are poor in our on
33:58welfare roles are no different from the
34:00rest of
34:01of course not they are human beings and
34:03they deserve every sympathy and every
34:05possibility of making their own way but
34:08the welfare system makes him different
34:10you give him an exit in their inner
34:11stupid account for them going off the
34:13rolls well nobody figures or figures and
34:16you've got to be careful with figures
34:17the fact that 1/3 there's a turnover of
34:201/3 does not mean that there aren't half
34:22war on all the time people come on go
34:25off come on go off I believe they ought
34:27to have the other things the 34% of the
34:32people on AFDC or on for five years or
34:35longer and when one thinks of the
34:37purpose of the AFDC program which was
34:39the rearing and support of children
34:42dependent children minor children I
34:45would submit to you that five years is
34:46not a terribly long time for a mother
34:49and children to have to be dependent if
34:50there's no other source of income we
34:54have a program in Pennsylvania for
34:55essentially all of those who are not
34:58taken care of by the AFDC program it's
35:01called a general Assistance Program and
35:02they're less than 15% are on more than
35:0618 months so we have a great turnover we
35:09have essentially young males moving into
35:12the welfare system after unemployment
35:14compensation and then moving out when a
35:17job opportunity comes along this I you
35:20know I think the notion of generations
35:22of people on welfare is is a very small
35:25minority in the whole system that
35:27doesn't mean that the system as
35:29presently defined and as the as a set of
35:33programs that we have put together don't
35:35often contradict each other and I'm the
35:37first to agree with with dr. Friedman
35:40that some of the programs are
35:41conflicting however I think it is it is
35:44overly broad to say that we turn people
35:47into helpless children I don't remember
35:49talking to anyone who's ever been on
35:50welfare who didn't think they were being
35:52treated like children while they were on
35:54it you know you Mun must make a
35:58difference a distinction between the
36:00system that was set up to help people
36:02and the people who are employed in that
36:05system look at any public welfare system
36:08around the country and we have know
36:10practically few trained people to work
36:13with people
36:14we employ the ill trained people who are
36:18not equipped to be helping people they
36:20say they're social workers they're not
36:22social workers I have neither the skills
36:24the attitudes and some of them not even
36:26the concern so I think one has to
36:29separate out a conceptual framework of a
36:32system designed to help people and what
36:34this the country and community puts into
36:37that system to implement those program
36:39in separate the hopes from the reality I
36:42separate the skills that are available
36:44in order to implement what the
36:46objectives of the program are and if
36:48they have to separate whether we're
36:49talking about program objectives are we
36:51talking about how it operates I would be
36:53the first to say that's a system that I
36:55administered had ill-prepared people to
36:58do the job that we were set up to do and
37:01I would not say that the system that we
37:03set up I focus on social welfare of
37:05people who think that in fact they were
37:07so hamstrung by the system that there
37:09was very little they could do to help
37:10people to get off welfare that is to
37:13build up skills get jobs the where was
37:15necessary to get off welfare they
37:17thought there was the system that we're
37:20stereotyping is one of a great deal of
37:26paternalistic interference in individual
37:28families lives and in fact isn't this
37:31true Thompson the caseload is so high
37:34for an individual welfare worker that
37:36they can't do a lot of interfering and
37:38individual family lives moreover in the
37:42last decade there's been a real attempt
37:44to ease this welfare trap in AFDC by
37:48changing the take-back rate and by
37:51administering work expenses and
37:54childcare expenses in such a way as to
37:57facilitate work by those who may want to
38:00do it so it's it's not quite as harsh a
38:01picture as we sometimes get that that
38:04there is this omniscient welfare worker
38:06who's right there in the living room
38:07with the family making all their
38:08decisions for them never heard of a
38:10government program which was defective
38:13in which the people who ran it didn't
38:15say if only we had more money to spend
38:17and what we're not being able to
38:19accomplish with the amount
38:22some of your prescriptions in that film
38:24because he's good ground for discussion
38:26the most drastic one was when you said
38:29speaking of an unemployed man supposing
38:32you were cruel and took away welfare
38:34from this man he would find a job and
38:37some at some wage that always be a job
