Milton Friedman The Power of the Market 2-5
How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the last 30 plus years. Here is part two.
Friedman: The Visalli family, like all of us who live in the United States today, owe much to the climate of freedom we inherited from the founders of our country. The climate that gave full scope to the poor from other lands who came here and were able to make better lives for themselves and their children.
But in the past 50 years, we’ve been squandering that inheritance by allowing government to control more and more of our lives, instead of relying on ourselves. We need to rediscover the old truths that the immigrants knew in their bones; what economic freedom is and the role it plays in preserving personal freedom.
That’s why I came here to the South China Sea. It’s a place where there is an almost laboratory experiment in what happens when government is limited to its proper function and leaves people free to pursue their own objectives. If you want to see how the free market really works this is the place to come. Hong Kong, a place with hardly any natural resources. About the only one you can name is a great harbor, yet the absence of natural resources hasn’t prevented rapid economic development. Ships from all nations come here to trade because there are no duties, no tariffs on imports or exports. The power of the free market has enabled the industrious people of Hong Kong to transform what was once barren rock into one of the most thriving and successful places in Asia. Aside from its harbor, the only other important resource of Hong Kong is people __ over 4_ million of them.
Like America a century ago, Hong Kong in the past few decades has been a haven for people who sought the freedom to make the most of their own abilities. Many of them are refugees from countries that don’t allow the economic and political freedom that is taken for granted in Hong Kong.
Despite rapid population growth, despite the lack of natural resources, the standard of living is one of the highest in all of Asia. People work hard, but Hong Kong’s success is not based on the exploitation of workers. Wages in Hong Kong have gone up fourfold since the War, and that’s after allowing for inflation. The workers are free. Free to work what hours they choose, free to move to other jobs if they wish. The market gives them that choice. It also determines what they make. You can be sure that somebody somewhere is willing to pay for these cheap, plastic toys. Otherwise they simply wouldn’t be made.
Competition from places like South Korea and Taiwan has made cheap products less profitable, so Hong Kong businessmen have been adapting. They have been developing more sophisticated products and new technology that can match anything in the West or East and their employees have been developing new skills.
Hong Kong never stops. There’s always some business to be done, some opportunity to be seized. Its long been a tourist center and a shoppers paradise and it’s now one of the business centers of the East. It’s the ordinary people of Hong Kong who benefit from all this effort and enterprise.
This thriving, bustling, dynamic city, has been made possible by the free market __ indeed the freest market in the world. The free market enables people to go into any industry that they want; to trade with whomever they want; to buy in the cheapest market around the world; to sell in the dearest around the world. But most important of all, if they fail, they bear the cost. If they succeed, they get the benefit and it’s that atmosphere of incentive that has induced them to work, to adjust, to save, to produce a miracle. This miracle hasn’t been achieved by government action __ by someone sitting in one of those tall buildings and telling people what to do. It’s been achieved by allowing the market to work. Walk down any street in Hong Kong and you will see the impersonal forces of the market in operation.
Mr. Chung makes metal containers. Nobody has ordered him to. He does it because he has found that he can do better for himself that way than by making anything else. But if demand for metal containers went down, or somebody found a way of making them cheaper, Mr. Chung would soon get that message.
A few doors away, Mr. Yu’s firm has been making traditional Cantonese wedding gowns for 42 years. But the demand for these elaborate garments is falling. The firm has already gotten that message and is now looking for another product. The market tells producers not only what to produce, but how best to produce it through another set of prices __ the cost of materials, the wages of labor, and so on. For example, if these workers could earn more doing something else, Mr. Ho would soon find a way to mechanize his picture frame production.
Inside this Chinese medicine shop, a market transaction is going on. The customer’s confidence that this painful looking ordeal will help him doesn’t rest on any official certification of the bone doctor’s qualifications __ it comes from experience __ his own or his friends. In his turn, the doctor treats him not because he has been ordered to, but because he gets paid. The transaction is voluntary so both parties must expect to benefit or it will not take place.
Believe it or not, this backyard is an entrance to a factory. The workers here are some of the best paid in Hong Kong. It’s hot, sticky, and extremely noisy. The workers are highly skilled so they can command high wages. They could induce their employer to improve working conditions by offering to work for less, but they would rather accept the conditions, take the high wages, and spend them as they wish. That’s their choice. The best known statement of the principles of a free market, the kind of free market that operates in Hong Kong, was written on the other side of the world.