What are your thoughts about this view on The Free Lunch Myth?

Sounds like he’s saying what we all know, just saying it with more authority. I guess that’s why he’s a Nobel Laureate.

Great question. I am stunned that so few Flutherites have responded. Thanks for the link to Milton Friedman’s talk. I’ve bookmarked it.

I have long been in favor of eliminating the tax on corporate profits for both the reasons that Friedman mentions and because our very high corporate tax rate hurts US businesses in competing for sales in a global economy.

I think there are legitimate uses of taxation to ensure a basic level of dignity for all citizens, but I have certainly not advocated that out of any delusion that the Tooth Fairy or Santa is providing the funds for such programs. When I write my check to my dear Uncle Sam, I am painfully aware of who pays.

He states the obvious here and I am continually amazed everyday that more people still don’t get this simple concept on taxes!

If corporations are going to get the privileges of being treated like a person, why should they then be exempt from taxation? Also, other countries have things like universal healthcare that removes the burden to provide healthcare for their employees which helps them be more competitive internationally.

I think major corporations are actually more harmful to the economy than several smaller-to-midsized companies that can produce the same things, pay their employees better and don’t have to pay executives 8 figure bonuses. A big corporation will come in, offshore all of the middle tier jobs, keep the unskilled ones that require subsidies from the government just to survive and then bonus out the upper management with the difference. They’re more like parasites than economic engines. I’m completely baffled how conservatives seem to get down on their knees and suck corporate cock at every possible opportunity, while ignoring the real driving force behind capitalism (the small business). Small businesses already have mechanisms to defray tax costs.

If anything small business tax benefits should be expanded upon while increasing corporate taxes to be inline with what ordinary citizens pay. If that is cost prohibitive, then they can loose some of the rights they have been lobbying for (such as the right to contribute to political campaigns). They’re trying to have it both ways, and get a free lunch in the process.

@gorillapaws Large corporations are capable of funding things like satellite navigation systems, broadband Internet, cutting edge medical research and many more that are enormously beneficial to human life. But our whole model of consumerism is flawed and unsustainable. Right now, large corporations are being part of the problem. But the problem is big enough it will probably require large corporations to help provide the cure. So it’s complicated.

@ETpro many of the examples you gave began life as small-to-mid-sized companies that were subsequently acquired by larger companies. I think the government can play a role in assisting with large-scale infrastructure projects that benefit the common good like they did with railroads, power, telephone, etc. You’re probably right that mega-corps may have a useful role to play, but the balance of power has been radically shifting in their direction for a long time now and I’d love to see things swing back the other way towards good old-fashioned American capitalism where people start up a business, hire people, work hard and make a great living, while providing reasonably well for their employees.

@gorillapaws No, none of those endeavors started small. All require many hundreds of millions of dollars in front-wnd investment. That’s why I picked those examples. Just getting the US with its right-wing leanings to recognize the looming disaster if we continue business as usual will be hard enough. Selling the Tea Partiers on the idea the government has a role to play in modern life is probably a Bridge too Far.

Satellite navigation was pioneered by the DOD in the 70’s. Broadband was first being experimented with back then too at universities. There are hundreds of small biotech startups out there finding cures to all sorts of things. I’m not saying large companies haven’t played a role in making those things more widely available, but most of the innovation starts small.

And we don’t need to sell tea party people on anything, just need to teach them what a logical fallacy is and how to think critically about the steady stream of counter-factual misinformation they’re being fed and it will sort itself out.

@gorillapaws I am talking about the large scale commercial deployment of thise technologies. That costs serious money. We could have government do it, but our government is already spending $1.3 trillion a year more than it takes in.

@ETpro I’m not suggesting the government should pay for these things, but it can play a role in facilitating private investment in these projects. In other words, there are alternatives to relying solely on major corps to get things done. For example, the government could guarantee monopolies for certain areas and fix pricing so that investors can be reasonably assured in a safe and healthy return on their investment, allowing smaller companies to secure funding from private lenders.

@gorillapaws i agree with your general points completely, but what about Thomas Edison how would you classify his enterprise?

Milton Friedman used to make my skin crawl, but of course he is correct when he more or less states that The current Business model has an important social function other than it’s more obvious financial activities, it operates as a tax collector, with regards to it’s employers and consumers (we have VAT in UK) whilst frequently and arbitrarily and often assiduously avoiding it’s own tax liabilities by hook or by crook, in some cases very much by crook.

There is a feeling that Friedman’s economic model, although in some ways very appealing and liberating, is fraught with implimental difficulties and a veritable obstacle course of unforseen anomilies. Not unlike the Marxist economic ideal, but very much at the other end of the spectrum.

@mammal I’m not all that familiar with Edison’s businesses, other than how he screwed over Nikola Tesla when Tesla worked for him, and then began a huge smear campaign against Tesla’s Alternating Current. When Tesla won the contract for powering the world’s fair, Edison refused to let them use his lightbulbs (so Tesla invented an improved version and used those). Based on those facts, I would say he tried to compete through monopolistic power instead of through innovation which ends up being counter-productive to society.

