Unit Overview

The traditional forms of Capitalism and communism are expressions of the two fundamental values in political philosophy: equality and liberty. A commitment to equality led to the formation of communist projects that pursued equality at the expense of personal liberty and ended up producing governments that consistently and horrendously violated the basic civil liberties of its citizens. ON the other end of the spectrum governments committed to capitalism guaranteed extensive personal liberties but at the expensive equality and ended up with extremely high levels of economic inequality and extreme poverty.

In practice governments is the Western world attempted to balance liberty and equality resulting in something in between, democratic socialism in Europe and Canada and something similar although less robust in the US. John Rawls’ work attempts to argue for an egalitarian philosophy that adequately respects individual liberty.

However, there are people who feel that even Rawls’ modest form of egalitarianism goes too far in promoting equality. They believe that all forms of taxation are morally wrong and that anytime the government gets involved, even with good intentions, the results are bad. This view came to be known as libertarianism.

In contemporary American politics libertarianism is represented by politicians like Ron Paul and Rand Paul and in general members of the Tea Party and some members of the republican party. The republican party has shifted over time from leaning more towards democratic socialism to leaning towards Libertarianism. Some people trace this to the influence of corporate money in politics. Business interests tend to favor libertarian economics due to the fact that libertarians are more likely to propose tax cuts for large corporations and wealthy individuals. Libertarians also generally favor less environmental restrictions and more freedom for corporations to pollute as needed.

There are two readings for this week. The reading from Milton Friedman’s capitalism and Freedom is illustrative of types of economic arguments that libertarians make against democratic socialism or the welfare state. The excerpt from Robert Nozick is his reponse to Rawls’ thoery of justice. I’ve also included a paper by Jonathan Haidt on the psychology of libertarianism.



Nozick’s Anarchy, State, and Utopia

Robert Nozick was a professor of philosophy at Harvard University at the time that John Rawls was also. His book Anarchy, State and Utopia was published shortly after Rawls’ Theory of Justice as a libertarian response to Rawls influential work.

Nozick’s foundational idea, which he connects to Kant’s principle of humanity, that you should never treat people as a means to an end, is that “Individuals have rights, and there are things no person or group may do to them (without violating their rights).” And from this basic idea Nozick argues that the role of the government is merely protect the basic rights of individuals but nothing more i.e. it is not the job of the government to feed, educate, provide healthcare etc. for its citizens. This is sometimes called a “night-watchman” state i.e. the idea being that the state is a kind of security guard and nothing more. This is in contrast to Rawls’ conception of justice in which just laws must ensure that inequalities benefit the least well off. In Nozick’s conception there is no specific requirement to benefit or care for the poor, as long as various other specified injustices are not committed. Both Rawls and Nozick reject utilitarianism, and both draw inspiration from and claim to derive their basic principles from Kant’s moral philosophy.


Nozick’s Three Principles

Nozick argues that the following three principles determine whether a distribution of goods is just:

1) A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding.

2) A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.

3) No one is entitled to a holding except by (repeated) application of 1 and 2.

He says:

“The complete principle of distributive justice would say simply that a distribution is just if everyone is entitled to the holdings they possess under the distribution. A distribution is just if it arises from another just distribution by legitimate means. The legitimate means of moving from one distribution to another are specified by the principle of justice in transfer. The legitimate first “moves” are specified by the principle of justice in acquisition. Whatever arises from a just situation by just steps is itself just.”

In addition to these three principles Nozick suggest one further principle is necessary to remedy past injustices. He calls this principle the Principle of Rectification. He says:

“The existence of past injustice (previous violations of the first two principles of justice in holdings) raises the third major topic under justice in holdings: the rectification of injustice in holdings. If past injustice has shaped present holdings in various ways, some identifiable and some not, what now, if anything, ought to be done to rectify these injustices? What obligations do the performers of injustice have toward those whose position is worse than it would have been had the injustice not been done? Or, than it would have been had compensation been paid promptly? How, if at all, do things change if the beneficiaries and those made worse off are not the direct parties in the act of injustice, but for example, their descendants? Is injustice done to someone whose holding was itself based upon an unrectified injustice? How far back must one go in wiping clean the historical slate of injustices? What may victims of injustice permissibly do in order to rectify the injustices being done to them, including the many unjustices done by persons acting through their government? . . The principle of rectification presumably will make use of its best estimate of subjunctive information about what would have occurred (or a probability distribution over what might have occurred, using the expected value) if the injustice had not taken place. If the actual description of holdings turns out not to be one of the descriptions yielded by the principle, then one of the descriptions yielded must be realized.”

