First of all, the burden of taxation in Britain is
lower than-it has been for many years-than in any
other of the countries of the European community,
the overall burden of taxation.
Secondly, you will immediately come back
and say, "Ah, but the marginal rates of
personal taxation have been extremely high."
Perfectly true, but not as high as they were
in the United States until the early 1960s.
It's interesting to note in passing that when
the United States reduced its ninety percent
maximum personal rate to fifty percent,
the rate of economic growth in the United States,
and I'm not suggesting cause and effect,
fell from the previously very low rate of 2 ½
percent a year to about naught-point-four percent
in the period since.
So that any notion that there is an absolutely
one-to-one relationship between the degree
of personal taxation and efficiency is wholly mythical.
Well, I'll tell you what you can do with statistics.
(laughter)
JAY: Well, you ought to read.
You ought to look at the facts.
It's easy to make glib remarks about statistics,
FRIEDMAN: I know!
but look at the facts.
Look at the fact that in Britain
over the last thirty years,
during which period, according to you,
Britain has been crushed by egalitarianism,
whereas the United States has been soaring away
in the glorious state of liberty,
the rate of economic growth in Britain has been faster
than that of the United States.
How do you explain that?
First of all, I have to look at what
the figures mean in Britain. I have to look at the way -
JAY: First you ought to look at them.
I have looked at them, and you realize
that in judging output in the government-
that's judged in terms of cost- not in terms of product.
And what I really ought to look at
is not the rate of growth of GNP
as the statisticians measure it,
but the consumption available to people in forms,
as people value it, ultimate consumption.
If I look at that- I get a very different picture.
Statistics are very, very, as you know very well,
are very easy to use.
They can be...they can be used to throw light-
or they can be used to cast confusion.
JAY: Why don't you look at facts?
The facts are that the amount of
FRIEDMAN: I agree with you...and facts...
goods and services consumed by the government
as a proportion of the national output are no higher
in Britain than they are in the United States
and haven't been any time since the war.
FRIEDMAN: They have risen very sharply-
Which may be the explanation of the low
rate of growth in the United States.
They have risen very sharply.
It has risen very sharply in the war-
both...since the war, in both countries.
It is higher in Britain than it is in
the United States, properly measured.
JAY: Both twenty-five percent in both cases.
The proportion...excuse me.
McKENZIE: Well- of goods and service.
That again, is a statistician's nightmare.
We have to look at total government spending.
JAY: You were the one who was talking about
whether or not people have freedom to choose
how their money is spent.
McKENZIE: Yeah.
The transfers, which is pensions and other payments
from government, leave the freedom as to how the
money is spent in the hands of private individuals.
It's only the direct consumption of goods and services
where the bureaucrats are making the decisions.
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