Who is Milton Friedman? For those who don’t know, Friedman (who passed away in 2006) is heralded as one of the world’s greatest economists. He is certainly on of the most famous. Milton’s philosophy was extreme free market, anti-regulation, and very much libertarian. This is what economists refer to as “neoliberalism,” liberal relating to the freedom of capital pursuits, not current political ideology.
People can agree or disagree with the concepts of free market capitalism, but Milton Friedman was outspoken on the issue, saying many controversial things on the matter over his lifetime. By “controversial,” I really mean bat-shit crazy and cold-hearted to the point of maniacal.
But don’t let me convince you, I’ve put up quotes from one of his most famous essays, entitled “The Social Responsibility of Business Is To Increase Profits” and let readers judge for themselves. This 1970 essay can be found here: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
* The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
* The stockholders or the customers or the employees could separately spend their own money on the particular action if they wished to do so. The executive is exercising a distinct “social responsibility,” rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it.
But if he does this, he is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other.
* Here the businessman–self-selected or appointed directly or indirectly by stockholders–is to be simultaneously legislator, executive and, jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds–all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on.
And of course, here’s my favorite. This quote gets you into Friedman’s mindset and illustrates how out of touch he is with mankind: In a free society, it is hard for “evil” people to do “evil,” especially since one man’s good is another’s evil.
I will close with a few comments responding to the his quotes as well as article. Milton Friedman argues against “social responsibility,” such as things like regulations forcing safety measures. What of the common practice of corporations that run “cost-benefit analyses” to determine whether to perform a recall or implement safety measures?
Quick example: the 1979 Chevy Malibu car incident. To summarize the case proceedings, from 78-79, GM reduced the distance and bracing between the fuel tank and car bumper by a significant margin past what the engineers deemed safe (Cut to 11 inches distance, no brace, versus the recommended 17 inches with metal brace). This caused almost any car engaged in a rear-collision to burst into flames. Hundreds died, many more were injured.
The CBA done by GM was as follows: 500 fatalities x $200,000 (avg. settlement per lawsuit) / 41 mil. cars = $2.40/car
The cost of ensuring fuel tanks in Malibus didn’t explode: $8.59 per car. Thus, GM made a profit of $253, 790, 000 ($6.19 x 41 million cars) by allowing a known flaw to go to market.
This according to Friedman, is the moral imperative of the corporation. He and other free-market economists rationalize such incidents as unfortunate “externalities,” a nice word that is good at obscuring the situation: profiting off of negligence.
“But Jackson, surely this is an uncommon case.” I posit that no, it is not. Between 1990 and 2001, General Electric, one of the industry standards for “corporate responsibility” was cited for 31 infractions including overcharging and defrauding government contracts, failing to clean up toxic PCB spills, and discrimination against employees who tipped off authorities.
Take a look at the recent past…the Exxon Valdez oil spill, Enron blackouts and price manipulation (WorldCom too), an explosion of defense contractors replacing U.S. military overseas and subsequently causing scandal after scandal of civilian casualties and corruption.
Not to mention the fun race-to-the-bottom where companies threaten to leave countries who do not agree to continually cut taxes and remove business regulations.
Now look at Big Tobacco: It sells a product that KILLS 1200 CUSTOMERS a day. Someone like Milton Friedman would argue that it is not in the company’s best interest to make products which alienate the public and destroy the clientbase, and would stop due to market forces. Yet tobacco companies CONTINUE to add excessive nicotine to cigarettes, place ineffective filters, and dodge the law whenever possible.
And this is in SPITE of government regulation, NGOs, citizen watch-dog groups, and widespread anti-cigarette advertising. Imagine if we had none of that and relied on “market forces.”
Businesses cannot, and do not, regulate themselves without being forced to. Profitable actions are taken without regard to sustainability or morals.
Hell, even most automobiles didn’t have seat-belts come standard until Ralph Nader’s investigations in the 1960s.
Milton Friedman, you have caused irreparable harm to a generation of economists and politicians with your lies.
Wake up, America.