Nozick is very critical of what he calls “end-state principles.” End-state principles are principles designed to produce a certain end state, like no one below the poverty line or everyone with equal wealth. And he thinks that it is very important to not ignore why people are in the state they are in. He says:

“If some persons are in prison for murder or war crimes, we do not say that to assess the justice of the distribution in the society we must look only at what this person has, and that person has, and that person has, . . . at the current time. We think it relevant to ask whether someone did something so that he deserved to be punished, deserved to have a lower share.”

In contrast he calls his principle, or conception of justice “historical.” He says:

“An injustice can be worked (created) by moving from one distribution to another structurally identical one, for the second, in profile the same, may violate people’s entitlements or deserts; it may not fit the actually history.”

He also refers to end-state principles as a Patterned distribution which he defines as:

“Let us call a principle of distribution patterned if it specifies that a distribution is to vary along with some natural dimension, weighted sum of natural dimensions, or lexicographic ordering of natural dimensions. And let us say a distribution is patterned if it accords with some patterned principle.”

What this means is that there is a pattern that is to be aimed at, and to be achieved at whatever the cost. Essentially Nozick will argue that when you identify a pattern and then seek to enforce the pattern you will create an injustice in the enforcement of the pattern because you will take something away from someone who deserves it, according to Nozick’s historical conception of justice, and give it to someone who doesn’t deserve it, again according to Nozick’s historical conception of justice. The argument of course is blatantly question begging as one would only think someone deserved what Nozick says they deserve if you are convinced that his historical account of justice is true.

 Nozick illustrates his conception of justice using a somewhat fictional example with Wilt Chamberlin as the protagonist. He asks us, “Is it unjust for Wilt Chamberlin to make $250 thousand a year?” In his example there is a box setup outside the stadium in which people put money in the box that they know is going directly to him because they want to see him play. He thinks that, assuming everyone has gotten their money by just means (principles 1 and 2), there is nothing morally problematic in Chamberlin earning 250 thousand dollars a year. As you can guess from the amount, Wilt Chamberlin played basketball quite a while ago when that was still a very large amount of money.

Nozick ends this excerpt with a discussion of socialism and end state distribution principles, and ultimately a radical claim about all taxation. Here are some of the relevant passages:

“Private property even in the means of production would occur in a socialist society that did not forbid people to use as they wished some of the resources they are given under the socialist distribution. The socialist society would have to forbid capitalist acts between consenting adults.No end state principle or distributional patterned principle of justice can be continuously realized without continuous interference with people’s lives. Any favored pattern would be transformed into one unflavored by the principle by people choosing to act in various ways; for example, by people exchanging goods and services with other people, or giving things to other people, things the transfers are entitled to under the favored distributional pattern. To maintain a pattern one must either continually interfere to stop people from transferring resources as they wish to, or continually (or periodically) interfere to take from some person’s resources that others for some reason chose to transfer to them.

Patterned principles of distributive justice necessitate redistributive activities. The likelihood is small that any actual freely-arrived-at set of holdings fits a given pattern; and the likelihood is nil that it will continue to fit the pattern as people exchange and give. From the point of view of an entitlement theory, redistribution is a serious matter indeed, involving, as it does, the violation of people’s rights. (An exception is those takings that fall under the principle of the rectification of injustices.)

And then he follows his discussion of socialism and constant interference to attain some pattern with the claim that “Taxation of earnings from labor is on par with forced labor.” He goes on to say that “. . . taking the earnings of n hours of labor is like taking n hours from the person; it is like forcing the person to work n hours for another’s purpose.”

Critique of Nozick

Here’s a review of nozick’s work that summarizes why many people find the philosophical position so concerning:

“Nozick exhibits a sort of cuteness that would be wearing in a graduate student and seems to me quite indecent in someone who, from the lofty heights of a professional chair, is proposing to starve or humiliate ten percent or so of his fellow citizens … leaving the sick, the old, the disabled, … to the tender mercies of private charity, given at the whim and pleasure of the donors and on any terms that they choose to impose. (Brian Barry Political Theory, Volume 3, 1975)

The most basic technical problem with his proposal is that his rectification principle is an unworkable suggestion.

