Thursday, March 22, 2012

Milton Friedman – Why soaking the rich won’t work

The question from the audience was why is it that we have so many millionaires and we still have so many people in poverty and trying to get up in the world. Milton starts off by debating that these millionaires are also spending money. He says that even when they invest the money they are still providing jobs for people like factory workers. Going back to her original question, he went on to say that the wellbeing of the average person has been the main thing that has been improved by economic progress and development. He continues to say that most residuals and causes of poverty today are due to government. Some of such government failures in America are failure to provide adequate schooling and because of a minimum wage rate. This prevents people with low schooling to get decent jobs at a decent wage. He says the only way that people can develop the skills to further them in the workforce is if they get the minimum wage jobs. However, with minimum wage companies improve their equipment and raise their prices all to compensate for the lack of employees they can hire. In the absence of a minimum wage, companies would be able to hire a larger number of young workers and a lower salary so they can develop their skills in the workforce.

The term Plutonomy means that 1% of the country has more money that the bottom 95% combined. I do believe this has a large part to do with government failures. By implementing a minimum wage policy, they are forcing companies to limit the amount of workers they have. This forces people on welfare and exposes them to things frauds and scams implied by banks, businesses and government. As these people are being forced out of jobs, the CEO’s of the large corporations are making tens of millions of dollars annually. There needs to be some sort of balance between the people who are struggling to survive and the people who have too much money for their own good. Milton Friedman has some interesting ideas and I recommend people take a look at some of his interviews.

-Daniel Parsons

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