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Milton Friedman on Self-Interest and the Profit Motive 1of2


This clip is from the 15-part lecture series, "Milton Friedman Speaks" http://www.ideachannel.com/pro... Transcript available via FreedomChannel: http://freedomchannel.blogspot... student poses a series of question on based on Friedman's notion that people should pursue their own self-interest. The student points out that he'd read that Friedman had previously come out against disaster aid for victims of a flood in Pennsylvania. Friedman corrected the questioner and noted that he did not come out against private aid for flood victims but instead was against the Federal Government providing discounted flood insurance in advance to home purchasers which motivated people to build houses in areas where they otherwise would not have been able to obtain insurance privately. If not for the discounted insurance, it's likely many of the flooded houses would never have been built in the first place as it wouldn't have been in peoples self-interest.The student went on to note that it was recently reported that an old man in Ohio died when the electric company turned off his power when he'd failed to pay his electric bill. Was it moral for the company to act in it's own self-interest to do so? Friedman responded by asking what if the electric company never turned off the power for anyone? Who would pay the cost--the people who own or work at the electric company? It would be unjust to impose that responsibility on individuals who are running an honest business of providing electricity. Friedman suggests that the true responsibility lies on the mans neighbors and friends who were not charitable enough to allow him to meet the electric bills.Finally the student uses the example of Ford deciding not to install a $13 block of plastic which would prevent it's Pinto cars from exploding in a rear-end collision. Ford estimated such a move would cost 200 lives a year at a cost of $200,000 per life lost. They multiplied and found that it wasn't worth it to install the plastic block. He asked if a corporation seeking it's own self-interest was a good thing in this case? Friedman responded by asking, what if it cost $1 billion to save each life, should Ford have put in the block? It's simply not practical to put an infinite value on an individuals life. If it took $1 billion in resources to keep one individual safe, and acquiring those resources meant that a million people must starve, it's a bad deal. Friedman concludes that he doesn't know if the $200,000 number that Ford used was the right number to maximize the overall benefits, but at the end of the day the principle is that we can't simply protect ourselves from everything and impose that cost on others. Friedman posits that the question the student should be raising, is should Ford be required to attach the statement to the car, "we've made this car $13 cheaper, and therefore it is X% more risky for you to buy it".See also:Free to Choose - All 15 episodes streaming online for free http://www.ideachannel.tvA history of Free to Choose http://www.freetochoose.com

Channel: News & Politics
Uploaded: November 30, 1999 at 12:00 am
Author: Sidewinder77

Length: 05:25
Rating: 4.7530866
Views: 106875

Tags: Milton  Friedman  Capitalism  Freedom  Corporations  Profits  Communism  Socialism  Subsidies  Documentary  Politics  liberty  

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Gyrode (November 30, 1999 at 12:00 am)
@kingmafi6699 Friedman answered this, that if you look at all the cartels, monopolies, and oligopolies...they are at the approval of the government through regulation. He is not advocating corporate anarchy, he is advocating a government that enforces property rights and allows the opportunity to hold and grow capital....you cannot sustain a monopoly in this case.The "exploitation," of workers is the price of their labor...and you forget that technology requires labor anyway!
geehuckwow (November 30, 1999 at 12:00 am)
Milt is a thief
Demian64 (November 30, 1999 at 12:00 am)
@xlfutur, Corporations are a state sanctioned entity and given abilities individual citizens can't. Don't deify corporations, understand that they play a role within the society within which they exist. Corporation exist at the whim of the people. Period. Otherwise there would be small firms that couldn't achieve the same levels of efficiency large corps with limited liability can. The people give them the ability to grow and proper. Most people just want the same in return.
kingmafi6699 (November 30, 1999 at 12:00 am)
The question is why do we need corporations?Does the progression of mankind require some economic incentive or is there an alternative to the system.The problem with Capitalism is that these large businesses are only concerned with increasing productivity and they do that through exploitation of workers and using technologies that will phase out workers thus making them redundant.As they become more powerful they behave like cartels and hold entire nations hostage to their decisions.
xlfutur1 (November 30, 1999 at 12:00 am)
Everyone seems to "hate" evil corporations, then when unemployment hits 10%, they wonder what the hell is going on. If every corporation laid off every worker today, we would all be living in grass huts. So this whole nonsense of bashing corporations is so ridiculous. The same people (i.e. liberals) who rail against the corporations are the same people that are employed by them! Friedman makes it so simple to understand.
sarkis179 (November 30, 1999 at 12:00 am)
the crisis started from sub prime lending. sub prime is the result of government requiring Fannie Mae to buy sub prime loans from smaller banks. so people with a 590 credit score where able buy houses with no down payment. people with poor credit cant pay day to day bills much less a $300,000 debt with 8%-17% interest.beatlesfanatic4ever has the facts wrong & is a goofy guy. when people make things up to support there argument people almost always blow them off as a quack or nut job.
s0beit (November 30, 1999 at 12:00 am)
Exactly, which is why corporations should be dissolved, rather than money given to the government.i agree with you completely, but i choose the free market approach, because taking power from private oppressors with little means to defend themselves (corp) to government, who can arrest you, mame you and so on seems like a lame trade, to me. (speaking to socialist policies)i know this hasn't been brought up by you however recently, it is important.
Heavenhammer99 (November 30, 1999 at 12:00 am)
@BeatlesFANATIC4ever ...can you provide us, with any reliable source for this accusations ?
cman31804 (November 30, 1999 at 12:00 am)
@BeatlesFANATIC4ever Wow. You are wrong on so many levels. Just wrong.
BeatlesFANATIC4ever (November 30, 1999 at 12:00 am)
This motherfucker was on Pinochet's payroll. Who dare he talk about freedom? The policies that created today's crisis are largely many of Friedman's ideas. I can't believe people are still supporting the same kind of policies...