Nozick’s rectification principle has a number problems. A just transfer cannot have an unjust appropriation in its history, however the injustices in transfers are so numerous and outrageous that rectification is impossible. Nozick’s proposal is so absurdly radical as to be ridiculous. It is not even a credible proposal. Rawls’ theory is actually much more conservative in the changes it would demand. How would go about rectifying past injustices? It seems that any attempt to do so would generate incredible injustices themselves. The principle is a utopian suggestion and not something that could be taken seriously, which Nozick is actually aware of, hence the “utopia” in the title. Hence, the comment from Brian Berry that Nozick’s treatment of the subject is “wearing” and “quite indecent.” Nozick is not addressing some arcane philosophical issue. Unfortunately extreme poverty is all too real.

As a more general principle I think Nozick fundamentally miss understands the basic principle of social contract theoryHe assumes that people have certain rights, rights to the entirety of what they can earn in a free market, and then goes on to argue that anything beyond a minimal state infringes on people’s rights. The problem is that he doesn’t explain why people have the rights, and only the rights, that he says they have. He uses the state of nature but not in the traditional way. The state of nature is traditionally used to determine what rights people have. And when you run it that way it becomes clear that Nozick’s conception of the rights people have is in conflict with the most basic principles of social contract theory. He strangely seems to think that people have a right to all the wealth they can accumulate without owing anything back to the society that made it possible for them to accumulate any wealth in the first place. The basic principle of social contract theory is everyone has a motivation to participate because everyone benefits and it seems to me that Nozick doesn’t get the idea. A social situation is one in which everyone contributes to the success of everyone else and therefore no one is entirely responsible for their own success. In the state of nature no matter how strong or smart you are you are destined for a life that is “short, brutish, and nasty.” It is only in the state of nature that one has a right to everything, and once one enters into the social contract one forgoes one’s right to everything for a more limited set of guaranteed rights.

Friedman’s Economic Libertarianism

Milton Friedman’s libertarianism, while similar in its desire to avoid government interference in the lives of individuals, is grounded in an economic rather than a philosophical argument. Libertarian economics is based on the idea that centrally planned economies, like that of the former Soviet Union, are extremely inefficient. And more generally than privately run enterprises are more efficient than publicly run enterprises. It is related to the idea of “trickle-down economics,” which is the claim that if we give tax breaks to the wealthy they will spend that money, the economy will improve, and the benefits will trickle down to the poor. Libertarian economic ideas have enjoyed a lot of popularity amongst the wealthy elite of the united states and have heavily influenced public policy over the past 40 years in terms of given tax breaks to the wealthy, privatizing various aspects of the government (charter schools for example), and cuts to government welfare programs. In Capitalism and Freedom Friedman makes the argument that government programs designed to reduce poverty have actually done more harm than good.

Here are some notes on portions of Capitalism and Freedom:

Friedman doesn’t like the idea he feels Kennedy is expressing in his famous quote “Ask not what your country can do for you but what you can do for your country.”

He says “The organismic, “what you can do for your country” implies that government is the master or the deity, the citizen, the servant or the votary.”

According to Friedman, the government exists to serve the people and no other goal other than the goals of the people.

To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom.

The Central Question from Friedman is,”How can we benefit from the promise of government while avoiding the threat to freedom?”

Or, “How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect?”

Which is an entirely legitimate concern, and classic concern of enlightenment political theorist, maybe best expressed by John Stuart Mill in his book On Liberty. Mill says:

To prevent the weaker members of the community from being preyed on by innumerable vultures, there needed to be a predator stronger than the rest, whose job was to keep the vultures down. But as the king of the vultures would be just as intent on preying on the flock as would any of the minor predators, the subjects had to be in a perpetual attitude of defence against his beak and claws. So the aim of patriots was to set limits to the power that the ruler should be allowed to have over the community; and this •limitation was what they meant by ‘liberty’.

They tried to get it in two ways. First, by getting certain political ‘liberties’ or ‘rights’ to be recognized; if the ruler were to infringe these, that would be regarded as a breach of duty, and specific resistance or general rebellion would be regarded as justifiable. •A second procedure—generally a later one—was to establish constitutional checks according to which some of the governing power’s more important acts required the consent of the community or of a body of some sort supposed to represent the community’s interests.

But a time came in the progress of human affairs when men stopped thinking it to be a necessity of nature that their governors should be an independent power with interests opposed to their own. It appeared to them much better that the various officers of the state should be their appointees, their delegates, who could be called back from office at the people’s pleasure. Only in that way, it seemed, could people be completely assured that the powers of government would never be misused to their disadvantage. This new demand to have •rulers who were elected and temporary became the prominent aim of the democratic party, wherever any such party existed, and to a large extent it replaced the previous efforts to limit the power of rulers.

