Category Archives: Milton Friedman

“Friedman Friday” :“A Nobel Laureate on the American Economy” VTR: 5/31/77 Transcript and video clip (Part 3)

July 6, 2012 – 1:36 pm

Milton Friedman on the American Economy (3 of 6)

Uploaded by on Aug 9, 2009

THE OPEN MIND
Host: Richard D. Heffner
Guest: Milton Friedman
Title: A Nobel Laureate on the American Economy VTR: 5/31/77
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Below is a transcipt from a portion of an interview that Milton Friedman gave on 5-31-77:

Friedman: Now what’s wrong with that? Two things are wrong. First place, nobody spends somebody else’s money as carefully as he spends his own. We talked about New York City. About seven or eight years ago (I’ve forgotten exactly when it was – Kenneth Galbraith in a n article in New York magazine said there were no problems in New York that could not be solved by the city spending enough money. If my memory serves me right, he said by doubling New York’s budget. Well, in the meantime, New York’s budget has quadrupled, and the problems have gotten worse, not better. And that’s cause and effect. Because when you say spend more money, whose money? The City of New York spent more money, but where did it get it? From its citizens. There is no more money in total to be spent. But nobody spends somebody else’s money as carefully as he spends his own. So you had more money being spent carelessly, and less money being spent carefully.

In the second place, equally important, you cannot spend somebody else’s money unless you first get it. How do you get it? Ultimately and fundamentally be sending a policeman to take it away from him. So the concept of doing good with somebody else’s money has force or coercion built into it as an essential feature. And those flows, the waste which arises out of spending somebody else’s money and the coercion which is unavoidable, destroy the good and the idea of doing good and convert it into doing bad.

HEFFNER: I’m interested in your second point because I’ve wondered, as you were addressing yourself to the subject, I’ve wondered whether it would be the philosophical climate that’s created, that of the policeman who comes and takes those tax monies, those funds, or is your opposition that of the economist? Is it that of the economist of that of the philosopher? Can we distinguish between them?

FRIEDMAN: We can distinguish between them very much. The economist, as economist, I can say what will be the consequences of doing something or other. As an economist, if you say to me – let me take a New York City problem – if I analyze to you the disastrous consequences of rent control in New York City, the effect which that has had on the deterioration of buildings, on the abandonment of buildings, on the reduction in the tax base, on slums, all of that is a predictable consequence of rent control. It’s a straight matter of technical economics that can be shown with a curve. Wherever rent control was introduced, whenever it was introduced, whether in Britain or in France or anywhere, it doesn’t matter; that’s purely a technical consequence of rent control. On the other hand, if I say, regardless of the consequences it is morally wrong for a government official to force me to rent a piece of property to you for less than the price at which I would voluntarily rent it, at that point I am now speaking as a man with values and philosophy. That is to say, you have both principle and expediency involved. The economist talks to the expediency; and the philosopher, the ethicist, the human being, talks to the principle.

HEFFNER: Now, the philosophers may disagree. Do the economists on this question of rent control and its relationship to New York’s…

FRIEDMAN: Oh, no, no. On rent control there’s no disagreement whatsoever. Oh, the interesting thing is that the public at large believes that economists disagree. The fact is that on most technical subjects in economics you’ll find almost no disagreement.

HEFFNER: All right.

FRIEDMAN: Rent control is certainly one example in which I will challenge you to find from the professional economists from the left to the right, I will challenge you to find anybody who will defend rent control from a technical economic point of view.

HEFFNER: All right. Now, when the program began, I was going to refer to you as this country’s foremost conservative economist. And you demerit that, you object to that characterization. And I can appreciate that. Is it not appropriate or proper though to say that there are economists in this country who fall into a camp that one might generally say is on the right, and others who fall into a camp that others might generally say is on the left?

FRIEDMAN: Yes.

HEFFNER: Or can we not say that economists disagree on major issues?

FRIEDMAN: Well, they disagree on major political issues. The question is whether they disagree on economic grounds or on noneconomic grounds. First, my objection to conservatives is not the same as the objections to what’s right or left. Right or left are very ambiguous terms. But conservative is a very definite, clear term. A conservative is somebody who wants to conserve, who keeps things as they are.

HEFFNER: And you don’t like the way things are.

FRIEDMAN: I don’t like things. I want to change them. I’m a radical. Who are conservatives today? The New Dealers, the people who are called in this country erroneously, liberals, the people who are in favor of big government. Mayor Beame’s a conservative. Hubert Humphrey’s a conservative. They want to continue along the path we’ve been going. You have two different dimensions along which, it seems to me, you can consider people. One of them they want to keep things the way they are, or change them. Conservative or radical. From that point of view I’m a radical. Second, insofar as things are changed, in what direction do they want to change them? You may have radicals who are people who are not conservative, who want to move farther in the direction we’ve been going, who want to have a completely socialized state, a completely collectivist state. And there is seems to me to the right terms are the ancient and honorable term “liberal” in its original sense and meaning of and pertaining to freedom; people like myself who want to maintain a free society. A word that has been much abused. And collectivists or stateists. People who want to have things organized through the state.

Now, the interesting thing about your question about economists is that there is a misleading impression of disagreement among economists. I’ve had this experience many times. Get a dozen people in a room together, some of them economists and some noneconomists, political scientists, sociologists, journalists, whatever they may be. Start any subject going. Within 15 minutes all the economists will be on the same side. Whatever their political persuasion is. Now, that doesn’t mean that they don’t have different political views and different political attitudes. But those derive very little from their technical economic discipline, and a great deal from their values, their political orientations. Let me show you, again illustrate. When President Ford two years ago and more had a summit conference in Washington at which there were a collection of economists, to discuss the problems of that time, there was a manifesto issued by all the economists present with the exception I think of two, in favor of a long list of 28 (I think it was) measures at reducing governmental intervention into the economy. Economists from the left to the right were in favor of eliminating interstate commerce commissions in control of rail, of CAB control of airfares. And I now have forgotten of the… But there were, I think 28 such items on which they agreed. So I think the appearance of disagreement is very much greater than the reality.

What happens – let me take the energy problem we started about – suppose you were to ask economists – I don’t care whether they’re on the left or the right – “What would be the appropriate way to handle the energy problem if you could neglect all considerations of political feasibility? As technical economists, how should the energy problem be handled?” I will lay you a large wager that the bulk of the economists, 80, 90 percent will say, “Oh, well, that’s easy. You should let the market go. Let market price oil and market price natural gas.” Among the things that all the economists were agreed on at that summit was that you ought to get rid of the price ceilings on natural gas.