Capitalism works very well as long as there’s a check on monopolistic forces that want to make profit from abusing power instead of competing in the free market. In these situations you get a Gilded-age economy with Standard Oil and Ma Bell, which is the kind of thing we’ve been seeing lately.

@gorillapaws don’t forget he electrocuted stray dogs and even an elephant, not to mention radically reforming capital punishment in America. Anyway i digress.

@gorillapaws staying with Friedman, I’m going to post three short videos for everyone’s consideration on the same subject. Friedman, like most intelligent and logical thinkers know, nothing is perfect. But the free enterprise system gives the greatest freedoms and liberties to individuals, and is the greatest economic system to aid in the elimination of poverty. Government regulations and intervention has aided and helped the so called monopolies who exploit the system and the poor. It is a shame and a disgrace.

http://www.youtube.com/watch?v=dmzZ8lCLhlk

http://www.youtube.com/watch?v=VHFIbfUi5rw&feature=related

http://www.youtube.com/watch?v=bJWZ27OT16M&feature=related

Capitalism came at the expense of the Indigenous people who found the European legal system of ownership, particularly with regards to land & resources, especially difficult to adjust too. Were they the victims of Robber Barons? not exactly, they just had difficulty appreciating the exclusivity of land ownership, so they were cleared like any other natural obstacle to cultivation & `prosperity’

i commented on this video sometime back, i’ve refreshed my memory and i still think it’s valid. Call them what you like, Robber Barons, would be a polite, but inaccurate epithet. To me they are simply a lowly rapacious breed, with complete disregard for the Native people and the habitat that sustains them, and similar contempt for the simple living white folk who may for whatever reason hinder their ambition. They were as active then as they are today, except the new frontier is in Afghanistan and Iraq.

America probably was prosperous in the 19th Century, the Country was mapped and primed for prosperity; slave labour down in the south, slave wages in the North. Massive influx of cheap immigrant labour. Endless resources just ready for the taking. No-one is arguing with any of that. But this Halcyon impression of universal prosperity is difficult to swallow. in fact it makes me gag.

My reaction to the first two videos has basically been covered by @ETpro and @mammal. I never really thought about the corporate tax structure, but it does seem like there are some double-taxation aspects of it that I wasn’t thinking about.

However, the assumption underlying the basic argument (of course, I’ll assume that this was an overview of his points on the issue, and therefore the glaring omissions were necessary) is that the funds would end up making it, in any significant way, into the wages of employees or create savings for consumers. They very well might – and this does start an argument that the funds if left in the hands of the corporation would be a more efficient use.

But simply because wages are reduced or prices are increased does not mean that taxation of corporate earnings at some level would not create greater public benefit – but this is more of a government budget and spending discussion. So, we can’t rest on Friedman’s statements as the end.

As to the robber baron discussion – I was fairly disgusted at the omissions in this case. Friedman, instead of discussing the perhaps unknown implications of certain policies as undermining one myth (a good approach) creates what seems like a wholly knew side myth – economic prosperity was due to free market principles rather than the factors @mammal points out…in addition to weaving into the story that information was freely available from the allegedly oppressed on one side of the ocean to the poor and hopeful on the other side (arguing that “well, if they were really oppressing the workers…then new workers would have stopped coming over” is a slight of hand that is simply foul).

The discussion about charity is perhaps the least objectionable – but there are still too many underlying assumptions at this point to warrant accepting anything stated. Yes, there were profound charitable acts – but of course you would expect this during a period of unprecedented growth. The problem underlying Friedman’s examples of the charity in the period is that it’s used as a counter to arguments that public welfare can’t be handled by private industry. We know that, indeed, some of it would be…but we don’t know (at least with the information here – I make no assertions about the final conclusion) whether private industry would react quickly enough and create enough efficiencies to consistently maintain welfare programs at the level we would require. The benefit of a government-based program on these fronts (and note, I don’t think we’ve got a good one yet) is that it is better (if not completely or even really at this point) shielded from market influences. Private industry would, in the interest of profitable ventures, make private charitable ventures to the point it stopped being profitable in some way. Therefore, the influence is not external (as it should be) but internal – as much as large corporations can greatly benefit the public good, they will only do so to the extent that it serves their interests, arguably. Their shareholders’ interests will come first.

The last couple of videos – well, I feel like they’re more propaganda than argument really.

Heinlein said it best: There Ain’t No Such Thing As A Free Lunch.

I think he is correct. This is a basic principal learned in ECON1000 at the state university. Unfortunately the masses don’t know it (or maybe don’t care enough to invest the thought), so the big wigs use “tax corporations as rhetoric to get the sheep to think they are the benevolent protector.

It is a basic Libertarian principal that the government does not create anything, thus it must TAKE from one to give to another.