I do agree with your friend about the injustice reincarnation and have pointed out its problems before. You have to ask yourself what kind of God would be punishing people for crimes they can't remember committing. Could there be a more ineffective form of punishment than that? The punishment being so far removed from the crime that one is likely to need regular reminding of what he's being punished for. And of course, in practice, nobody ever knows what they are getting punished for. A man born blind has no way of knowing what he did in the past to incur such a penalty. At best he has to rely on shoddy psychics and other hucksters to give him a dubious speculation. With such a harsh punishment, one would think that you'd at least be entitled to know what you were supposed to have done.
In fact, this very scenario was brought to Jesus in the bible and Jesus seems to deny this "punished for your last life" theory outright.
His disciples asked Him, “Rabbi, who sinned, this man or his parents, that he was born blind?” 3Jesus answered, “Neither this man nor his parents sinned, but this happened that the works of God would be displayed in him. 4
John 9:3
While he does deny the "punishment for your last life" theory, he doesn't explicitly deny reincarnation itself. But it's worth noticing that he missed a very opportune moment to mention it.
If most people thought about it in a more "down-to-earth" case they would see that there are ethical absurdities in the idea of punishing people for crimes they can't remember committing. For example, all but the most barbarous courts wouldn't prosecute a man with Alzheimer's disease.
When it comes to reincarnation, it seems that there was more justice employed at the Salem witch trials!
Let me give you a scenario.
You are sitting in prison. It is a life sentence. You are not told why, you were not present at your trial, and your memory has been wiped by the state. But a fellow inmate suggests to you that if you give him all your cigarettes for the next two months, he can perform a pre-prison hypnotic regression on you. This will reveal to you the crime and you can finally be at peace with the justice of your punishment or you may request a retrial which you also won't be present at.
In the cell next to you there's a man named Job. He tells you not to bother.
You take up the inmates offer, because you really want to make some sense of things. He tells you to lay back and imagine yourself in a green field...
You wake up. It was revealed that in your pre-prison life you murdered your mother and her suitor in a fit of rage when you accidentally walked in on them in private. Your name at that time was Carl. Now your name is inmate 770086. Suddenly it all makes sense and in some weird way, you kind of remember it. It all adds up now.
Job is in the corner laughing. He is suggesting this sounds very much like the movie Sling Blade which was played last year in the recreation room.
Turns out you need faith and also you now owe your psychic jail-buddy your next two months supply of cigarettes.
It wouldn't be right to post this without mentioning what Ramana said about reincarnation as well. It turns out that he denied it as a reality, but seemed to say that it does
seem to occur so long as the ego is in place. He also, at one time or another, endorsed the Saiva school of thought which says that God or Ishwara picks from a set of movies out of all the movies that are in the queue to be shown to a particular jiva. It goes on to say that during each incarnation, he carefully examines the library of movies to be shown and selects a few from there to be shown in that particular incarnation. This however, is not a punishment process, but rather an act of love to bring about the jiva's eventual awakening. As far as it goes, that more traditional view is a lot more palatable to me than the "punished for your last life" interpretations. Not that I totally believe it. Again, Ramana endorsed it but also said that the ultimate truth is that there is no reincarnation, no bondage, and no liberation.
Osho, Nisargadatta Maharaj, and Papaji are among other well-known teachers who, oddly enough, both affirmed and denied the reality reincarnation at different times. Osho said somewhere that it was the final truth and the truth hurts. But he also said at one point that the Buddha was possessing him and demanding he sleep in a different position, much to his annoyance (this may have been induced by heavy medications).
So, take it how you will.