Milton Friedman: I do not believe it’s proper to put the situation in terms of industrialist versus government. On the contrary, one of the reasons why I am in favor of less government is because when you have more government industrialists take it over, and the two together form a coalition against the ordinary worker and the ordinary consumer. I think business is a wonderful institution provided it has to face competition in the marketplace and it can’t get away with something except by producing a better product at a lower cost; and that’s why I don’t want government to step in and help the business community. Now I want to go to your question about Medicare. There are many people who have benefited from Medicare, but you’re not looking at the cost side. What has happened to the people who are paying for it? It isn’t __ we don’t have a free good, it isn’t coming from nowhere. And are they benefiting from it in a cost effective way. Those are the questions. It’s demagoguery, if you’ll pardon me, Michael Harrington, to say the people who have Medicare are freer. Of course, in one dimension. But they themselves have been paying all their lives, and have they gotten a good bargain? At the moment they have. The young men, the young working people who are going into Social Security now, they’re going to get a very raw deal indeed.
CONABLE: Milton, interestingly on that point, people over 65 are paying more of their spendable income for medical care now, then they were before Medicare was enacted. It’s been not a very successful program. Government doesn’t do things well.
FRIEDMAN: It doesn’t do things well. If it hasn’t done things well in Britain, in Canada, in the United States.
McKENZIE: Now, Milton, then you took us to Hong Kong on exactly that point. That here you said was a true model of market operating. Now is that really a fair description of Hong Kong?
FRIEDMAN: At the moment, yes. It’s not __ again, there aren’t any such things as a hundred percent one way and a hundred percent the other. Everything is mixed, of course. Hong Kong has a government, and it happens to be a government __ in this case there’s no democracy in Hong Kong. It’s run from Britain; it’s a Crown Colony of Britain, and the British Governor General and so on, and Financial Secretary run it. But the situation in Hong Kong is that there is very little government regulation of industry. There’s complete free trade. There are no tariffs; there are no export subsidies; there are no restrictions on the purchase and sale of monies, so that it is, comes about as close to a complete free market as you can find in the world today, and there is no doubt that the main beneficiaries have been the low-income people, the poor people who have poured into Hong Kong by the hundreds of thousands and millions, out of Red China and who keep on trying to get in there. This goes to Michael Harrington’s question, if an industrial system, if a free enterprise system is a system in which the poor are ground beneath the heels of the rapacious industrialists he’s worried about, how would he explain the success in Hong Kong, the extent to which people continue to vote with their feet to go there.
CONABLE: You’re not asking us to make of the United States one gigantic Hong Kong, or sweatshop, or whatever you want to call it. You would acknowledge that there is a historical development of an economy, and what may be right for one stage in the development of an economy may not be right for another stage. Isn’t the issue, where do we go from here? What pragmatic decisions do we make about the direction of the American economy. Should it be toward more and more government, or should it be trying to preserve an adequate balance between freedom of choice and government intervention?
FRIEDMAN: Again, the problem is to distinguish two things. This comes back to an earlier comment. The circumstances in terms of the physical arrangements, and the circumstances in terms of the rules that guide the society. Now in the case of Hong Kong, of course, I’m not asking that we crowd our people to a density of population such as Hong Kong has. Hong Kong is a marvelous example just because its circumstances are so terrible, it’s physical circumstances. And the people in Hong Kong would love to get elsewhere, into less crowded circumstances, if other people would let them in. This is the problem of immigration, which is a very important restriction on human freedom. In the period before 1913 we had complete, a hundred percent freedom of immigration into the United States. We don’t now, but go back to your question.
CONABLE: Do you think Hong Kong __ do you think Hong Kong would exist if it weren’t in close juxtaposition to Communist China?