HEFFNER: Now, their differences will arise from what?

FRIEDMAN: At this level their differences will arise because they will say, “Oh, of course that’s the right solution.” But you know it’s not perfectly feasible. And so they go down the trap you were trying to drive me down before. Having accepted that it’s not politically feasible, then instead of being in favor of what I think is the right thing, I’m going to try to ask which is the least bad thing. So the economist comes out and says “Well, as the second best thing…” — he doesn’t even say this, but he thinks it – he says, “Well, I really have to be practical. It’s not feasible. You’re going to continue with price control on natural gas. You’re going to continue with price control of fuel crude oil. So maybe it would be a little better if we allowed those fixed prices to be higher, so we’ll come out in favor of higher prices and not attack the controls.”

HEFFNER: But now, Professor Friedman, you use the word “political.” You say this is a political decision. Is it political, or is it philosophical? Does it relate to the desire to have one’s party reelected? Elect, elect, elect; or spend, spend, spend and the elect, elect, elect? Or is it related to the sense of what we can impose upon the human beings who make up the electorate?

FRIEDMAN: Well, you know, you’re trying to put things into watertight categories that cannot be put there.

HEFFNER: Then take them out.

FRIEDMAN: Human beings are, every human being has a capacity of knowing what he believes is the right thing is also the right thing for the country.

By Everette Hatcher III | Comments (0)

“The Power of the Market” episode of Free to Choose in 1990 by Milton Friedman (Part 5)

July 5, 2012 – 10:29 am

Milton Friedman The Power of the Market 5-5

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 five which consists of a lively discussion between Friedman and several other interested scholars concerning his film.
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I’m Linda Chavez. Welcome to Free to Choose. Joining Dr. Friedman in a discussion of the power of the market are David Brooks of the Wall Street Journal, and James Galbraith of the University of Texas at Austin.

Friedman: In any event, I am not trying to defend one political party or another. As David says, a major enemy of a free market is a business interest. The business community is a major enemy and the problem in this society is to have the public at large understand the importance of free markets so as to protect themselves against the depredation of the business community with their tariffs, their quotas, their special provisions, and so on. But you cover all of these good things that society is supposed to do, you have to look at how many of them have been perverse in their influences and their effect. You mentioned the FDA and that is a very important case because that’s cost tens of thousands of lives over the course of time.

Brooks: You can start with the AIDS virus where the FDA tries again __ recently there have been reforms but they were very slow, even people who knew they were going to die and were going to die without any drug to try experimental drugs.

Chavez: Let me ask another question.

Galbraith: You have to establish that those experimental drugs would have, in fact, saved their lives.

Brooks: They couldn’t have done worse __ they were going to die.

Chavez: Let me give you another hypothetical. What if you have a social need, say a disease which is very lethal but effects very few people and you don’t have a company who has an interest because it is not going to make very much money, there is not a large market for the good to produce a drug, does the government have any role there to step in and try to stimulate certain social purposes?

Brooks: It’s hard for me to imagine how the government would, in the first place.

Friedman: In any event, you must realize that government isn’t the only recourse. The great period, when were the nonprofit hospitals of the United States founded? Almost all of them were in the 19th century, during the hay day of laissez faire. There are private charitable activities which are essentially the most effective way of handling the kinds of things you have described.

Galbraith: A little bit of faithfulness to history surely would cause you to concede that in 1937, when we inaugurated social security, 1965 when we inaugurated Medicare, we did so because the private charitable systems, the private insurance systems to care for people when they were old and when they were sick were failing in a gross way to meet the needs of the American people. And those programs, which are government programs, have at least had the virtue of extending the access to health care and extending income security when you are old to a very large part of the population that never had it before.

I would argue too that in addition to the regulatory functions and the judicial functions that we certainly agree on, that there is, in a rich society which can afford to take care of people who fell out of the market process, who aren’t lucky or gifted or fortunate in their economic lives, to take care of those people when they are old and when they are sick.

Friedman: What about the extent to which the same society that you described, the same logic you described, makes them poor. What about the minimum wage which prevents many people from getting employment. What about the rent controls which destroy housing in the cities.

Brooks: To switch over, you can point to the minimum wage which everybody agrees increases unemployment among the poor especially, but what about the environment. If you have a simple environmental law __ the reason the West is cleaner than the Eastern Bloc, the main reason is that we are richer. We can afford to do it.

Friedman: The problem, so far as the environment is concerned, the real function of the government is to define the property rights and it is quite clear that if I force you to take bad water for good water, then I ought to pay you. I am not quarreling with that. But if you look at the actual environmental measures that government takes, they often have harmful effects and not positive effects. The new Clean Air Bill that has just been passed, for example, is going to cost an enormous amount of money.

Brooks: Nobody knows how much.

Galbraith: It is in principle, of course, your argument is one which many economists are sympathetic to and I have some sympathy for it, but the technical facts of environmental control are such that it is often very costly to define the property rights in a way in which you can generate a efficiently functioning market. That is why you don’t have a private and organized market. The information cost of those transactions is extremely high. So, in some cases, what you want to have the government do is say, if there is mercury in the water, you find out who is putting it in and . . . . . that is the reasonable way to proceed because the alternative is extremely costly.

Friedman: Let’s look at what the government actually does. In the United States today, the federal government spends an amount of money which is 25% of the national income. State and local governments spend an additional 17% of the national income. That is 42% all together. Now, some of that is doing good, of course. It would be very hard to spend that amount of money. But an enormous amount of that is simply taking money from some and giving it to others and very often taking it from poor, giving it to well-to-do, . . . .

Galbraith: . . . social security in that which is taking money from the payroll tax from working people . . .

Friedman: On the whole, as far as social security is concerned, the people who pay are poorer than the people who benefit.

Chavez: Gentlemen, we are out of time. Thank you for watching Free to Choose. Next week we will be discussing what happens when government enters the marketplace.

By Everette Hatcher III | Comments (0)

Listing of transcripts and videos of “Free to Choose” episode 1 – Power of the Market on www.theDailyHatch.org

July 3, 2012 – 12:35 am

Milton Friedman’s books and film series really helped form my conservative views. Take a look at one of my favorite films of his:

“FREE TO CHOOSE” 1: The Power of the Market (Milton Friedman)
Free to Choose ^ | 1980 | Milton Friedman

Posted on Monday, July 17, 2006 4:20:46 PM by Choose Ye This Day

FREE TO CHOOSE: The Power of the Market

Friedman: Once all of this was a swamp, covered with forest. The Canarce Indians who lived here traded the 22 square miles of soggy Manhattan Island to the Dutch for $24.00 worth of cloth and trinkets. The newcomers founded a city, New Amsterdam at the edge of an empty continent. In the years that followed, it proved a magnet for millions of people from across the Atlantic; people who were driven by fear and poverty; who were attracted by the promise of freedom and plenty. They fanned out over the continent and built a new nation with their sweat, their enterprise and their vision of a better future.

