“Friedman Friday” :“A Nobel Laureate on the American Economy” VTR: 5/31/77 Transcript and video clip (Part 1)

Milton Friedman on the American Economy (1 of 6)

Uploaded by on Aug 9, 2009

Host: Richard D. Heffner
Guest: Milton Friedman
Title: A Nobel Laureate on the American Economy VTR: 5/31/77

Below is a transcipt from a portion of an interview that Milton Friedman gave on 5-31-77:

Host: Richard D. Heffner
Guest: Milton Friedman
Title: “A Nobel Laureate on the American Economy VTR: 5/31/77

I’m Richard Heffner, your host on The Open Mind. My guest today is perhaps this country’s foremost economist, Milton Friedman of the University of Chicago, of Newsweek magazine, and of wherever it is that persons of brilliance and concern gather to discuss the fate of individual liberty in the midst of ever-expanding governmental responsibilities. Well, that’s the way I introduced Professor Friedman on The Open Mind two years ago. Since then he has been as brilliant, has delighted still more discerning citizens of the world, has become a Nobel laureate, and is here today to pick up where we left off.

Professor Friedman, we were saying two years ago, literally, we left off on the road to serfdom. I was looking back at the transcript of our program together, and we did leave off on the road to serfdom, the road to an overabundance of interference in the lives of most individuals. And you said, “I really do think the chance is a good deal less than 50 percent that we’ll be able to avoid it.” And by avoiding it you were referring to this road to serfdom. Now, two years later, have you changed your mind? Is it still 50 percent? Is it 40 percent, 60 percent, or what?

FRIEDMAN: I am sorry to say that I haven’t changed my mind. I wish I could say I had a favorable direction. I think the odds at the moment are still less than 50 percent. In the past two years there have been some favorable developments from this point of view and some unfavorable ones. If you start with the unfavorable ones first, the developments in Great Britain have been very unfavorable from this point of view. Britain has been in an increasing crisis economically. And that is threatening the political stability of Great Britain. Great Britain, after all, is a fount for most of our ideas on political freedom and liberty. And if Britain were to go, that would not be a good thing from the point of view of the world as a whole or the US in particular. On the continent of Europe, Italy and France seem to be on the verge of moving toward governments in which the communist party will either be dominant or will play a large role. They may yet escape that fate. But certainly the possibility of that development today is larger than it was two years ago. At home in the United States, on the unfavorable side, the energy program development is from a fundamental point of view the most threatening at the moment to the preservation of a free society.

HEFFNER: Why do you say that?

FRIEDMAN: Because the plans that are being made and the programs that are being offered with respect to it are programs fundamentally for nationalizing or the equivalent of nationalizing the production, distribution, consumption of energy. If you look at the program that has been proposed by various groups, not necessarily only those by the Carter administration, they are programs for turning over control over the production and distribution of energy to governmental bureaucracies. That’s a move in the direction of a corporate state. It’s a move of replacing private initiative and voluntary action by compulsory governmental action. Those are the unfavorable developments.

On the favorable side, if I may start with what I think has been the most favorable development of the past two years and one that many people will not find favorable, it’s been what’s happened New York City. Now, that’s very unfavorable for the citizen of New York.

HEFFNER: Tell me about that. I am a citizen of New York.

FRIEDMAN: But for the country as a whole it’s been the most dramatic element that has shaken the confidence of the public at large in the virtues of big government, of paternalistic government, of social welfare measures. Here is New York City. The most welfare state oriented electorate in the country. The city which has the largest government spending per person. A city which has the greatest problems of any city in the country, in which government spending far from solving problems has created or exacerbated them. Now, from the point of view of the public at large, the experience of Britain should have been just as great a cautionary tale. But Britain is a long way off; it’s a different country. New York is close to home; everybody knows about New York and is aware of New York. And therefore the problems of New York City have had, I think,, a very healthy effect on the attitudes of the public at large toward the role that government should play in their lives.

Similarly, on a number of a wide range of other issues there has been increasing disillusionment with what government can accomplish. We all know from all the polls that governmental agencies, whether it be the Congress or the White House or the bureaucracy, rank very low in public esteem. There has been a gathering tax revolt, a gathering reaction against big spending by government. It is this reaction against big spending, this decline in confidence that the way to solve a problem is to throw money at it which has been the major political force behind what commentators have been describing as Mr. Carter’s fiscal conservatism. Now, that’s a good trend. Much more fundamental and much more important potentially from the long run is what’s been happening in the world of ideas. The ideas of socialism, of collectivism, of central planning, of the welfare state, which were for so long the dominant ideology of the intellectual community, have become increasingly discredited. That line of thinking is dead. It has nothing to offer to a young, hopeful man who is trying to look for something to believe in and to have faith in. The ideas and individualism of freedom, of each person doing his own thing, the idea that maybe you have a better society if people tend to their own knitting rather than everybody trying to tend to everybody else’s. Those ancient and honorable ideas are having a resurgence. They have a much better hearing today on campuses, among the intellectual community in general than they did even as short a time ago as two years. That intellectual development, I think, is all to the good. But whether it will be able to stop the road to serfdom, stop us from going all the way down to the road serfdom is a real question, because once you get an avalanche going, if that’s the right image, once you get a big car going down the road it has an enormous amount of inertia. And it takes something really to stop it and turn it around. And the real problem is whether the changing climate of ideas can take effect soon enough before it is overwhelmed by the onrushing behemoth of the state.

HEFFNER: Professor Friedman, I’m interested in what you say as what you see as a shift in ideas away from the welfare state, away from socialism, away from stateism. Yet I had the occasion recently to look at a series of reports that indicated what citizens in this fair city, New York, were thinking about, what they were concerned about. And I was fascinated to note – now, this isn’t two years ago, this is very recently – to note that they are still concerned about the services that they want, additional services. They want more, they want more, they want more. And perhaps on the campuses, perhaps you and your friends are terribly much aware of what the “gimmes” have done to us. But what indication is there that really at the depth of this society, at the basic level of this society, people are moving away from an insistence upon more and more social services?

FRIEDMAN: Well, maybe there isn’t, and maybe you’re right. In which case that pessimistic evaluation that we started out with is supported. But I think one must distinguish between common opinion at a moment and the underlying movement of intellectual ideas which only determines common opinion after a very long lag. Now, of course, most people most times would like to get something for nothing. They…always have the gimmes, in your very evocative term. But yet – and New York, of course, is exceptional, as I said before, New York is the most welfare-oriented electorate in the country – and yet even the people in New York, I suspect, are more aware than they were before about the price, the cost, the consequences of trying to get things by that device of getting it through government. And undoubtedly the majority of the people have not been moved…

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