Capitalism and Freedom Chapter Summary & Analysis - Chapter 12, The Alleviation of Poverty Summary

Chapter 12, The Alleviation of Poverty Summary and Analysis

The West has experienced extraordinary economic growth over the last two centuries but many still live in poverty. Private charity is desirable and in the 19th and early 20th centuries such organizations grew dramatically. however, many argue that private charity is not enough because individuals will tend to undervalue poverty relief as it has positive externalities. Everyone is benefited with less poverty.

However, Friedman accepts the reasoning that justified government action to alleviate poverty but the question remains about how and how much. First, we should have a program directed to helping the poor and second it should make use of the market as much as it can. Friedman prefers a negative income tax where individuals all pay a slightly graduated tax but below a certain level of exemption they would receive increasing compensation in the form of cash as income falls, though not so much as to eliminate...
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