For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. For the immigrants who were welcomed by this statue, America was truly a land of opportunity.

They poured ashore in their best clothes, eager and expectant, carrying what little they owned. They were poor, but they all had a great deal of hope. Once they arrived, they found, as my parents did, not an easy life, but a very hard life. But for many there were friends and relatives to help them get started __ to help them make a home, get a job, settle down in the new country. There were many rewards for hard work, enterprise and ability. Life was hard, but opportunity was real. There were few government programs to turn to and nobody expected them. But also, there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found in fact, a free market, and most of them thrived on it.

Many people still come to the United States driven by the same pressures and attracted by the same promise. You can find them in places like this. It’s China Town in New York, one of the centers of the garment industry __ a place where hundreds of thousands of newcomers have had their first taste of life in the new country. The people who live and work here are like the early settlers. They want to better their lot and they are prepared to work hard to do so.

Although I haven’t often been in factories like this, it’s all very familiar to me because this is exactly the same kind of a factory that my mother worked in when she came to this country for the first time at the age of 14, almost 90 years ago. And if there had not been factories like this here then at which she could have started to work and earn a little money, she wouldn’t have been able to come. And if I existed at all, I’d be a Russian or Hungarian today, instead of an American. Of course she didn’t stay here a long time, she stayed here while she learned the language, while she developed some feeling for the country, and gradually she was able to make a better life for herself.

Similarly, the people who are here now, they are like my mother. Most of the immigrants from the distant countries __ they came here because they liked it here better and had more opportunities. A place like this gives them a chance to get started. They are not going to stay here very long or forever. On the contrary, they and their children will make a better life for themselves as they take advantage of the opportunities that a free market provides to them.

The irony is that this place violates many of the standards that we now regard as every worker’s right. It is poorly ventilated, it is overcrowded, the workers accept less than union rate __ it breaks every rule in the book. But if it were closed down, who would benefit? Certainly not the people here. Their life may seem pretty tough compared to our own, but that is only because our parents or grandparents went through that stage for us. We have been able to start at a higher point.

Frank Visalli’s father was 12 years old when he arrived all alone in the United States. He had come from Sicily. That was 53 years ago. Frank is a successful dentist with a wife and family. They live in Lexington, Massachusetts. There is no doubt in Frank’s mind what freedom combined with opportunity meant to his father and then to him, or what his Italian grandparents would think if they could see how he lives now.

Frank Visalli: They would not believe what they would see __ that a person could immigrate from a small island and make such success out of their life because to them they were mostly related to the fields, working in the field as a peasant. My father came over, he made something for himself and then he tried to build a family structure. Whatever he did was for his family. It was for a better life for his family. And I can always remember him telling me that the number one thing in life is that you should get an education to become a professional person.

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.

If you enjoyed that then take a look at the other segments:

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 6 of 7)

PETERSON: Well, let me ask you how you would cope with this problem, Dr. Friedman. The people decided that they wanted cool air, and there was tremendous need, and so we built a huge industry, the air conditioning industry, hundreds of thousands of jobs, tremendous earnings opportunities and nearly all of us now have air […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 5 of 7)

Part 5 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 […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 4 of 7)

The fundamental principal of the free society is voluntary cooperation. The economic market, buying and selling, is one example. But it’s only one example. Voluntary cooperation is far broader than that. To take an example that at first sight seems about as far away as you can get __ the language we speak; the words […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 3 of 7)

  _________________________   Pt3  Nowadays there’s a considerable amount of traffic at this border. People cross a little more freely than they use to. Many people from Hong Kong trade in China and the market has helped bring the two countries closer together, but the barriers between them are still very real. On this side […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 2 of 7)

  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 […]

“Friedman Friday” (“Free to Choose” episode 1 – Power of the Market. part 1of 7)

“FREE TO CHOOSE” 1: The Power of the Market (Milton Friedman) Free to Choose ^ | 1980 | Milton Friedman Posted on Monday, July 17, 2006 4:20:46 PM by Choose Ye This Day FREE TO CHOOSE: The Power of the Market Friedman: Once all of this was a swamp, covered with forest. The Canarce Indians […]

 

By Everette Hatcher III | Comments (0)

“The Power of the Market” episode of Free to Choose in 1990 by Milton Friedman (Part 4)

July 2, 2012 – 9:39 am

Milton Friedman The Power of the Market 4-5

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 four which consists of a lively discussion between Friedman and several other interested scholars concerning his film.
To take an example that at first sight seems about as far away as you can get __ the language we speak; the words we use; the complex structure of our grammar; no government bureau designed that. It arose out of the voluntary interactions of people seeking to communicate with one another. Or consider some of the great scientific achievements of our time __ the discoveries of an Einstein or Newton __ the inventions of Thomas Alva Edison or an Alexander Graham Bell or even consider the great charitable activities of a Florence Nightingale or an Andrew Carnegie. These weren’t done under orders from a government office. They were done by individuals deeply interested in what they were doing, pursing their own interests, and cooperating with one another.This kind of voluntary cooperation is built so deeply into the structure of our society that we tend to take it for granted. Yet the whole of our Western civilization is the unintended consequence of that kind of a voluntary cooperation of people cooperating with one another to pursue their own interests, yet in the process, building a great society.DISCUSSIONI’m Linda Chavez. Welcome to Free to Choose. Joining Dr. Friedman in a discussion of the power of the market are David Brooks of the Wall Street Journal, and James Galbraith of the University of Texas at Austin. Dr. Galbraith, should we follow the example of Hong Kong and simply allow an unregulated free market?Galbraith: I think we do better in this country whereas the combination of a free market and its advantages, and a well regulated, carefully thought out structure of government, which provides a chance to pick up some of the losers from the market process and give them a second start. It provides us with a chance to make the economic process a little safer, a little healthier, a little more environmentally sound and protective, than you might get from a strict adherence to the free market such as Professor Friedman has described in the case of Hong Kong.

Chavez: Dr. Friedman, is there any such thing as a well-regulated market?

Friedman: No. He is begging the question. Obviously he is right. If you could have a well-regulated, carefully thought out, properly done market, benevolent dictatorship is the best of all forms of government.

Galbraith: Oh, I don’t agree with that at all.

Friedman: Neither do I.

Galbraith: Constitutional democracy is the best of all forms of government.

