Milton Friedman on Greed

October 24, 2011

Good stuff. I’m impressed that Donohue even had Friedman on his show.

Here’s a transcript of the exchange I found on another website:

Donahue: When you see around the globe the mal-distribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have-nots, when you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism and whether greed’s a good idea to run on?

Friedman: Well, first of all, tell me is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course none of us are greedy; its only the other fellow who’s greedy.

The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

Donahue: But it seems to reward not virtue as much as ability to manipulate the system.

Friedman: And what does reward virtue? You think the communist commissar rewards virtue? You think a Hitler rewards virtue? You think – excuse me, if you will pardon me – do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self interest is nobler somehow than economic self interest? You know I think you are taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us? Well, I don’t even trust you to do that.

What’s interesting is that Friedman does not say that capitalism is perfect, only that of the systems available, it’s the best.

6 responses to Milton Friedman on Greed

  1. I think regulated capitalism is best, and along with that failures should absolutely entail some form of bankruptcy.

    What we have in the US currently is not the ‘ideal’.

    What we have is much closer to a Plutocracy/Corporatocracy (look them up on Wikipedia), where gains are privatized (for the few), and the losses are socialized for all to bear.

    • I would agree with that, BG. I think even Friedman would agree with that. Our politicians are too close to business.

  2. Friedman was vehemently against regulations, therefore I disagree with Friedman.

    Anyhow, answers that Donahue could have used for Friedman’s questions (maybe he did, the interview clip was cut short):

    Countries with a more level playing field (not as greed based as the US): Japan, France, Sweden, etc.

    Great achievements that came from government: DARPA/Internet, NASA/Space Shuttle/Moon landings, Hoover Dam, Interstate Highway system, Panama Canal, not to mention the laws/protections/militaries that allow corporations to even exist here.

    • Vehemently against regulations? I think that’s too strong. I think he’s okay with the right kind of regulations. It’s just that so many regulations seem to cause problems and so new regulations are created. It becomes a big mess.

      Hasn’t Japan been a mess for something like 20 years? Not a very good example. I don’t know anything about France and Sweden.

  3. He was against the FDA, regulation of airlines, and practically all regulations or government oversight of corporations in general. He said pharmaceuticals companies should have been allowed to sell a certain medication in the US, that caused thousands of birth defects across Europe. He said there should be no FAA, because airlines (or the free market in general) have an incentive to be safe — what a joke. Corporations incentives are to make a PROFIT, not to make a safe product.

    I’ll use Friedman’s debate technique and ask you want countries have a safer drug supply or a better airline safety record than countries with an equivalent FAA or FDA?

    Friedman was a libertarian and spoke out against regulations in all material I could find on the web. Perhaps it would help convince me if you could find one example where he was for a regulation.

  4. Friedman had an impressive command of historical facts which I cannot match in answering your questions, BG, but I will at least explain the philosophy as I understand it, because I think you are missing an important part.

    Friedman was not an anarchist but he was against regulations, in part because, through lobbying, regulations are ultimately dictated by the industries they regulate, and often crafted to stifle competition and innovation.

    The mechanism of safety in a free market is consumer choice AND legal liability. If there is fraud or negligence in a product or service, the seller should be held liable. People will also stop buying it if they decide it is not worth the risk.

    In other words, you should be free to purchase products or services that are unsafe as long as the seller makes it clear how they are unsafe. The key is an informed, free exchange.

    I recall Friedman considering a regulation prohibiting sales of certain items to minors, however I don’t think it was so much about creating a regulation, but rather about minors lacking the capacity to make a free, informed decision for which they would be responsible.