234 Economic Theory: An Introductionties for investment that had previously existed in countries like
the United States were evaporating. Thus, the government
should actively stimulate investment whenever it seemed neces
sary. Friedman maintains that to properly gauge the time and the
need for such governmental intervention is so difficult that such
intervention most often leads to inflation, or minimally makes
matters worse. Once again, the private sector is most effective in
determining when to invest, especially since, as Friedman claims,
the opportunities for investment are as numerous as ever.
Among the many ideas that Friedman advances to achieve the
goals of economic and political freedom, diversity, and growth
are the voucher system, right-to-work laws, occupational
licensure, and the negative income tax.
When the great mass of immigration took place, the public
school was the great institution which contributed to the success
of the melting pot, bringing unity to many diverse cultures.
Today, however, with a huge public-school system monopoliz
ing education, Friedman sees the need for diversity. He proposes
that each parent with a school-age child be given a voucher,
which would represent a portion of the taxes paid for public
education. The parent would be able to cash the voucher in at any
school of his choice, public, private, or parochial. The competi
tion among schools to offer a better product would be stimulated,
and the freedom to choose would be expanded. The roll of the
government would be simply to determine minimal educational
standards that each school would have to maintain, and the free
market would do the rest. Friedman cites the excellence of
private colleges over most public universities as evidence of his
theory.
In the area of labor, Friedman seeks to expand the freedom of
the worker to choose whether or not he should belong to a union.
He claims that unions, exempt from antitrust laws, have become
monopolies of the worst sort. Thus, laws restricting both “closed
shops” (where one must be a member of the union to get a job)
and “yellow dog” contracts (where in order to work one can not
be a member of a union) are laws favored by Friedman. The
objective is to maximize the freedom that employers and em
ployees have in their relationship with one another.
Laws restricting the pursuit of certain occupations are suppos
edly enacted to protect the public. Friedman contends that in