Episode 2 – Milton Friedman Speaks – Myths That Conceal Reality (Podcast)

According to Milton Friedman, five myths cloud our perception of both the past and the present. (1) The “robber baron” myth which holds that in late nineteenth-century America there were powerful men who became rich at the expense of the poor. The reality is that they became wealthy by being productive, and that there is no other period in history which saw such a rapid and widespread improvement in the well-being of the average individual. (2) The myth that the Great Depression was caused by a failure of business. It was, in fact, produced by a failure of government and …

According to Milton Friedman, five myths cloud our perception of both the past and the present.

(1) The “robber baron” myth which holds that in late nineteenth-century America there were powerful men who became rich at the expense of the poor. The reality is that they became wealthy by being productive, and that there is no other period in history which saw such a rapid and widespread improvement in the well-being of the average individual.

(2) The myth that the Great Depression was caused by a failure of business. It was, in fact, produced by a failure of government and specifically by the Federal Reserve System.

(3) The myth that government in the economy has expanded in response to public demand. Actually, the public has had to be sold “hard” for politicians to enact every major social program.

(4) The “free lunch” myth. No matter how the government raises money—by taxing individuals, by taxing businesses, or by printing more money — it is the individual who pays.

(5) The myth that government, like Robin Hood, transfers wealth from the rich to the poor. The reality is that the government usually transfers wealth and income from both the very rich and the very poor to those in the middle.

As Milton put it, these five myths all come to a head  with one over-riding theme, “There has been a drastic shift in public attitudes and public opinions in the past fifty years or so with respect to the role of the individual on the one hand, and the role of government and collective institutions on the other. There has been a shift in the philosophy and attitudes of the public from a belief in individual responsibility, from a belief in a society in which the role of government was as an umpire, to a belief in a society in which the emphasis is on social responsibility, and the role of government as big brother and protector of the individual.”

Hear what else Milton has to say on the matter in the above podcast, Milton Friedman Speaks – Milton Friedman Speaks – Myths that Conceal Reality.