38:39he could get he might need some charity
38:41enroute private charity but he would get
38:44a job I want you to react those of you
38:46before we come back to Milton on that is
38:48that a picture that seems plausible to
38:51you we may get a job that he will get
38:53may get a job in what we refer to as the
38:55underground economy and that's where a
38:57number of our youth are now going to get
38:59their jobs those activities that are
39:01illegal and the only opportunity they
39:04have for earning part of a livelihood I
39:06think the other issue is that you have a
39:09whole group of people who are the single
39:12female head of a household and yes cut
39:15off welfare tomorrow what will they do
39:16what will be their immediate response at
39:19what price to their small children and
39:21to their middle-aged children yes
39:26they'll get a job in fact the statistics
39:27show that women in fact are the most
39:30successful through the Employment
39:32Program
39:33but what has to supplement that
39:34typically is the provision of some kind
39:37of daycare arrangement either the
39:39individual woman has to earn enough
39:41money to be able to pay privately for
39:43her daycare or in fact she is quote
39:45subsidized through this insidious
39:46corrupting program set of programs run
39:49by the federal government which in fact
39:51makes our employable in a taxpayer it's
39:54a it's an interesting notion of trying
39:57to get people in a productive mode Tom
39:59so it's incredible the way the way you
40:01start the story in the middle as if
40:03there's a predestined amount of poverty
40:05a predestined amount of unemployment and
40:07that the welfare system is not itself in
40:09any way responsible predestined 20% of
40:12the bottom half of the population I have
40:14never that's always been
40:19it's also true that 20% of the bottom
40:21population does have to be living on the
40:23government and ruled by the government
40:24Commission for example of female-headed
40:26households many of those additional
40:28grown woman who has all all the kids are
40:30teenage pregnancies there's not a
40:33predestined amount of teenage pregnancy
40:35I grew up in an era of when people and
40:37particularly blacks were a lot poorer
40:39than today faced a lot more
40:40discrimination in today and in which the
40:43teenage pregnancy rate was a lot lower
40:45than today I don't believe there was a
40:47predestined amount of teenage pregnancy
40:49a predestined amount of husband
40:51desertion others Guttman has done a
40:53study of the black family showing that
40:55this whole notion that this is the black
40:56family has always been disintegrating
40:58but that is nonsense that his studies go
41:00up in 1925 the great bulk of black
41:02families were intact two-parent families
41:04up through 1925 and going all the way
41:06back through the aro slavery so it is
41:08now only within our own time that we
41:10suddenly see this inevitable tragedy
41:13which the welfare system says it's gonna
41:15rush into sound in which it is itself a
41:17point for a very small group we're
41:19talking about 12% of the families are
41:21not intact are not two-parent families
41:24at any one you know I'm gonna walk over
41:26sniffing no public at large we're
41:28talking about 12 percent of the families
41:3012 percent that's right that's a small
41:32number welfare we're still talking about
41:36a significant component of the bottom 20
41:38percent that are the bottom 20 percent
41:41whether they are above the poverty line
41:43or below the poverty line they are still
41:45the bottom 20 percent and the issue is
41:47what is the responsibility of the other
41:4980% if any does your program plan to
41:52eliminate there being a bottom 20% no
41:54but it intends to raise the bottom 20%
41:57you're raising them by having more by
41:59having more legitimacy more unemployment
42:00I'm not making the meat have
42:02illegitimate children
42:07you don't have to be subsidizes we as
42:09human beings don't have a responsibility
42:11but I hope we have a compassion and
42:13interest in the bottom 20% and I only
42:15want to say to you but the capitalist
42:17system the private enterprise system in
42:19the 19th century did a far better job of
42:21expressing that sense of compassion than
42:23the governmental welfare programs are
42:25today the 19th century the period which
42:27people denigrate as a high tide of
42:29capitalism had the was a period of the
42:31greatest outpouring of eleemosynary and
42:33charitable activity that the world has
42:35ever known and one of the things I hold
42:37against the welfare system low seriously
42:39is that it has destroyed private
42:41charitable arrangements which are far
42:43more effective far more compassionate
42:45far more person-to-person and helping
42:47people who are really for no fault of
42:49their own in disadvantaged situation I
42:51have to disagree with you though because
42:52I think that the the whole notion of
42:55private property was excluded whole
