Where do children come in?

What are their rights under a negative income tax?

And are we, by building in a negative income tax,

in fact subsidizing the illegitimacy that

Tom Sowell is so concerned about?

FRIEDMAN: The major reason it is not feasible today

to have a negative income tax is because the

present welfare bureaucracy would be out of work.

They are the major objectors and as Senator Pat

- he's now a senator, Pat Moynihan demonstrated

in his book on the Nixon program,

the chief obstacle to getting it enacted

was the welfare bureaucracy.

So that I don't believe these administrative problems,

if you got it enacted, would be at all serious.

O'BANNON: I think the other assumption under

the negative income tax, and it's

one that I'm not sure I can buy,

is that everybody has a minimum level

of understanding about how to spend money.

In other words, how to use the

marketplace to satisfy wishes.

And I, as an economist, would say, yes, we do.

We - everybody from age four to a hundred

knows how to use money

to satisfy wants and that's the...

FRIEDMAN: But they don't. They don't!

There are all sorts of problems

of people who are not going to be able to.

But that's a minority problem.

That's a problem for private activity

and private charity.

One thing is sure: they're spending...

they would be spending their own money,

and that however knowledgeable

you are about spending money...

O'BANNON: They would be spending my money!

They...I...

FRIEDMAN: They would be spending my money,

but it would be one stage less bad.

Right now, the welfare worker is spending

Mr. A's money to help Mr. C.

And there's a big takeoff

in the middle as Tom Sowell said.

The question is not whether the people

on welfare or low incomes

can all spend their money effectively;

the question is: How effectively do they

spend it as compared to how effectively

the bureaucrats spend it for them?

Comparing anything to perfection or to

some arbitrary standard settles nothing.

The same thing is true in the education area.

They're saying: “Would families be able to

spend their - select schools for their

kids under a voucher system?"

For example: Well, the question is:

Could they possibly do much worse

than the current bureaucrats are doing

in the public school system?