Why Friedman Sides with Free Man

Mr. Friedman finally threw me a bone. I spent the entire time reading his book thinking what he summed up in his last page:

"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....At [some] point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a liberal." (195)

Friedman is what he would call a liberal. We know that. However, Friedman does not persuasively explain why. The freedom-is-more-important-than-equality reason is an entirely separate argument than the one I will address in this blog post. It is more of a philosophical question than an economic one. So, I investigated Friedman's other claim: that everyone is better off under capitalism. Then I looked into some data.

At the end of his first chapter, Friedman argues that even minorities benefit from a free market. He notes how "no one who buys bread knows whether the wheat from which it is made was grown by a Communist or a Republican, by a constitutionalist or a Fascist, or, for that matter, by a Negro or a white." (21) On the other hand, minorities are at high risk for extreme poverty in an economy run by a majoritarian government. At any given point, the argument goes, the majority can advance policies that will exploit the minority.

But is that really what non-liberal Western nations are doing? I looked into some data on welfare programs in the United States.

We see that African Americans and Hispanics clearly suffer from persistently lower income. Interestingly, the income levels see periods of both growth and decline under Republican (Friedman-esque policy) and Democratic (less Friedman-esque) administrations. Yet these same minorities disproportionately benefit from government programs. While Hispanics represent 15% of the population, they represent 22% of the Medicaid-receiving population. Blacks comprise 14% and 22%, respectively. Both groups receive similarly disproportionate assistance under TANF due to the high levels of "needy" black and hispanic families. The majoritarian governments are clearly choosing to spend on minorities.

While it is difficult to prove conclusively that welfare programs are the best poverty-fighting policies, the data suggest that Friedman's task is even more challenging. Proving the counter-factual - that minorities are better off without government programs aimed at benefiting minorities - will be tough for Friedman since the government expenditures are so obviously helping minority groups from an empirical stand point. 

We see that a sympathetic majoritarian government does in fact further the minorities' interest. It is not wholly paradoxical, then, that "the enemies of the free market, the Socialists and Communists, have been recruited in disproportionate measure" from minorities. (21) Minority groups might be more at risk in an economy run by a majoritarian state, but in modern and advanced Western nations, that risk is so much lesser than Friedman intimates.

To Friedman's credit, he grants that men will fundamentally differ regarding the merits of equal materiality versus equality of opportunity. He concedes that such "fundamental differences in basic values can seldom if ever be resolved at the ballot box," thus perpetuating social tension (20). However, his claim that equality of opportunity through liberal policies is best for the material wealth of minorities is unsubstantiated. We talked in class about the human tendency to defy maximum absolute utility in favor of lower-but-equal utility (remember the lollipop example?), but that does not save Friedman here. He makes interesting points about some government programs like the minimum wage being ineffective, but offers no proof that broad government welfare programs like Medicaid and TANF will frequently hurt the lower class. And if we accept that modern Western governments will not actively exploit minorities - which I find to be an entirely reasonable assumption in today's world -  then the data certainly indicate that the welfare state will be better for minority material wealth than the free market.