Friedman: No. Constitutional democracy is the least bad of all forms of government. But you beg all the questions when you talk about well-regulated, carefully thought out __ if you look at the actual programs that governments follow, they most always have effects that are the opposite of those that were intended by their well-meaning advocates.

Galbraith: Let me tell you what troubles me.

Friedman: I will tell you something. Matching the invisible hand of the market is the invisible foot of government.

Galbraith: You make the point in the program that in every case where you have a smaller role of government and a freer market, you have a higher standard of living.

Friedman: No. I didn’t say that. I didn’t say that. I said there are better conditions for the poorer people.

Galbraith: Okay. Better conditions for the poorer people. Fine, I will accept that. At the same time you are making the argument in the program that the conditions in Hong Kong are better, for example, than in the United States, which is manifestly not true. You are making the argument that Hong Kong is more free than we are.

Friedman: It is more free.

Galbraith: Does it then follow that the conditions for poor people in Hong Kong are better than they are in the United States? That I don’t believe is true.

Friedman: I said in there where you compare like with like.

Galbraith: Okay this is an important qualification.

Friedman: Hong Kong obviously started out from a much lower position. If I were to compare conditions in Hong Kong in 1945 or 1950 with conditions in the United States in 1820 or 1830, you would have a much closer comparison.

Galbraith: Are you then saying, a position which I would find much more congenial, that where you have a country which has developed a base of material wealth, a degree of comfort for the average citizen, that it is then legitimate for the government of that country to step in and provide some guarantees and some security for poor people and old people.

Friedman: No. I am not saying that at all. Every time they step in and try to do that, they end up doing the opposite.

Galbraith: This discussion reflects a feature of the program that I found to be most troubling which is the failure to make a distinction between governments of the kind that we have developed in this country over 200 years, and governments of the kind that you described in the People’s Republic of China. It’s perfectly clear that one can have, and many countries do have, the curse of repressive dictatorships. It is also perfectly clear that an economy that is organized by Commissars is going to fail. We have certainly seen laid out before us over the last several years, the ashes of those failed economies. But is it possible to take the example of the Soviet Union, Poland, Hungary, and to say that because their governments, which were after all dictatorships modeled after the system of government installed in the Soviet Union by Stalin, are in fact parallel to the actions of our government which is a government which operates on many different federal levels, and where fundamentally what you have is the ability of the ordinary citizen whose power is not weighted by the amount of money he or she has, to use the vote in order to make some collective decisions. Granted, after ten years of Reagan’s Washington, you’ve got a serious problem of corruption. Does that mean we should abandon the idea that you have a democratic process that should be entrusted with certain important decisions __ I don’t think so.

Friedman: You don’t have a democratic process in the sense in which you mean it. We have a democracy. We have a majority rule, but the majority that rules is a collection of minorities. It is a collection of special interests. You cannot tell me that the consumers in this country would vote for a sugar quota that makes the price of sugar three times the world price. When you say you can’t compare it to Russia, you are quite right, but only because they are 100% and we are 50%. If our system, if our present regulations and rules had prevailed, our scope of government had prevailed 100 years ago, we wouldn’t be where we are today.

Chavez: Let me understand you Dr. Friedman. Do you believe that there should be no role at all, whatsoever, for government?

Friedman: Of course there should be a role for government __ a very important role for government.

Chavez: What is that role?

Friedman: The role for government is first of all, to protect people from physical coercion by their neighbors or by foreign countries, that is to protect the national defense and to protect law and order at home. There is a role for government enabling us to have a mechanism whereby we decide on the rules which we want to run, how we define private property, what we mean by private property. There is a role for government in adjudicating disputes between us. There is a role for government. A very important role and I believe our government played that role quite well for about 100 years until the Great Depression.

Brooks: I would go a little further. I think there is a health and safety role as well. The problem is that you have to keep your regulations simple and minimal. You have to realize that there are costs and often the costs outweigh the benefits. In fact, in Washington there are interests who want to divert costs to themselves, so there is sort of a built in structure, a dynamic to make costs outweigh the benefits.

Galbraith: We are making progress here. I would add that the government has a role to protect the environment. I would say the government has a role to set standards for products, where information is very costly for the individual consumer to obtain. I like very much the fact that the steaks that the dentist was eating were inspected by the USDA. Their purity was guaranteed by a rather well-functioning aspect of our government.

Brooks: On the other hand, you have the FDA which has these long delays, 10 years to get a drug approved so that the effect is that you have to be a big drug company to get any kind of dent of the market. Basically you are closing off the market.

Galbraith: On the other hand, you have had a set of regulations which have disappeared without any well-justified regrets. For example, the regulations that govern the entry into interstate trucking; the regulations that govern entry and rates in the airlines.

Friedman: Don’t tell me that that was done under the Reagan administration.

Galbraith: Oh no. Those reforms were done under the Carter administration.

Brooks: There is no doubt that Carter did the heavy lifting on deregulation.

By Everette Hatcher III | Comments (0)

Obama’s solution to our healthcare problems: MORE FEDERAL OVERSIGHT!!!

June 29, 2012 – 6:56 am

A Taxing Distinction for ObamaCare

Published on Jun 28, 2012 by

http://www.cato.org/publications/commentary/it-now-falls-congress
http://www.cato.org/publications/commentary/taxing-decision
http://www.cato-at-liberty.org/supreme-court-unlawfully-rewrites-obamacare-to…
http://www.cato-at-liberty.org/congress-its-not-a-tax-scotus-yes-it-is/

The Cato Institute’s Roger Pilon, Ilya Shapiro, Michael F. Cannon, Michael D. Tanner and Trevor Burrus evaluate today’s ruling on ObamaCare at the Supreme Court.

Video produced by Caleb O. Brown and Austin Bragg.

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When I think about how Obamacare would work it turns my attention to how our federal government has run other things so far. When I think of an inner city youth and the opportunities he or her has at our fine public schools today it makes me proud of how our federal government has made such a great educational experience possible for this younger generation. (I guess you have picked up on how I am being very silly and trying to make you laugh.)

The sad truth is that a private voucher program would bring in competition and generate these results but the federal government would rather that does not happen because they want to keep their hand in everything.

We got to get a voucher system in place so inner city youth can have the educational opportunities they deserve.

What DC Schools Can Teach Us about Obamacare

Posted by Andrew J. Coulson

Thanks to today’s Supreme Court ruling, the federal government has gained broad new powers to control the nation’s health care system. This, we are told by the President and his fellow travelers, will save money, expand access, and improve quality. One way to gauge the chances of that is to see what benefits federal oversight has brought to education in the one district in the nation over which Congress has ultimate authority: the District of Columbia public schools.