42:57segments of society were excluded from
42:59the notion of private property in the
43:0019th century namely women idiots and
43:03imbeciles and so I don't go back to the
43:0519th century and hold it up as any
43:06Paragon that we would want to replicate
43:08today anyway I want Milton now to come
43:10to your major prescription look I know
43:13you don't say it's on the agenda for
43:15tomorrow but it lies ahead that is the
43:17negative income tax and I'm not sure
43:19people fully understand how it work we
43:21can't I think go to the details of it
43:23but I'd like to get a reaction around
43:24the panel first of all is this a viable
43:29approach to the enduring problems of
43:31poverty negative income tax I think it's
43:35a viable approach to some part of the
43:38problems of poverty it involves first of
43:42all cash payments rather than in-kind
43:44payments as I understand it involves
43:46payments on a non categorical basis but
43:48you be known that is to say it doesn't
43:50matter whether you're a female added
43:52family or a male headed family or with a
43:53young or old you're sick or well if your
43:56income falls below a certain level you
43:58may some guaranteed income level for
44:01people based on family size and then it
44:03has a take-back rate which is modest I
44:07suppose by definition now the question
44:10is how many things you want to use that
44:12program to replace how many things you
44:15want to replace with such a negative
44:17income tax program
44:18would you replace everything with just
44:20we Claire that point up would you
44:21virtually wipe out the remaining forms
44:23of welfare if you got this program going
44:25yes I would not but I think its purpose
44:28is precisely to provide a transition
44:31between where we are now and where we
44:33would like to go because while but
44:35because I agree with you given that
44:37we've corrupted the people on welfare
44:39and gotten them on there we do have an
44:42obligation not to throw them out in the
44:43street and put them in the difficult
44:45adjustment you've made we've got easy
44:46okay but I would want to replace all
44:50let's get reactions for this we'll come
44:52back to well I saw some figures recently
44:54which said that if you took all the
44:56money spent on poverty in United States
44:57and divided by all the poverty family
44:59you can't come up with a figure of
45:00$32,000 per family now the average
45:04poverty family apparently is not getting
45:05the $32,000 and so clearly someone in
45:09between the Treasury and those families
45:11is getting an awful lot of that money
45:12and I think that if you simply
45:14eliminated the middleman as they saying
45:16that commercials that there'd be an
45:18awful lot of benefit both to the poor
45:19and to the taxpayers I'm supportive of
45:23the negative income tax concept and and
45:26the objective of it I like to point out
45:28however that administrative ly we have
45:30another bureaucracy set up somebody has
45:35to take into account earnings someone
45:37has to decide when to pay back that
45:40which they're entitled to there's a time
45:42lag between the paying back their
45:44earning and the paying back there are
45:47variety of problems in there that I will
45:50be prepared to accept but I want you to
45:52know that government intervention is not
45:54going to be eliminated the issue that I
45:57have is where do children come in what
45:59are their rights under a negative income
46:01tax and are we by building in a negative
46:04income tax in fact subsidizing the
46:07illegitimate see that Tom soul is so
46:09concerned about the major reason it is
46:11not feasible today to have a negative
46:13income tax is because the present
46:15welfare bureaucracy would be out of work
46:18they are the major objectors as pass
46:21senator Patton now he's now a senator
46:23Pat Moynihan then demonstrated in his
46:25book on the Nixon program the chief
46:27obstacle to getting an enacted was a
46:29welfare bureaucracy
46:30so that I don't believe these
46:32administrative problems if you've got it
46:34enacted would be at all serious I think
46:36the other assumption under the negative
46:38income tax and it's one that I'm not
46:39sure I can buy is that everybody has a
46:42minimum level of understanding about how
46:44to spend money in other words how to use
46:46the marketplace to satisfy wishes and
46:48and I as an economist could say yes we
46:51do we have everybody from age 4 to 100
46:55knows how to use money to satisfy wants
46:59and that's that's what they don't they
47:01don't there are all sorts of problems of
47:03people who are not going to be able to
47:04but that's a minority problem that's a
47:07problem for private activity in private
47:09charity one thing is sure they're
47:12spending they would be spending their
47:13own money and that however knowledgeable
47:16you are about my money but it would be
47:21one stage less bad right now
47:24the welfare worker is spending mr. a's
