The stupidest statement I ever heard by an economist was made by Milton Friedman on a video tape shown on The News Hour with Jim Lehrer when that program reported the economist death.
You can watch the interview here -- and the statement I refer to is this answer to a question asked by Robert MacNeil:
ROBERT MACNEIL, Former NewsHour Host: Milton Friedman, do any of the candidates have a plan for job growth that gives you confidence?
MILTON FRIEDMAN: No, they don't. The fact is that governments don't create jobs, and the most they do is shift jobs. There's a lot of talk about how infrastructure programs will create jobs. But the fact of the matter is that the money spent on that is taken from somewhere else and jobs are destroyed elsewhere.
Did Mr. Friedman never hear of the TVA which electrified the South and brought the region into the 20th century with millions of new AND better jobs created? Where were those millions of jobs destroyed elsewhere? The TVA came with the bonus that isotopes of URANIUM could be separated to supply fissionable material that went into A-bombs with the electricity created by the many dams built. Savior of the country type of weapon. Job creator, par excellence. Did he not here of the GI BILL OF RIGHTS that financed the skills learned by returning veterans from WW II that led to the golden 50's and 60's? Did he not hear about the Eisenhower administration extensive building of the National Highway System that created businesses that entrepreneurs started at nearly every EXIT and ENTRANCE?
Did he not hear about the GOVERNMENT bail out of Chrysler Corporation that banks refused to do. Chrysler survived and paid back the loan with interest--the GOVERNMENT made a profit AND avoided paying unemployment insurance! By the way, do PRIVATE banks create jobs?!
Did he never hear about the INTERNET and three men instrumental in its creation -- Tim Berners-Lee, Vint Cerf, and Robert Kahn -- supported along the way by working for government organizations like CERN and ARPANET now called DARPA (Defense Advanced Research Projects Agency, an agency of the United States Defense Department).
One might as well say a corporation does not create jobs--all it does is take jobs from somewhere else! SO, PLEASE TELL ME, HOW COME THE UNEMPLOYMENT RATE CHANGES--EVEN IN PERIODS OF STAGNANT POPULATION GROWTH?
How about the STOCK MARKET! Do you think it would exist as big as it is, if it existed at all, without the GOVERNMENT CREATING the SEC--SECURITY AND EXCHANGE COMMISSION--giving it the imprimatur of fairness? Here's a dirty little secret--THERE ARE NO JOBS WITHOUT GOVERNMENT TO ORGANIZE SOCIETY. Government sets the RULES, and WITH TAXES PAYS FOR THE COURT SYSTEM TO ADJUDICATE THEM.
The choice for the second stupidest statement made by an economist was delivered on television's THE NIGHTLY BUSINESS REPORT by Glenn Hubbard, Dean of the Columbia School of Economics, in one of the end of program segments that gives the guest the chance to say anything.
While talking about the ESTATE TAX, so artfully renamed the DEATH TAX (as I understand it) by pollster-author Frank Luntz, Dean Hubbard looked into the camera and said without a twitch of a smile, that all the wealth a person has at the time of death has had the income taxes paid on it.
I sometimes scream at the television set when I hear an UTTERLY MORONIC statement, and this time was no exception.
"DID YOU NOT EVER HEAR OF WARREN BUFFET, YOU IDIOT. HE GRADUATED COLUMBIA WITH A DEGREE IN ECONOMICS". Actually, it was a MASTER OF SCIENCE DEGREE gotten by studying under Benjamin Graham, a value investing strategy proponent.
Mr. Buffet is worth somewhere in the large neighborhood of 50+ BILLION dollars. It is safe to assume, based on information that articles by FORBES and others indicate, that all the shares of BERKSHIRE HATHAWAY that he has owned were NEVER sold. (I do not know that for a fact, but does anyone doubt that he owns almost all of them he ever had?) Here are a couple of samples I found on the internet:
The World's Billionaires
Edited by Luisa Kroll 03.05.08, 6:00 PM ET
After 13 years on top, Bill Gates is no longer the richest man in the world. That honor now belongs to his friend and sometimes bridge partner Warren Buffett.
Riding the surging price of Berkshire Hathaway stock, Buffett has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago.
Forbes
#2 Warren Buffett
09.20.07, 6:00 PM ET
Net Worth $52.0 billion Source Berkshire Hathaway (A) (quote:
BRK.A), Investments, Self made
Age 77
Marital Status Widowed, Remarried, 3 children
Hometown Omaha, NE, United States
Education University of Nebraska Lincoln, Bachelor of Arts / Science
Columbia University, Master of Science
Nation's most beloved investor is $6 billion richer this year despite handing over $2.1 billion in Berkshire Hathaway stock to charity in July. Berkshire shares up 24% over past 12 months; have averaged 21.4% annual return since 1965. Son of Nebraska politician delivered newspapers as a boy. Filed first tax return at age 13, claiming $35 deduction for bicycle. Studied under value investing guru Benjamin Graham at Columbia. Took over textile firm Berkshire Hathaway 1965. Today holding company invested in insurance (Geico, General Re), jewelry (Borsheim's), utilities (MidAmerican Energy), food (Dairy Queen, See's Candies). Also has noncontrolling stakes in Anheuser-Busch, Coca-Cola, Wells Fargo. Last year bought Israeli cutting-tool business Iscar and electronic components distributor TTI. Longtime critic of efforts to repeal estate tax; says wealth should not pass exclusively to members of "lucky sperm club." The Oracle of Omaha had long promised to give away his fortune posthumously. Last summer irrevocably earmarked the majority of his Berkshire shares to charity, mostly to the Bill & Melinda Gates Foundation. Gift was valued at $31 billion on day of announcement; donation will far exceed that sum so long as Berkshire shares continue to rise.