FRIEDMAN: Hong Kong would exist. It is very dubious that it would have policies it has now if it weren’t in close juxtaposition to Communist China. Well, now, but to answer your question directly, yes. I am in favor of the United States having not the circumstances, not the physical circumstances, but the policies that Hong Kong has had of zero tariffs, complete free trade, of no restrictions on exports, no restrictions on monetary transactions, of a far greater degree of __ far lesser degree of governmental regulation. I agree with what Russell Peterson said before, that there are third party effects. There are things like pollution. The question is whether we’re handling them in the right way, and I think we’re not.
McKENZIE: I want to bring Bob Galvin in here. Bob, the beginning of Milton’s agenda there, no tariffs, for example, no restrictions, no quotas. Now, will business, big business, wear that kind of policy?
GALVIN: I think big business and all business could wear that kind of policy if we could find the appropriate balancing factor that in the rest of world trade, where we trade outside our border, and as others come in, we are required to trade against socialized institutions. That’s a very different kind of an institution than the private institution. The private institution can clearly operate more efficiently if it is not imposed upon by an artificial price from the socialized institution across the seas. So I think there has to be, not protectionism, but there has to be an international rule of the road that prevents the socialized institution from subsidizing and taking advantage of the private institution.
McKENZIE: Do you include the nine countries to the Common Market, though, as socialist countries, or are you prepared to have competition from all the nine countries in the Common Market?
GALVIN: The nine countries of the European Common Market engage in the most dramatic of the socialized institutions.
FRIEDMAN: I don’t agree with him at all. We are hurting ourselves by restricting trade from abroad. Other countries are hurting themselves and us by the measures you describe, but we’re only hurting ourselves even more if we imitate them.
CONABLE: I don’t think, Dr. Friedman that your mother would get a job sewing today in America, if we had no tariffs at all. What would happen is, there wouldn’t be any sewing jobs in America, we’d be making nothing but computers. (several talking at once.)
FRIEDMAN: But then there would be some other kinds of jobs. Then she would get a job at a very low level in making computers.
McKENZIE: Yeah. Although you face the problem, That you’ve had both a leading businessman and a leading conservative Congressman, not accepting your prescription of sweeping away
FRIEDMAN: But, of course, the two greatest enemies __ I would say the greatest enemies of free enterprise and of freedom in the world have been on the one hand the industrialists, and on the other hand most of my academic colleagues, who end up in government. For opposite reasons. (laughter)
FRIEDMAN: For opposite reasons.
McKENZIE: Michael Harrington, I guess, would agree with this.
FRIEDMAN: People like Michael Harrington, and my academic colleagues, want freedom for themselves. They want free speech, they want freedom to write, they want freedom to publish, to do research, but they don’t want freedom for any of those awful businessmen. Now the businessmen are very different. Every businessman wants freedom for somebody else, but he wants special privilege for himself. He wants a tariff from Congress, and the Congress __ well the way in which Congressmen get elected is by performing favors to constituents. And if indeed you were to wipe out completely all tariffs, if you were to reduce government controls in this country to what they are now, I do not think that would be in the self-interest of __
McKENZIE: Well, then __
FRIEDMAN: __ even Barber, Conable, for whom I have the very greatest respect, or Bob Galvin, for whom I have the respect. I think it would be in the self-interest of Michael Harrington.
McKENZIE: Now let’s ask what the American people want and will wear, because you’re saying, in effect, that to get elected the Congressman is giving the people what they want. Now, aren’t you saying in the end, then, the people don’t want this or don’t understand the advantage of it?
FRIEDMAN: I’m saying that my whole function and purpose is to try to persuade the people to make a different thing politically profitable. I’m trying to persuade the people to make it clear that Congressmen who pursue these policies are gonna lose their jobs, and if we do that, Congressmen aren’t pursuing their self-interests. They’re in a market, there’s a political market. They’ve got a product to sell, and they’ve got to appeal to their customers. And I am just engaging in the kind of advertising Mr. Galvin and other companies use.
McKENZIE: We’ve got another very experienced politician, Governor Peterson.