So these videos have been going around… and it being Milton Friedman… everyone just nods to these comments…
Although i agree with this chaotic feeling, the message one should get is… we don’t know. People don’t know how long they will live, and assuming they will be spending a certain % of their wealth per year according to how many years they have left is very much reaching. Going about this in such a presumptive manner is a non-enlightening way of looking at the world, we don’t really know what would happen, we have no evidence to suggest that a family based society is more creditworthy than an individualistic one. In fact there is not even a guarantee that it will turn individualistic, maybe people will just find alternative means to give money back to their families. This is all to say that I don’t know if I believe in inheritance tax , however maybe in a society with 100% inheritance tax they would not believe that reducing the inheritance would be the answer either. What I do consider thought provoking is that such a system would probably reduce hoarding of cash.
The free market isn’t perfect, why would the free market create unconditional institutions that would educate for free? The Free market as powerful a force as it is, needs something back, whether it be something now, or something later with interest, an interest much higher than expected because not all of the children will be able to make money back, and so the interest expected will be weigh down the ones that did. Taking a child to a high quality school, in exchange for a proportion of his future income, will still create inequality due to the interest he or she would have to pay that the richer child would not. Additionally there is also a moral slave issue here where we would be forcing the child upon a certain path for the rest of his life. You could argue that the risk can be taken in by other investors, as a form of securitization, but if government subsidies are required to motivate sub-prime mortgages, and even then they create such a crisis what reason is there to believe something much bigger in scale and much riskier would be better?
How bout an end to minimum wage? Real Wages in the US have stagnated for a few years now, and there is no evidence of the skill gap increasing. The market does not perfectly allocate skill with wage, a large factor is luck. Profit in enterprises has shown to have an upward bias, and the market creates a never ending friction between the employer who wants to pay the least amount possible, and the employee who wants to receive the most amount of money possible. The end of minimum wage just gives the employers more leeway.