In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount.  I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?”  and “Created Equal”  and  From Cradle to Grave, and – Power of the Market. In this episode “The Tyranny of Controls” Milton Friedman shows how government planning and detailed control of economic activity lessens productive innovation and consumer choice.

In this episode Milton Friedman asserts:

I think the United States would prosper in a way that is hardly imaginable today. It would be an example and a beacon to the rest of the world. What kind of sense does it make, here we are supposedly the leaders of the world. We are the ones who promote freedom, and free enterprise, and individual initiative. And what do we do? We force puny little Hong Kong to impose limits, restrictions on its exports at tariffs, in order to protect our textile workers. We go to Japan, and we say to Japan, “For God sakes, you got to limit the number of television sets you come out.” Instead of doing that, we ought to be setting an example to the world, and if we set the kind of an example to the world that Great Britain set to the world in the 19th century, it would be a tremendous __ it would have a tremendous impact, it would strengthen our moral position in the world, it would strengthen our ethical position in the world.

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Milton Friedman’s Free to Choose – Ep.2 (6/7) – The Tyranny of Control

McKENZIE: How close are you to what Deason was saying a moment ago in this area? He would seem to be arguing with you that there was a responsibility to make competition work.

FRIEDMAN: The responsibility is to set up a framework of laws and of arrangements, under which competition will flourish. And the most __

McKENZIE: Inevitably flourish? I mean, or __

FRIEDMAN: Well, so far as I know, I don’t know of any case in history in which monopolies have been able to maintain themselves for very long without having government assistance directly come in on their side. The trade union monopolies that Mr. Deason represents would never have the kind of power they do now if it weren’t for the special privileges which government has granted to them. I can perfectly well understand his being in favor of such action, of antitrust action by the government, because it really is pro-monopoly action, in the main.

DEASON: Why were those exemptions to monopoly laws given to unions?

FRIEDMAN: Because of the political power of unions, of course. I’m not questioning that.

DEASON: and because __ and because of the tremendous imbalance of power of companies at the time that unions were getting their start.

McKENZIE: There’s one concluding idea toward the end of your script that I’d like to look at, because it seemed to me to be most provocative. You talked about the need for constitutional restraints on governments to prevent them interfering in foreign exchange free markets, and in foreign trade. Now what have you in mind, Milton, when you say “constitutional restraints”?

FRIEDMAN: I __ no doubt what I have in mind if I, if I could persuade the public, I would like it to adopt a constitutional amendment strictly parallel to the constitutional prohibition in the text of the constitution, against the central government __ I’m sorry, against state governments imposing tariffs on imports. I would like to have a constitutional amendment which would read, “The Congress shall not impose any taxes, any taxes on imports, or give any subsidies to exports, except such as may be necessary,” I think the wording of the constitution is that the states are permitted to do it if it’s necessary for inspection. That’s the excuse under which California inspects you every time you drive past to see whether you’re carrying any plants or fruits or vegetables.

DEASON: Milton, let me ask you a question: How long do you think that the United States would survive if the United States enacted what you would like to have?

FRIEDMAN: I think the United States would prosper in a way that is hardly imaginable today. It would be an example and a beacon to the rest of the world. What kind of sense does it make, here we are supposedly the leaders of the world. We are the ones who promote freedom, and free enterprise, and individual initiative. And what do we do? We force puny little Hong Kong to impose limits, restrictions on its exports at tariffs, in order to protect our textile workers. We go to Japan, and we say to Japan, “For God sakes, you got to limit the number of television sets you come out.” Instead of doing that, we ought to be setting an example to the world, and if we set the kind of an example to the world that Great Britain set to the world in the 19th century, it would be a tremendous __ it would have a tremendous impact, it would strengthen our moral position in the world, it would strengthen our ethical position in the world. Instead of giving money to underdeveloped countries to produce products which we then refuse to buy and don’t let them export to us, we would be saying to the rest of the world, “If you produce anything, if you can produce anything and have a market here, come, we’re delighted to buy it, and we’ll produce things for you to buy.” That’s the kind of a pattern I would like to see the United States establish.

McKENZIE: Would your members buy that?

DEASON: Never. That’s a __

FRIEDMAN: Never is a long word, sir.

DEASON: Yes, you’re right.

FRIEDMAN: __ and you must distinguish between __

DEASON: And one should never say never.

FRIEDMAN: Your union officials would not buy it. But I am not sure your members wouldn’t.

DEASON: My members would not. No. My members would never buy it either. I cannot conceive of the United States setting itself up to become a target for the rest of the world.

FRIEDMAN: It’s not a target.

DEASON: There would be absolutely nothing that would require or compel any other country to enact any reciprocal agreements relative to tariffs__

FRIEDMAN: That’s right.

DEASON: __ and until such time as they have succeeded in dumping in the United States __ and I used dumping in the broadest sense of the word __ any and every product, either government subsidized by a foreign government, either put there because of multinational corporations manufacturing facilities in a foreign country, until they have succeeded in absolutely draining us dry __

FRIEDMAN: Draining us dry of what?

DEASON: Of every __ of every asset.

FRIEDMAN: How?

DEASON: Of every __

FRIEDMAN: What would they do with the dollars they got?

DEASON: They’d probably buy up, as they are now, as they __

FRIEDMAN: If they bought up __

RUMSFELD: The choice farmland.

FRIEDMAN: Yes. Yes.

McKENZIE: Let’s broaden this. On this very argument, now and a constitutional amendment argument. We’ve learned from our union friend he would __ can’t sell it and won’t sell it. Would business buy it?

RUMSFELD: Oh, no! They __ speaking __ (Several people talking at once.)

RUMSFELD: I’m not saying whether I’d buy it. No, no, but if business would help, which is the question. No, when I __ I speak not as a businessman, but as an ex-government employee, whenever proposals like that came up, one of the first things people see happen is government __ business and labor come in in lockstep, saying, “Horrors, horrors, the sky is falling.” There’s a commonality of interests there and people get used to what is, they get terribly conservative, and they know how to work the system the way it exists, and particularly the big unions and the big business, and they get very satisfied with it, they can manage it pretty well, and any time you try to unravel any kind of regulation or restriction or government intrusion, they’re philosophically for it, but in the practical world, they don’t want you to change the drill, they just figured out how to work this. Why should you then change it and make it all the more complicated. No, I think you’d get a good deal of reaction, just like you did out of the steel company in your television show.

McKENZIE: And what would the international reaction, do you think, as an international economist. Supposing Milton got his amendment, constitutional amendment, which had that effect, how would other countries react to it?

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“The Failure of Socialism” episode of Free to Choose in 1990 by Milton Friedman (Part 1)

By Everette Hatcher III | Posted in Milton Friedman, Ronald Reagan | Edit | Comments (0)