Free or equal? 30 years after Milton Friedman’s Free to Choose (Part 3)

Johan Norberg – Free or Equal – Free to Choose 30 years later 3/5

Published on Jun 10, 2012 by

In 1980 economist and Nobel laureate Milton Friedman inspired market reform in the West and revolutions in the East with his celebrated television series “Free To Choose.”
Thirty years later, in this one-hour documentary, the young Swedish writer, analyst and Cato Institute Fellow Johan Norberg travels in Friedman’s footsteps to see what has
actually happened in the places Friedman’s ideas helped transform. In location after location Norberg examines the contemporary relevance of Friedman’s ideas in the 2011 world of globalization and financial crisis. Central to his examination are the perennial questions concerning power and prosperity, and the trade-offs between individual liberty and income equality.

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I have enjoyed reading this series of reviews by T. Kurt Jaros on Milton and Rose Friedman’s book “Free to Choose.” I hope you enjoy it as much as I did.

I have posted several transcripts and videos of the FREE TO CHOOSE film series on my blog. My favorite episodes are the “Failure of Socialism” and  “Power of the Market.” (This is the 1990 version but the 1980 version is good too.) Today with the increase of the welfare state maybe people should take a long look again at the episode “From Cradle to Grave.” 

Milton Friedman’s  view on vouchers for the schools needs to be heeded now more than ever too. “Created Equal” is probably the episode that I wanted President Obama to see the most and I wrote several letters to him suggesting that.

T. Kurt Jaros is currently a Master’s student studying Systematic Theology at King’s College in London.  He holds a B.A. in Philosophy and Political Science cum laude and an M.A. in Christian Apologetics high honors from Biola University, an evangelical Christian university outside of Los Angeles.

He enjoys learning and thinking about theology, specifically historical theology, philosophical theology and philosophy of religion, and issues pertaining to monergism and synergism.  Additionally, he enjoys learning and thinking about political philosophy, economics, American political history, and campaigns.

The Power of the Market: Part 2

T. Kurt Jaros on Economics
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This is part of a series on Milton Friedman’s “Free to Choose.”

In my previous post I explained the three ways a market economy naturally regulates prices in a way that is more efficient than a command economy. This is part three of a book series on Free to Choose by Milton Friedman.

Some people think the free market is full of greedy men who respond to monetary stimuli. But this isn’t the essence of a market (despite some types of those men acting within the free market). Rather, self-interest is “whatever it is that interests the participants, whatever they value, whatever goals they pursue.” This is why an economy is very much like any industry: science, linguistics, theology, etc. In each industry there is the attempt to build and grow the knowledge within the field, so that the bad ideas will dissolve over time and the good ideas succeed and live on.

So what is the role of the government in all of this? In a way, the government is like a market because people voluntarily choose what they believe is the most effective way of achieving something (like universal healthcare). Friedman points to local governments as entities where we can object to what the government does because we can move. And yet government is more than a voluntary cooperation of individuals because “it is also the agency that is widely regarded as having a monopoly on the legitimate use of force or the threat of force as the means through which some of us can legitimately imposes restraints through force upon others.”

Friedman cites three points from Adam Smith. First, a government has a duty to protect its people from violence and invasion from other societies. Second, a government has a duty to protect its people from people within the society (and to set up a system that administers justice). Third, a government should erect and maintain certain public works and institutions. This third point has been grossly misused to defend all sorts of government programs. “In our view it describes a valid duty of a government directed to preserving and strengthening a free society; but it can also be interpreted to justify unlimited extensions of government power.”

Consider the example of road building. The costs may be too high for any one organization to build roads and then collect tolls to cover their costs. Therefore we give this task to the government to handle. However, despite the benefits there are also costs, and often, unforeseen costs. Aside from poorly budgeted projects, delays and unions to work with, there are third parties that are affected. Parties that do not use the roads and would otherwise never have paid to use such a government program or institution. Friedman writes, “as a result a government attempt to rectify the situation may very well end up making matters worse rather than better—imposing costs on innocent third parties or conferring benefits on lucky bystanders.” Moreover, there is a greater risk with power for some of the citizens to take advantage of others. This is seen on the low-income end where people may abuse the system or on the high-income end where the crony capitalism takes place.

The lesson to be learned is that there ought to be a very clear cost-benefit analysis where the burden of proof is on the bureaucrats before any plan is implemented. Even still, “experience shows that once government undertakes an activity, it is seldom terminated.” Rather than its abolition, a license for more power and more money is granted. Today we are suffering under the size and power of the federal government. Some of us are suffering from the size of our state governments, too! We need to elect wise individuals who have a basic knowledge of economics and markets, who can understand that the government is not the solution to our problems, but the cause.

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