Limitations on the power of government is something to be used against rulers whose interests are habitually opposed to those of the people. What we now want is for the rulers to be identified with the people, for their interests and decisions to be the interests and decisions of the nation. The nation doesn’t need to be protected against its own will! There is no fear of its tyrannizing over itself. As long as the rulers are responsible to the nation and easily removable by it, it can afford to trust them with power. . . . The rulers’ power is simply the nation’s own power, concentrated and in a form convenient for use.

In time, however, a democratic republic came to occupy a large part of the earth’s surface, and made itself felt as one of the most powerful members of the community of nations; and elected and responsible government became subject to the scrutiny and criticisms that any great existing fact is likely to draw on itself. It was now seen that such phrases as ‘self-government’, and ‘the people’s power over themselves’ don’t express the true state of the case. The ‘people’ who exercise the power aren’t always the ones over whom it is exercised, and the ‘self-government’ spoken of is the government not of •each by himself but of •each by all the rest. The will of the people in practice means the will of the •most numerous or the •most active part of the people; that is,
the •majority, or •those who get themselves to be accepted as the majority. So ‘the people’ may desire to oppress some of their number; and precautions are as much needed against this as against any other abuse of power. Thus, the limitation of government’s power of over individuals loses none of its importance when the holders of power are regularly accountable to the community, i.e. to the strongest party in it.


Similarly Friedman identifies two principles to limit government power:

  • Power must be limited
  • Power must be dispersed

And two legitimate functions of government:

  • Protect citizens (enforce law and order)
  • Accomplish jointly what is impossible to accomplish individually

Its major function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets. Beyond this major function, government may enable us at times to accomplish jointly what we would find it more difficult or expensive to accomplish severally. However, any such use of government is fraught with danger. We should not and cannot avoid using government in this way. But there should be a clear and large balance of advantages before we do.

Centralization seems like a good thing but anytime you concentrate power it ends up bad. He says:

“The great tragedy of the drive to centralization, as of the drive to extend the scope of government in general, is that it is mostly led by men of good will who will be the first to rue its consequences.”

“Government can never duplicate the variety and diversity of individual action. At any moment in time, by imposing uniform standards in housing, or nutrition, or clothing, government could undoubtedly improve the level of living of many individuals; by imposing uniform standards in schooling, road construction, or sanitation, central government could undoubtedly improve the level of performance in many local areas and perhaps even on the average of all communities. But in the process, government would replace progress by stagnation, it would substitute uniform mediocrity for the variety essential for that experimentation which can bring tomorrow’s laggards above today’s mean.”

The basic claim is that privatization is almost always better than socialization:

Liberalism and Libertarianism

One way to think about the relationship between libertarianism and egalitarianism is as a dispute over what is the right interpretation of the enlightenment political tradition that valued liberty and equality equally. The rallying cry of the French Revolution was “liberty” and “equality.” Earlier political philosophers would have found the distinction between libertarian and egalitarian strange as they would have considered themselves valuing both. And of course contemporary libertarian and egalitarian political philosophers value both as well but just disagree on emphasis, but this disagreement of emphasis can lead to profound policy differences.

Friedman calls his conception liberalism. He says:

“It is extremely convenient to have a label for the political and economic viewpoint elaborated in this book. The rightful and proper label is liberalism.”

. . .

“Beginning in the late nineteenth century, and especially after 1930 in the United States, the term liberalism came to be associated with a very different emphasis, particularly in economic policy. It came to be associated with a readiness to rely primarily on the state rather than on private voluntary arrangements to achieve objectives regarded as desirable. The catchwords became welfare and equality rather than freedom. The nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth-century liberal regards welfare and equality as either prerequisites of or alternatives to freedom. In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought. In the very act of turning the clock back to seventeenth-century mercantilism, he is fond of castigating true liberals as reactionary!”

Friedman is what we would now call a libertarian and unhappy with both what now is called liberalism or conservatism:

“Because of the corruption of the term liberalism, the views that formerly went under that name are now often labeled conservatism. But this is not a satisfactory alternative. The nineteenth-century liberal was a radical, both in the etymological sense of going to the root of the matter, and in the political sense of favoring major changes in social institutions. So too must be his modern heir. We do not wish to conserve the state interventions that have interfered so greatly with our freedom, though, of course, we do wish to conserve those that have promoted it, Moreover, in practice, the term conservatism has come to cover so wide a range of views, and views so incompatible with one another, that we shall no doubt see the growth of hyphenated designations, such as libertarian-conservative and arisTOCratic-conservative.”