47:27money to help mr. city and there's a big
47:30take off in the middle as Tom Sowell
47:31said the question is not whether people
47:33are wealthier on low incomes can all
47:35spend their money effectively the
47:37question is how effectively do basement
47:39it as compared to how effectively the
47:41bureaucrats spend it for them comparing
47:43anything to perfection or to some
47:45arbitrary standard acetyls noting the
47:48same thing is true in the education area
47:49they're saying would families be able to
47:51select select schools with their kids
47:53under a voucher system for example
47:54well the question is could they possibly
47:56do much worse than the corrupt
47:57bureaucrats are doing and yet in the
47:59public school system we're going on
48:01education in another program I've owned
48:04equivalent you said about a half of the
48:07money not going to the poor or something
48:10that doesn't shouldn't lead the viewer
48:13to think that all that money is going to
48:14the administrators of programs a lot of
48:16what you're talking about
48:17goes to non poor recipients for example
48:21Social Security as a program pays a
48:22roughly half of its benefits to people
48:24who otherwise would not be poor
48:26unemployment insurance pays about
48:28two-thirds of its benefits or so to non
48:31poor persons and those are in some
48:32definitions welfare or anti-poverty
48:34programs and that's how statisticians
48:36come up with this horrendous sounding
48:38discrepancy between the total amount of
48:40money spent and the total
48:42cash benefits that go to the poor I
48:44think it's a perfectly valid point
48:45though because supposedly we were not
48:48setting up unemployment benefits and
48:49Social Security in order to keep the
48:51affluent affluent well this goes back to
48:53this big philosophy debate we might have
48:55I think it's easy to oversimplify things
48:58and say that all of these programs
48:59including the public schools are there
49:01to be up help to the poor and the poor
49:03only but I will let me mention that the
49:05negative income tax has some of its
49:06impetus in that it would be a way of
49:09confining benefit payments to people who
49:11are yes yes and it would cut out
49:13benefits we're an awful lot of people
49:15who now have expectations that they're
49:17going to get them not in the form of
49:19public assistance but in the form of
49:21social insurance as we use the when an
49:24Almond could be made for us not
49:25disappointing expectations on which
49:26people have built their lives for one
49:28generation but not a continuing for
49:30eternity in order to avoid one
49:31generational transition what are the
49:33other hurdles to it getting underway now
49:35you said I don't know how seriously the
49:37biggest and the almost the only hurdle
49:39is the welfare bureaucracy no no they're
49:41they're the biggest immediate group of
49:43lobbyists that will lobby against it
49:45yeah the biggest hurdle to getting it
49:46over at the moment is that there is no
49:49way of constructing a sensible negative
49:52income tax system that will not hurt
49:56some people there will be some people
49:58who will get less money than they are
49:59now getting under particularly those in
50:01the upper income groups particularly the
50:03affluent who are now being subsidized by
50:05the wealthy and they will make it
50:08politically difficult for the people to
50:10put it into effect that the attempt is
50:13to put a negative income tax in effect
50:14which costs less money is easier to
50:17administer and yet which doesn't play
50:19anybody in the society one dollar less
50:21than he's now getting there's no way in
50:23which you can construct such a program
50:25but although it's not politically
50:27feasible now the force of history is on
50:30its side it's going to become political
50:31food let's not say that they give the
50:35impression that welfare administrators
50:37were against negative income tax the fat
50:39program for example as Moynihan says
50:42because they would lose their jobs for
50:44example many of us were opposed to it
50:46because of certain features in that
50:48program a $24 $2,400 level for a family
50:53of four
50:53these were opposed to that and if one
50:55goes down the Congressional Record those
50:57who testified will be shown to be saying
51:00yes we're four conceptually but we're
51:02against this piece and this piece if you
51:04change that you have our support I was
51:06in the same position I have first
51:09proposed the negative income tax twenty
51:10five years ago but I testified against
51:13the final version of the Nixon plan why
51:15because of welfare bureaucrats had led
51:18them to introduce changes in it which
51:20converted it from a decent satisfactory
51:23well negative income tax to one which
51:25would have been just as bad as what you
51:26now have would have been added on top of
51:28everything else that's its political
51:31reality got political reality changes