As I wrote earlier this week, the Census Bureau has now confirmed my finding that DC public schools spend about $30,000 / pupil annually. That is more than double the national average of public schools. Access to schooling may be universal in the District, but access to a quality education is not. As Economist Mark Perry writes, despite its stratospheric spending, DC’s graduation rate of 58.6% is far lower than the national average of 75.5%. The academic performance of its students is also significantly below the national average, and also below the average for other big city districts–in both reading and mathematics. Its achievement gaps by race and socio-economic status are also larger than in other public school districts.

That is how the only public school district in the nation under the control of Congress performs. Nor have nationwide federal education programs shown promise, as the chart below illustrates.

If our experience with education is any guide, a bigger federal role in health care does not bode well.

 

Milton Friedman on school voucher system

Max Brantley of the Arkansas Times Blog reports today that Mitt Romney is for school vouchers. I am glad to hear that. Over and over we hear that the reason private schools are better is because they don’t have to keep the troubling making kids. It reminds me of this short film that I saw many […]

Brummett wants Charter schools to show public schools how to do it”Friedman Friday”

John Brummett (10-26-11, Arkansas Democrat-Gazette online edition) does not want charter schools to put public schools out of business but he wants them to show public schools how to do it. (Paywall) I seek in these matters a kind of Clintonian third-way finesse: I support charter schools only to the extent that they should be […]

Obama rule apply to vouchers?

Introducing the ‘Obama Rule’ Posted by Neal McCluskey In his latest weekly radio address, President Obama featured what will no doubt be a mainstay of his reelection campaign: the “Buffett Rule,” which says that rich people should pay at least the same tax rate as middle-class folks. It’s named after mega-investor Warren Buffett, who famously declared […]

Listing of transcripts and videos of Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” on www.theDailyHatch.org

Everywhere school vouchers have been tried they have been met with great success. Why do you think President Obama got rid of them in Washington D.C.? It was a political disaster for him because the school unions had always opposed them and their success made Obama’s allies look bad. In 1980 when I first sat […]

HERITAGE FOUNDATION VIDEO:What is School Choice?

What is School Choice? Uploaded by HeritageFoundation on Aug 2, 2011 School choice offers families the opportunity to select schools that meet their child’s needs. Watch the video from Heritage Foundation explaining school choice, how it benefits parents and children and why school choice is needed.

Girl Likens Public School Failure to Ban on Teaching Slaves to Read

  Why have blacks that live in bad areas been condemned to inferior schools? A young lady floated an idea out there and was severly punished for her thoughts: Girl Likens Public School Failure to Ban on Teaching Slaves to Read Posted by Andrew J. Coulson A 13-year-old black girl from Rochester likens the pedagogical […]

Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 6 of transcript and video)

Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 6 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: FRIEDMAN: But I personally think it’s a good thing. But I don’t see that any reason whatsoever why I shouldn’t have been required […]

Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 5 of transcript and video)

Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 5 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: Are your voucher schools  going to accept these tough children? COONS: You bet they are. (Several talking at once.) COONS: May I answer […]

Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 4 of transcript and video)

Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 4 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: It seems to me that if one is truly interested in liberty, which I think is the ultimate value that Milton Friedman talks […]

Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video)

Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video) Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 3 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: If it […]

By Everette Hatcher III | Also posted in Cato Institute, Healthcare, President Obama, Vouchers | Comments (0)

“Friedman Friday”:“A Nobel Laureate on the American Economy” VTR: 5/31/77 Transcript and video clip (Part 2)

June 29, 2012 – 5:32 am

Milton Friedman on the American Economy (2 of 6)

Uploaded by on Aug 9, 2009

THE OPEN MIND
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:

Friedman: General public ideas are much slower to move than intellectual ideas. That’s a fortunate thing. The public at large never moved as far in the direction of socialism and collectivism as the intellectual community did. They preserved a kind of a stability which kept us from going even faster than we did. One of the reasons in my opinion why Britain went so much faster toward a completely socialized state than we have gone is because the intellectual and ruling communities in Britain are more homogeneous and more nearly one. Well fortunately we have a much more diversified and varied set of elites. So I think the public at large never went as far as the intellectuals in that direction. And I am sure they are slow in turning around and going back the other way. I’m not saying that there has been any major trend in the public opinion at large, but only that in the intellectual community, in the community of the youngsters and young people who are coming up; no change in the older ones either.

You know, human beings have certain very common characteristics. It’s very hard for anybody to change his mind after he’s gotten to the age of 25 or 30 and gets set in his ways. It’s always fascinating to me. I had an interview this morning, a radio interview with a group of youngsters from a radio program called “Focus on Youth.” They were lively, energetic, bright; they were a wonderful group. They had a guest book in which they asked me to write a message and my name. And soothe message I wrote was “How is it that these bright, energetic, brilliant, dynamic young people turn within such few years into such deadly dull, unimaginative inactive adults?”

HEFFNER: You mean the rest of us?

FRIEDMAN: The rest of us. All of us. You’ve noticed this, I’m sure. You’re on the campus, on Rutgers. Haven’t you always been impressed by the contrast between…the liveliness and active minds of the young graduate students and of the opposite on the part of the settled, permanent tenured instructors?

HEFFNER: Well, we could argue that point out, Professor Friedman, at some point.

FRIEDMAN: I don’t want to overstate it. There’s an element to it. Well, going back to the main point, I believe it is true, and I’m sure you’re right and many people will believe that government owes them something. The point is that the first step in people’s conversion is never with respect to their own privileges but always with respect to somebody else. Everybody always knows he’s an exception. You ask people, “Do you think government should be cut down to size?” “Oh, of course.” “How about the program you benefit from?” “Oh, well, that’s a special case. That needs more money.” So I don’t believe there’s any contradiction between people saying “Gimme”, on the one hand; and these same people acting in another capacity to as to hold down the rate of growth in the state.

HEFFNER: You know, I would ask you the same question that I asked you a couple of years ago, and that is, why do you hold on, as it seems to me you do, hold on almost for dear life, to a kind of optimism despite all the things that you see and comment on in front of you? Why not recognize the situation for what it is, as you describe it so well, and then perhaps point ourselves in a different direction?

FRIEDMAN: Down the same road. There’s no different direction down that road. Don’t kid yourself. There just is no different direction down that road. This isn’t a strange road. We, you and I, who have been lucky enough to have been born in a free society, take freedom for granted as if it’s a natural phenomenon. But let me ask you, what fraction of the human race today lives in free societies?

HEFFNER: Tiny, tiny, tiny percentage.