Should he die, billions of dollars worth of stock will NOT have ONE PENNY of it paid in income tax.
Let's assume that everyone hates to pay taxes. Complaining about it is the full time occupation of some people and some Institutes, shall we say.
The claim is sometimes made that lowering the income tax, the business tax and in particular THE CAPITAL GAINS TAX leads to greater growth in the economy, and CONSEQUENTLY--AS NIGHT FOLLOWS DAY--INCREASES IN TAX REVENUE COLLECTED. Great--let's lower all tax rates to ZERO and watch the INFINITE amount of tax revenue OVERFLOW our State and Federal treasuries!
On a more practical scale, it seems clear that there is a TAX RATE that maximizes revenue for the TREASURIES, and that RATE IS UNKOWNABLE--too many variables affect it. It also seems fair to suggest that the RATE that produces the maximum is not necessarily the BEST rate for the people who are ALIVE. Therefore, my BILLIONAIRE TAX CODE will have NO complainers--EXCEPT INHERITORS WANTING A FULL BANQUET FREE LUNCH--since the TAX will only be paid by DEAD BILLIONAIRES.
First things first. A CONSTANT DOLLAR WILL BE USED. This means that "BILLION" might change NUMERICALLY OVER TIME but NOT in VALUE.
HERE IS THE TAX TARIFF:
1) ALL WEALTH OVER ONE BILLION DOLLARS WILL GO TO THE FEDERAL TREASURY.
2) ALL WEALTH BETWEEN ONE-HALF BILLION AND ONE BILLION WILL GO TO THE MEMBERS OF THE ARMED FORCES TO BE SPENT ON THE MEDICAL NEEDS OF VETERANS AND THE EDUCATIONAL NEEDS OF THEIR CHILDREN.
3) ALL WEALTH BETWEEN 250 MILLION AND ONE HALF BILLION WILL GO TO FINANCE THE PUBLIC SCHOOL SYSTEM
4) ALL WEALTH BELOW THE 250 MILLION MARK CAN BE GIVEN AWAY IN ANY MANNER THE DECEASED WISHES AND MADE CLEAR IN A LEGAL WILL. THIS WEALTH WILL BE TAXED AT THE SAME RATE, AND PAID BY THE RECIPIENT, AS IF IT WERE EARNED ON A JOB. ONE EXEMPTION HERE--ALL FAMILY OWNED BUSINESSES SHALL BE EXEMPT FROM THIS TAX. THE RATIONALE FOR THIS IS SIMPLE. IT IS SILLY TO DESTROY AN ENTITY THAT PROVIDES JOBS AND WILL KEEP ON PROVIDING JOBS IF IT IS NOT SOLD TO PAY AN INHERITANCE TAX. FARMS, RESTAURANTS, CAR REPAIR SHOPS EASILY COME TO MIND. BUT IF THE BUSINESS IS A CORPORATION, WHICH IMPLIES STOCK, THEN THE TAXES MUST BE PAID. THIS WILL GIVE SOME GUARANTEE THAT THE STOCK HOLDERS WILL GET THE BEST LEADERSHIP POSSIBLE RATHER THAN THE PROGENY OF A BRIGHT OWNER WHO RAISED DUMB CHILDREN.
FINALLY, THIS TAX CODE WILL APPLY TO ALL! JUST MOST OF US WILL START OUT IN A RANKING BELOW THE BILLIONAIRE "FIRST" CLASS.
There will always be disagreements about the role of MERITOCRAY and LEGACY in the distribution of wealth. Someone more qualified losses a chance for a job to a family member of the boss. That is expected. The idea of giving GREAT wealth to someone -- EVEN A FAMILY MEMBER--who had no hand in creating it should be anathema.
BILLIONAIRES who LOVE their country and think it is the GREATEST country in the WORLD can avoid all the CHUNKS of their wealth going to the SINKS 1,2, and 3 by giving it away when ALIVE; taxes, when demanded by TAX LAW, to be paid by the recipient. Spread the wealth.
Broaden the middle class. Many billionaires do. Names on buildings appear "MAGICALLY" through donations. Charities benefit.
And my claim is that our country will benefit with GREATER MERITOCRACY and LESS INJUSTICE IF BILLIONAIRES BALK AT THIS GIVING WHILE ALIVE PATHWAY.
After all, the total wealth of last years FORBES 400 is estimated to be 1.5+ TRILLION dollars which leaves 1.1+ TRILLION for the nation off the top.