51:33and that's the important thing I want to
51:35say one more thing about this this whole
51:40problem that we've been talking about
51:42and that is going back to Bob lemons
51:45comment there is one thing that can be
51:47said in favor of the welfare program
51:49unaccustomed as I have to saying
51:50anything in favor of it and that is that
51:52it is the only social program I know of
51:55which at least on the average gives
51:57money to people who are in lower income
52:00classes than those who pay the taxes
52:02every other welfare program not only
52:05does a lot of money go to the people who
52:07are well-off but on the average the poor
52:10are taxed and the well-to-do are
52:12subsidized we in the upper income
52:14classes have been very clever at conning
52:17the poor suckers at the bottom to pay us
52:20nice well salaries as bureaucrats and to
52:23provide us with nice benefits at their
52:24expense and at least a welfare program
52:26doesn't do that and what you said with
52:30great confidence that it will come the
52:33negative income tax even though you
52:34recognize the hurdles why are you so
52:36sure it will come because the present
52:38system has within it the seeds of its
52:41own destruction there is no way in which
52:43a system constructed like the prison in
52:46my opinion can avoid creating more and
52:48more social problems and something is
52:50gonna have to be done nobody has
52:52proposed any alternative
52:53so far as I know there is no effective
52:56alternative to the negative income tax
52:57and so it gets knocked down and it keeps
53:00rising it gets knocked down yeah but
53:02finally raised the question though
53:03whether in any modern industrial
53:05democracy
53:06this one it's conceivable system to be
53:09run without a fairly elaborate welfare
53:12underpinning of some kind but to feel I
53:15I don't think it can be because I think
53:19essentially the welfare set of welfare
53:22programs reflect the values of this
53:25society that if it didn't there would
53:28have been revolt long before now yes
53:31there are rumblings about its cost and I
53:33think that's primarily a function of
53:35rapid rates of inflation eroding real
53:38income earning power of the middle-class
53:39taxpayer but I think on one level we
53:44wanted to give up the responsibility of
53:46caring the responsibility of day to day
53:49actual caring and in a technical modern
53:52industrial society like we have the tax
53:55system and the government system is
53:57probably as a isn't viable alternative I
54:02don't think we're gonna get out of it I
54:03don't think you're going to see private
54:05charities who can take my money that I
54:08am free to give or not give and
54:10essentially make a difference in
54:12people's laws of any substance on any
54:14level I don't think that has anything to
54:16do with the Massiah T being modern
54:18technological or industrial they have to
54:20do with an ideology and particularly an
54:21ideology that is very strong among
54:24academic intellectuals and in the media
54:26and I think that as time goes on and
54:28more and more intelligent ideas replace
54:29the kinds of vague divisions that
54:31dominate today that the political
54:33climate will change and that's the only
54:34thing that stands in the way of reform
54:36right now Jim doesn't I don't think
54:38you're gonna get rid of the system that
54:39I'm interested welfare system I'm
54:42interested in Tom's last statement about
54:45accommodations and and and theorists and
54:48so forth we forget that we're talking
54:50about people and we may sit in the ivory
54:53tower and talk about whether this system
54:55will work and either logically or
54:57ideologically why it won't work at the
54:59same time there are masses of people
55:01outside or locked out of the system that
55:04you and I are part of and somehow we've
55:07got to make sure those people are taken
55:08care of
55:09and the short of not doing it of course
55:12means that your safety and my safety and
55:14the vital the vitality of this
55:16government and of our country is at
55:18stake
55:18the
55:19mayor of the city of New York asked me
55:21when we had a strike what would I do if
55:22I couldn't get checks out to people when
55:25our workers were on strike and I said to
55:27him after the first month chaos needs to
55:29what do you mean I said no man or woman
55:32in the street of the city of New York
55:33you include a mr. mayor
55:34we'll be safe if we cannot take care of
55:37people or we leave this discussion and
55:39hope you'll join us for the next episode
55:40of free to choose
55:42[Music]
55:59next week is equality every American's
56:03birthright is it healthy for a nation
56:05when the government tries to impose
56:07equality on all its citizens
56:09how does that affect the freedoms of
56:11individuals don't miss Milton Friedman's
56:14free to choose next look
56:29[Music]
56:47Oh
57:05major funding for this program was
57:07provided by

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