FRIEDMAN: Over history, what fraction at any moment of time ever lived in free societies?

HEFFNER: Even tinier.

FRIEDMAN: Even tinier.

HEFFNER: I’m leading you down the garden path, Professor Friedman.

FRIEDMAN: No, you’re not. No, you’re not. It is true that the normal condition of mankind is tyranny and misery. We’ve escaped. We’ve been extraordinarily fortunate to escape into an island of freedom and prosperity. If we do not maintain that island of freedom, of prosperity, if we do not maintain the essential features of this society which made that freedom and prosperity possible, there isn’t a wide range of alternatives. We go to misery and tyranny, to the normal state of mankind. Why am I optimistic? Because we’re also ignorant. If we could really predict the future, you couldn’t be optimistic. But we’ve seen historically time and again that people have tried to make long-range predictions and not been very good at it. The human race is a funny thing. It’s always turning up surprises on you. People are capable of doing things you wouldn’t have expected to; of rising to the circumstance. And I suppose I maintain my optimism partly because my innate character is optimistic. But partly because the consequences of not recognizing our state of affairs, of not acting in time to check, seem to me so horrendous that I cannot but believe unless people realize the alternative before them they won’t take measures to make sure it doesn’t happen.

HEFFNER: Well, what took us into this little island of time in which we are so different or have enjoyed a difference from all the history of mankind?

FRIEDMAN: Well, that’s a very interesting question, and it’s one that can be spread more broadly. It’s a subject I’ve been very much interested in. From time to time in man’s history there have been golden ages. The fifth century B.C. in Greece, the Renaissance in Italy, the first Elizabethan period in England, the nineteenth century in Britain. We’re in the midst of what I regard as a golden age in the United States, the nineteenth and early twentieth centuries. Now, the interesting question is how is it here, to take it out of our own context, here’s the Greek peninsula. I refer to it as Peloponnesian, and somebody reminded me that it is not. What is it? It’s a different peninsula. At any rate, the area where…

HEFFNER: We’ll accept it as such.

FRIEDMAN: Okay. It was the same people there in the sixth century B.C. and in the fifth century B.C., the same people in the fourth century as in the fifth century. Why is it in the fifth century you have this sudden flowering, this enormously productive and brilliant period; it disappears in the fourth, third, second century B.C.? Why is it? Same people. Well, I think in many ways the fundamental explanation – and now I’m simplifying and conjecturing; this isn’t a solid, well-sustained hypothesis – is that some accident comes along which wipes the slate clean of restraints that have been holding people back. In our own golden age it’s very clear what that was. It was a new continent, with new people coming, with a new form of government, with a Constitution, the Declaration of Independence. It was an opportunity in which people were unrestrained and in which the natural instincts for people to improve their lot were given freest and fullest reign.

Well, what happens, and the reason these golden ages tend to be relatively brief, the reason they last 100 years, 150 years at most, is that as time passes the slate gets filled up. It’s very much easier to introduce restrictions and restraints than it is to remove them. It’s easier to pass a low than it is to repeal a low. And so over the course of time you tend to impose these chains and restraints on yourselves, mostly for good reasons. The initial objectives are always good. That doesn’t mean the outcome is. And finally, the slate becomes so full – if I may continue to use that image – that there’s no more room to write on, and you need somehow something which will provide for another removal of restraints.

HEFFNER: What do you think would provide now for a tabula rasa again, a wiping clear of the slate?

FRIEDMAN: Well, I think the first thing that’s necessary to wipe clear the slate is to set a limit to government spending. The thing that has been encroaching more and more upon that slate is that whereas until 1928 or 9, total government spending in the United States, federal, state and local, never exceeded ten percent of our income, except in the Civil War and the First World War. It has now risen to over 40 percent of our income. If that continues…well, 40 percent is an awful lot. In Britain now it’s reached somewhere between 50 and 60 percent. The first necessity, I think, as a tactical matter, is to set an end to that. As a strategic matter, the main necessity is to have a change in the intellectual climate of opinion which will substitute a belief in the individual responsibility for the false belief in social responsibility. Let me emphasize, the problems that have arisen for us have not come from evil people who were trying in conspiracy or anything like that to enslave us. That hasn’t been our problem. Our problems have arisen from good people who were trying to do good, but trying to do good is a fundamentally flawed way. The welfare state is in many ways a noble construct, a noble concept. It’s the concept that we ought to help our fellow men. What flaws it is that it’s one thing for you to help me out of your pocket; it’s another thing for your to help me out of his pocket. And the fundamental flaw of the welfare state, in my opinion, is the idea that you should do good with somebody else’s money.

By Everette Hatcher III | Comments (0)

“The Power of the Market” episode of Free to Choose in 1990 by Milton Friedman (Part 3)

June 28, 2012 – 6:41 am

Milton Friedman The Power of the Market 3-5

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 three.

Two hundred years ago in Scotland, Adam Smith taught at the University of Glasgow. His brilliant book, The Wealth Of Nations, was based on the lectures he gave here.The basic principles underlying the free market, as Adam Smith taught them to his students in this University, are really very simple. Look at this lead pencil, there is not a single person in the world who could make this pencil. Remarkable statement? Not at all. The wood from which it’s made, for all I know, comes from a tree that was cut down in the State of Washington. To cut down that tree, it took a saw. To make the saw, it took steel. To make the steel, it took iron ore. This black center, we call it lead but it’s really compressed graphite, I am not sure where it comes from but I think it comes from some mines in South America. This red top up here, the eraser, a bit of rubber, probably comes from Malaya, where the rubber tree isn’t even native. It was imported from South America by some businessman with the help of the British government. This brass feral __ I haven’t the slightest idea where it came from or the yellow paint or the paint that made the black lines __ or the glue that holds it together. Literally thousands of people cooperated to make this pencil. People who don’t speak the same language; who practice different religions; who might hate one another if they ever met. When you go down to the store and buy this pencil, you are, in effect, trading a few minutes of your time for a few seconds of the time of all of those thousands of people. What brought them together and induced them to cooperate to make this pencil? There was no Commissar sending out orders from some central office. It was the magic of the price system __ the impersonal operation of prices that brought them together and got them to cooperate to make this pencil so that you could have it for a trifling sum.That is why the operation of the free market is so essential. Not only to promote productive efficiency, but even more, to foster harmony and peace among the peoples of the world.These people are crossing between two very different societies. This is Lo Wool, the official border crossing point between China and Hong Kong. Nowadays there’s a considerable amount of traffic at this border. People cross a little more freely than they use to. Many people from Hong Kong trade in China and the market has helped bring the two countries closer together, but the barriers between them are still very real. On this side of the border, people are free not only in the marketplace, but in all their lives. They are free to say what they want, to write what they want, to do pretty much as they please. Not so over there.That is why people in China who cannot get permission to leave go to desperate lengths to escape. They risk their lives in the process. Many lose their lives, but that doesn’t keep others from following. Some are attracted by the higher material standard of life in Hong Kong, but more by the natural human desire to be free.