Chapter 11: Social Welfare Measures

“The humanitarian and egalitarian sentiment which helped produce the steeply graduated individual income tax has also produced a host of other measures directed at promoting the ”welfare” of particular groups. The most important single set of measures is the bundle misleadingly labeled “social security.” Others are public housing, minimum wage laws, farm price supports, medical care for particular groups, special aid programs, and so on.”

On Public Housing

Better to give people money than housing. Friedman notes how public housing generally hasn’t been a wild success.

On Minimum wage laws:

Such laws decrease employment. There is an unstated view that the market should determine things like this rather than the government by decree.

ON Social Security:

Social Security is arbitrary is in terms of redistribution:

It is on balance redistributive but not perfectly redistributive ie. on balance poor people get more out than they put in but not always.

So, he says that redistribution is a not an argument favor of social security.

Social security redistributes wealth in immoral ways, from young people to old people.

Social security should be privatized.

If it exists at all it should be privatized, like auto insurance where the government requires you to purchase insurance but doesn’t actually provide it:

“Only the doctrinaire socialist, or the believer in centralized control for its own sake, can, so far as I can see, take a stand on principle in favor of nationalization of the provision of annuities.”

Why should we force individuals to purchase something that we think is in their own good?

Paternalism? “Few people are thoroughgoing paternalists. It is a position that is most unattractive if examined in the cold light of the day. Yet the paternalistic argument has played so large a role in measures like social security that it seems worth making it explicit.”

General good of society? “A possible justification on liberal principles for compulsory purchase of annuities is that the improvident will not suffer the consequence of their own action but will impose costs on others. We shall not, it is said, be willing to see the indigent aged suffer in dire poverty. We shall assist them by private and public charity. Hence the man who does not provide for his old age will become a public charge. Compelling him to buy an annuity is justified not for his own good but for the good of the rest of us.”

His response to this line of reasoning:

“Compulsory purchase of annuities has therefore imposed large costs for little gain. It has deprived all of us of control over a sizable fraction of our income, requiring us to devote it to a particular purpose, purchase of a retirement annuity, in a particular way, by buying it from a government concern. It has inhibited competition in the sale of annuities and the development of retirement arrangements. It has given birth to a large bureaucracy that shows tendencies of growing by what it feeds on, of extending its scope from one area of our life to another. And all this, to avoid the danger that a few people might become charges on the public.”


Libertarianism vs. Egalitarianism (from Chapter 12 – The Alleviation of Poverty)

Friedmand says:

The heart of the liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights, subject only to the proviso that he not interfere with the freedom of other individuals to do the same. This implies a belief in the equality of men in one sense; in their inequality in another. Each man has an equal right to freedom. This is an important and fundamental right precisely because men are different, because one man will want to do different things with his freedom than another, and in the process can contribute more than another to the general culture of the society in which many men live.

The liberal will therefore distinguish sharply between equality of rights and equality of opportunity, on the one hand, and material equality or equality of outcome on the other. He may welcome the fact that a free society in fact tends toward greater material equality than any other yet tried. But he will regard this as a desirable by-product of a free society, not its major justification. He will welcome measures that promote both freedom and equality such as measures to eliminate monopoly power and to improve the operation of the market. He will regard private charity directed at helping the less fortunate as an example of the proper use of freedom. And he may approve state action toward ameliorating poverty as a more effective way in which the great bulk of the community can achieve a common objective. He will do so with regret, however, at having to substitute compulsory for voluntary action.

The egalitarian will go this far, too. But he will want to go further. He will defend taking from some to give to others, not as a more effective means whereby the “some” can achieve an objective they want to achieve, but on grounds of “justice.” At this point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a liberal.


Can one be an Egalitarian and liberal?: A response by Joshua Cohen

Here is a response by contemporary political philosopher Joshua Cohen:

Friedman expressing the classical liberal and libertarian view clearly says no (Friedman 1961, 195). Is Rawls’s solution an affirmative answer to this question? Can we have our liberty and our equality? No, we can’t have full liberty in the sense of a right to do whatever we want at anytime. Full liberty is the Hobbesian state of nature where everyone has a right to everything else, and there are no natural rights to protect anyone. But this full liberty doesn’t provide with real freedom, even the basic freedoms that we all want. And therefore we enter into a social contract that limits our freedom and provides us with certain rights that we want. Political theory is based on the foundation that we chose voluntarily to give up our full liberty under the state of nature because we have more actual liberty when we enter into a collective social contract. To live in a society means to give up a certain amount of liberty.

