Poverty Alleviation

1. Friedman argues against the externalities, not by denying their possible existence, but by saying that all that they would justify is increased taxation on the house types that contribute to these extra social costs, not subsidized housing. He argues against “aid to the poor” subsidized housing by claiming that it would actually be better to give cash subsidies so that low-income families could spend it on what they needed most (this could include housing, if they so desired). The paternalistic approach is rejected on the grounds that it violates the freedom of responsible adults to make their own choices (he does concede that this argument may partially work for the children who are indirectly affected). However, he seems to leave certain considerations out, such as the fact that cash subsidies may very well be used in a manner that increases neighborhood effects (if used on things that are not actually what low-income families need), and he also does not go into enough detail concerning the indirect effects on children that may be a means of justification.
2. One could say that it is not that libertarians think business people can do no wrong, it is rather that they believe that business transactions are the best way of benefitting both sides, but only if they are freely entered into in a fully-informed manner. Thus, one would not have this situation that Friedman talks about on page 181 if wages were determined in the free market because those self-interested parties would not be able to find others with which to enter into transactions with.
3. Friedman believes that there is no morally acceptable argument for supporting people on the grounds of their being over a certain age. He believes that while it may be good to want to help poor people (and even if that may be one of the effects of OASI), there is no reason why it should be accomplished in that way, choosing an arbitrary age as the grounds for aid.