The people who get official permission to leave China are fortunate. They are going to be able to enjoy the benefits of the economic freedom they will find in Hong Kong. More important, that will give them a much wider freedom.

Human and political freedom has never existed and cannot exist without a large measure of economic freedom. Those of us who have been so fortunate as to have been born in a free society tend to take freedom for granted __ to regard it as the natural state of mankind __ it is not. It is a rare and precious thing. Most people throughout history, most people today have lived in conditions of tyranny and misery, not of freedom and prosperity. The clearest demonstration of how much people value freedom is the way they vote with their feet when they have no other way to vote.

Of course, many of the people who pour into Hong Kong will end up in conditions that most of us in the West would find appalling. Hong Kong is very far from utopia. It has its slums, its crime, its desperately poor people. But the people are free. That’s after all, why so many of them have come here, despite having to live in leaky house boats in one of Hong Kong’s many small harbors. Here they have the freedom and the opportunity to better themselves, to improve their lot, and many succeed. There’s appalling poverty in Hong Kong, it’s true, but the conditions of the people have been getting better over time. They’re far better off now than they were when they first came across the border from China. And that poverty, appalling to us, because we’re accustomed to much higher standards of life, is not poverty as viewed by most of the people in the world. It’s the poverty to which they would aspire. A state of affairs they would like to achieve.

There is an enormous amount of poverty in the world everywhere. There is no system that’s perfect. There is no system that’s going to eliminate completely poverty in whatever sense. The question is, which system has the greatest chance? Which is the best arrangement for enabling poor people to improve their life? On that, the evidence of history speaks with a single voice. I do not know any exception to the proposition that if you compare like with like, the freer the system, the better off the ordinary poor people have been.

Ask yourself what it is that assures these garment workers in Hong Kong a good wage; not high by Western standards; but high enough to enable them to live far better than most people in the world. It is not government or trade union, these workers do well because there is competition for their labor and skills.

When a businessman faces trouble, a market threatens to disappear, or a new competitor arises, there are two things he can do. He can turn to the government for a tariff or quota or some other restriction on competition, or he can adjust and adapt. In Hong Kong the first option is closed. Hong Kong is too dependent on foreign trade so that the government has simply had to adopt a policy of complete noninterference. That’s tough on some individuals, but it is extremely healthy for the society as a whole. Only the businessmen who can adapt, who are flexible and adjustable survive and they create good employment opportunities for the rest.

The complete absence of tariffs or any other restrictions on trade is one of the main reasons why Hong Kong has been able to provide such rapidly rising standard of life for its people. Even Communist China recognizes Hong Kong’s success, it set up shop here and now excepts the universal symbol of capitalism. The Bank of China, the official bank of Communist China is the largest bank in Hong Kong. There’s no doubt that Communist China recognizes the power of the market.

In all this, the government of Hong Kong has played an important part, not only by what it has done, but as much by what it has refrained from doing. It has made sure that laws are enforced and contracts honored. It has provided the conditions in which a free market can work. Most importantly, it has not tried to direct the economic activities of the colony.

No government official is telling these people what to do. They are free to buy from whom they want, to sell to whom they want, to work for whom they want. Sometimes it looks like chaos and so it is, but underneath it’s highly organized by the impersonal forces of a free marketplace. The impersonal forces of a free marketplace at work back here in the United States, prices are the key. The prices that people are willing to pay for products determines what’s produced. The prices that have to be paid for raw materials, for the wages of labor, and so on, determine the cheapest way to produce these things.

In addition, these self same prices, the wages of labor, the interest on capital, and so on, determine how much each person has to spend on the market. It’s tempting to try to separate this final function of prices from the other two. To think that some how or other you can use prices to transmit the information about what should be produced and how it should be produced, without using those prices to determine how much each person gets. Indeed, government activity over the past few decades has been devoted to little else. But that’s a very serious mistake. If what people get is not going to be determined on what they produce, how they produce it, on how successfully they work, what incentive is there for them to act in accordance with the information that is transmitted. There is only one alternative: force __ some people telling other people what to do.

The fundamental principal of the free society is voluntary cooperation. The economic market, buying and selling, is one example. But it’s only one example. Voluntary cooperation is far broader than that.

By Everette Hatcher III | Comments (0)

“The Power of the Market” episode of Free to Choose in 1990 by Milton Friedman (Part 2)

June 25, 2012 – 7:55 am

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: Of course she didn’t stay here a long time, she stayed here while she learned the language, while she developed some feeling for the country, and gradually she was able to make a better life for herself.Similarly, the people who are here now, they are like my mother. Most of the immigrants from the distant countries __ they came here because they liked it here better and had more opportunities. A place like this gives them a chance to get started. They are not going to stay here very long or forever. On the contrary, they and their children will make a better life for themselves as they take advantage of the opportunities that a free market provides to them.The irony is that this place violates many of the standards that we now regard as every worker’s right. It is poorly ventilated, it is overcrowded, the workers accept less than union rate __ it breaks every rule in the book. But if it were closed down, who would benefit? Certainly not the people here. Their life may seem pretty tough compared to our own, but that is only because our parents or grandparents went through that stage for us. We have been able to start at a higher point.Frank Visalli’s father was 12 years old when he arrived all alone in the United States. He had come from Sicily. That was 53 years ago. Frank is a successful dentist with a wife and family. They live in Lexington, Massachusetts. There is no doubt in Frank’s mind what freedom combined with opportunity meant to his father and then to him, or what his Italian grandparents would think if they could see how he lives now.Frank Visalli: They would not believe what they would see __ that a person could immigrate from a small island and make such success out of their life because to them they were mostly related to the fields, working in the field as a peasant. My father came over, he made something for himself and then he tried to build a family structure. Whatever he did was for his family. It was for a better life for his family. And I can always remember him telling me that the number one thing in life is that you should get an education to become a professional person.

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.