Can one be an egalitarian and a liberal. Yes, if we reclaim the original sense of what it meant to be a believer in liberty. Liberty originally meant protection against the tyranny of political rulers. That is obviously important but we must remember that by living in society we are choosing to enter into a contract with the other members of society, and that necessarily means giving up some of our liberties. Liberty was never a total liberty free of any responsibility to the state or any other members of the society that we have entered into a social contract with. That is anarchy, or the state of war of all against all.

Although perfect equality is impossible, because there will always be differences in natural abilities, we can work to create a more fair social system that provides not just legal freedom but as much true freedom as possible to all members of society. And at the very least we can create a system that guarantees the basic rights by those at the bottom of society, a system that prevents the innumerable vultures from preying on the weak members of society. In this sense we can be both an egalitarian and a liberal.

Universal Basic Income

Universal basic income is the idea that rather than the current welfare programs that currently exist the government should instead simply give money to every citizen. It is called “basic income” because the amount is enough to provide for a person’s basic needs. The number that is often mentioned is $1,000/month. It is called “universal” because it is given to all citizens, rich and poor, healthy and sick, young and old.

Universal is basic income is interesting for a number of reasons:

  1. It could permanently end poverty.
  2. There is an egalitarian argument for universal basic income.
  3. And there is a libertarian argument for universal basic income.
  4. It may be the only solution to current and future technological unemployment.

Here is a short video explaining the topic:

Many advocates of Basic Income think it will be necessary due to coming changes in the economy related to automation via the internet and ever more sophisticated robots. Here’s a video about that:


Friedman’s Minimum Income Proposal

Friedman argues for a minimum income program to replace  social security, government housing, food stamps, price supports, etc. The philosophical justification is that the elimination of poverty is a public good that can best be accomplished through government. He says:

“It can be argued that private charity is insufficient because the benefits from it accrue to people other than those who make the gifts, again, a neighborhood effect. I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people’s charity therefore partly accrue to me. To put it differently, we might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance. In small communities, public pressure can suffice to realize the proviso even with private charity. In the large impersonal communities that are increasingly coming to dominate our society, it is much more difficult for it to do so.”

“Suppose one accepts, as I do, this line of reasoning as justifying governmental action to alleviate poverty; to set, as it were, a floor under the standard of life of every person in the community.”


Friedman thinks a minimum income would have a several advantages:

“The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash. It is general and could be substituted for the host of special measures now in effect. It makes explicit the cost borne by society. It operates outside the market. Like any other measures to alleviate poverty, it reduces the incentives of those helped to help themselves, but it does not eliminate that incentive entirely, as a system of supplementing incomes up to some fixed minimum would. An extra dollar earned always means more money available for expenditure.”

“In 1961, government amounted to something like $ 33 billion (federal, state, and local) on direct welfare payments and programs of all kinds: old age assistance, social security benefit payments, aid to dependent children, general assistance, farm price support programs, public housing, etc.1 I have excluded veterans’ benefits in making this calculation. I have also made no allowance for the direct and indirect costs of such measures as minimum-wage laws, tariffs, licensing provisions, and so on, or for the costs of public health activities, state and local expenditures on hospitals, mental institutions, and the like.

There are approximately 57 million consumer units (unattached individuals and families) in the United States. The 1961 expenditures of $ 33 billion would have financed outright cash grants of nearly $ 6,000 per consumer unit to the 10 per cent with the lowest incomes. Such grants would have raised their incomes above the average for all units in the United States. Alternatively, these expenditures would have financed grants of nearly $ 3,000 per consumer unit to the 20 per cent with the lowest incomes. Even if one went so far as that one- third whom New Dealers were fond of calling ill-fed, ill-housed, and illclothed, 1961 expenditures would have financed grants of nearly $ 2,000 per consumer unit, roughly the sum which, after allowing for the change in the level of prices, was the income which separated the lower one-third in the middle 1930’s from the upper two-thirds. Today, fewer than one-eighth of consumer units have an income, adjusted for the change in the level of prices, as low as that of the lowest third in the middle 1930’s.”

Adjusting Friedman’s statistics for inflation to get a better idea of the amounts he is proposing, it today’s dollars his proposal would have been equivalent to:

$15,000/ year to the bottom 33%

$23,000/year to the bottom 20%

$45,000/year to the bottom 10%





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