By Everette Hatcher III | Comments (0)

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

June 22, 2012 – 7:33 am

Milton Friedman on the American Economy (1 of 6)

Uploaded by on Aug 9, 2009

THE OPEN MIND
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:

THE OPEN MIND
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…

By Everette Hatcher III | Comments (0)

“The Power of the Market” episode of Free to Choose in 1990 by Milton Friedman (Part 1)

June 21, 2012 – 7:39 am

Milton Friedman The Power of the Market 1-5

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 one.
Volume 1 – The Power of the Market
Abstract:
Finding examples in his visits to Hong Kong, the U.S. and Scotland, Dr. Friedman says that free markets are the fundamental engines of economic progress. In free markets, individuals can go into any business they want, trade with whomever they want, buy as cheap as they can, and sell at the highest price they can get. In truly free markets, governments do not interfere with any of these privileges. Individuals are free to enter the marketplace to do business, and they, and they alone, enjoy the fruits of their successes and the consequences of their failures. In free markets, producers of goods and services respond to signals they receive from buyers in the marketplace. They key production to their understanding of what people are buying and, apparently, wish to continue to buy. Using this information, they decide what to produce and in what quantity. Competitive forces in free markets promote efficiency. Because there is free entry of new producers into the market, individual producers must keep costs down in order to price their products at competitive levels. This means the resources they consume tend to be used efficiently. If they are not, costs of production rise, selling prices go up, and the producer may not be able to sell his product because it is not priced competitively. Free markets promote voluntary cooperation among a great diversity of people. As Milton Friedman points out, even making something as simple as a pencil requires the cooperation of thousands of people largely unknown to one another. Because the pencil manufacturer needs paint, graphite, wood, glue, and other components, widely separated groups of individuals have an incentive to produce these items and ship them to the pencil plant. This cooperation is not accomplished by any government. Individual freedom and economic freedom are tightly linked. It is difficult to conceive of personal freedom existing in isolation from economic freedom. Thus, the free market system not only promotes economic progress, but also buttresses our cherished individual freedoms.
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Hi, I am Arnold Schwarzenegger. I would like a moment of your time because I wanted you to know something. I wanted you to know about Dr. Milton Friedman’s TV series, Free to Choose. I truly believe that the series has changed my life. When you have such a powerful experience as that, I think you shouldn’t keep it to yourself, I wanted to share it with you.

Being free to choose for me means being free to make your own decisions; free to live your own life; pursue your own goals; chase your own rainbow; without the government breathing down on your neck or standing on your shoes. For me that meant coming here to America. Because I came from a socialistic country in which the government controls the economy. It is a place where you can hear 18 year old kids already talking about their pension. But me __ I wanted more. I wanted to be the best __ individualism like that is incompatible with socialism. So I felt I had to come to America. I had no money in my pocket, but here I had the freedom to get it. I have been able to parlay my big muscles into big business and a big movie career. Along the way I was able to save and invest and I watched America change and I noticed this __ that the more the government interfered and intervened and inserted itself into the free market, the worse the country did. But when the government stepped back and let the free enterprise system do its work, then the better we did, the more robust our economy grew, the better I did, and the better my business grew, and the more I was able to hire and help others.

Okay. So there I was in Palm Springs, waiting for Maria to get ready so we could go out for a game of mixed doubles. I started flipping through the television dial and I caught a glimpse of Nobel Prize winner, Economist Dr. Milton Friedman. I recognized him from the studying of my own degree of economics in business, but I didn’t know I was watching Free to Choose __ it knocked me out. Dr. Friedman expressed, validated and explained everything I ever thought or experienced or observed about the way the economy works. I guess I was really ready to hear it. He said, the economic race should not be arranged so that everyone ends at the finish line at the same time, but so that everyone starts at the starting line at the same time. Wow! I would like to write that one home to Austria. He said, that society that puts equality before freedom winds up with neither, but that society puts freedom before equality, we will end up with a great measure of both. Boy, if I would have come up with that one myself, I maybe wouldn’t have had to get into body building.

When I did beef up my body building, at business school, of course it started with what Thomas Jefferson believed and what Adam Smith thought, even what Milton Friedman had to say __ I would be free to choose __ it all came together. Their economic thought with my own personal experience, and in a way I felt that I had come home. I sought out Dr. Friedman and had great pleasure and privilege of meeting him and his economist wife, Rose, and we have all become friends, and now I call him Milton. Then I became a big pain in the neck about Free to Choose.

All my friends and acquaintances got the tapes and the books for Christmas after Christmas, all the way through the Reagan years when I was able to tell them all __ you see, Milton is right. And I think it’s crucial that we all keep moving in the same direction, away from socialism and to its greater freedom and opportunity. That is why I am so excited that Milton Friedman is updating Free to Choose, bringing it into the 90’s by discussing how to deal with the drug disaster, the chabain phenomenon, and of course, the miserable failure of communism. By the way, there are plans now to translate Free to Choose into the languages of the Soviet Union and Eastern Europe. And you know, they really need it to guide them through it __ to take the first walk toward freedom. But we need it too.

I commend to you the new television series Free to Choose and encourage you to walk into the 21st century in freedom, in opportunity and in success, with Dr. Milton Friedman.

Thanks for listening.

 
Friedman: Once all of this was a swamp, covered with forest. The Canarce Indians who lived here traded the 22 square miles of soggy Manhattan Island to the Dutch for $24.00 worth of cloth and trinkets. The newcomers founded a city, New Amsterdam at the edge of an empty continent. In the years that followed, it proved a magnet for millions of people from across the Atlantic; people who were driven by fear and poverty; who were attracted by the promise of freedom and plenty. They fanned out over the continent and built a new nation with their sweat, their enterprise and their vision of a better future.For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. For the immigrants who were welcomed by this statue, America was truly a land of opportunity.They poured ashore in their best clothes, eager and expectant, carrying what little they owned. They were poor, but they all had a great deal of hope. Once they arrived, they found, as my parents did, not an easy life, but a very hard life. But for many there were friends and relatives to help them get started __ to help them make a home, get a job, settle down in the new country. There were many rewards for hard work, enterprise and ability. Life was hard, but opportunity was real. There were few government programs to turn to and nobody expected them. But also, there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found in fact, a free market, and most of them thrived on it.Many people still come to the United States driven by the same pressures and attracted by the same promise. You can find them in places like this. It’s China Town in New York, one of the centers of the garment industry __ a place where hundreds of thousands of newcomers have had their first taste of life in the new country. The people who live and work here are like the early settlers. They want to better their lot and they are prepared to work hard to do so.Although I haven’t often been in factories like this, it’s all very familiar to me because this is exactly the same kind of a factory that my mother worked in when she came to this country for the first time at the age of 14, almost 90 years ago. And if there had not been factories like this here then at which she could have started to work and earn a little money, she wouldn’t have been able to come. And if I existed at all, I’d be a Russian or Hungarian today, instead of an American.
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