Free To Choose 1980 - Vol. 02 The Tyranny of Control - Full Video

00:57:39
https://www.youtube.com/watch?v=CWgNe8v6KFc

الملخص

TLDRThis episode of the series explores Milton Friedman's perspective on government planning and control in nations like India, Japan, and Europe, contrasting these with free market systems such as those in Hong Kong. The film illustrates how Adam Smith's "invisible hand" principle works in free markets and the impact of centralized control on economic development, focusing on Japan's successful transition to a free market and the stagnation in India due to central planning. Post-film reflections at the Harper Library further debate these issues, advocating for free trade and criticizing protectionist policies.

الوجبات الجاهزة

  • 📈 Free markets allow self-interest to promote public welfare through Adam Smith's 'invisible hand.'
  • 🏭 Britain's transition to free trade in the 19th century led to global economic dominance.
  • 🇯🇵 Japan's economic success was propelled by embracing free trade and new technological methods.
  • 🇮🇳 India's focus on central planning has stifled its economic growth and development potential.
  • 💼 Government planning often inhibits the growth of dynamic and adaptive industries.
  • 🇬🇧 British shipbuilding is used as a modern example of government-subsidized competition.
  • 🔄 The exchange rate naturally balances trade by adjusting to demand unless governments interfere.
  • ⚖️ Protectionist policies inhibit consumer benefits, driving costs for lower economic growth.
  • 🌐 Free trade is argued to ultimately benefit all parties through competition and better pricing.
  • 📉 Government monopolies often fail against industries operating in free markets.
  • 🎥 Post-film discussion debates the ethical and social considerations of free vs. managed markets.
  • 🗽 Free enterprise is supported as a means to prevent excessive control by any single entity.

الجدول الزمني

  • 00:00:00 - 00:05:00

    Robert McKenzie introduces the series, highlighting Milton Friedman's exploration of economic systems. This week's focus is on India, Japan, and Europe, and how government planning affects economic activities. Insights from Adam Smith's theories on free markets are discussed, showcasing the invisible hand that coordinates independent economic actions.

  • 00:05:00 - 00:10:00

    In Japan, farmers harvest rice for the market, echoing Adam Smith's ideas that markets function best when influenced by self-interest. Britain's past imposition of trade duties, which encouraged smuggling, is recounted. The lifting of trade barriers in 1846 spurred economic benefits across the globe, illustrative of free market advantages.

  • 00:10:00 - 00:15:00

    The Industrial Revolution in Britain showcases the benefits of free trade. Japan's transition from isolation in 1868 to adopting British trading patterns marks its evolution toward a market-driven economy. This included importing textile innovations from Europe and led to economic and industrial growth, demonstrating the power of free enterprise.

  • 00:15:00 - 00:20:00

    Milton Friedman discusses India's embrace of central planning post-independence in 1948, a consequence of British intellectual influences supporting government control. The preservation of traditional industries, like handloom weaving, exemplifies the struggle against modernization and highlights the limitations of a planned economy.

  • 00:20:00 - 00:25:00

    The adverse effects of government intervention and planning in India are evidenced by the subsidization and protection of traditional industries. This restricts industrial growth and perpetuates poverty, contrasting with the prosperity in nations like Japan, where free markets facilitated technological and economic advancement.

  • 00:25:00 - 00:30:00

    The film illustrates the success of Japan's market-oriented economy, emphasizing technological advancements. Milton Friedman criticizes government protection of industries as detrimental to economic health, advocating for free trade and illustrating through examples, like U.S. steel, that market restrictions harm competitiveness.

  • 00:30:00 - 00:35:00

    The discussion shifts to an analysis of government restrictions and their impact on competitive industries, highlighting inefficiencies in protected markets. The narrative underscores how consumer interests suffer under protectionism. The film argues for the benefits of allowing markets to operate without government interference.

  • 00:35:00 - 00:40:00

    Milton Friedman and other experts debate the merits of free trade versus protectionism. Arguments focus on ethical and social impacts, worker displacement, and the need for competition. Friedman's response emphasizes the long-term benefits of open markets despite short-term adjustments, stressing individual over societal interests.

  • 00:40:00 - 00:45:00

    Debate continues with criticisms of foreign subsidies and trade regulations. Responses highlight the need for fairness in global trade and managing the impacts on disadvantaged workers. The session addresses the implications of subsidies and how government interventions can distort market dynamics rather than protect them.

  • 00:45:00 - 00:50:00

    Discussion pivots to the role of government in industrial development. Examples from Japan and other countries illustrate how both market forces and government action shape economic landscapes. Critics argue mixed strategies of intervention and market freedom might be necessary for balanced growth in developing economies.

  • 00:50:00 - 00:57:39

    Milton Friedman advocates for constitutional amendments to limit government interference in trade, arguing it would bolster U.S. economic leadership. Critics worry about domestic industries' vulnerabilities under such conditions, foreseeing potential exploitation without reciprocal trade agreements. Debate highlights varying perspectives on the balance between protectionism and free market ideals.

اعرض المزيد

الخريطة الذهنية

فيديو أسئلة وأجوبة

  • What is the main topic of the video?

    The main topic is Milton Friedman's examination of the effects of government planning and control of economies in countries like India, Japan, and Europe, contrasted with free market systems.

  • Which economist's ideas are discussed in this video?

    Milton Friedman's ideas are discussed in this video.

  • What countries are covered in the film?

    The film covers India, Japan, and several European countries.

  • What historical economic concept does the video highlight?

    The video highlights the concept of the 'invisible hand' introduced by Adam Smith, which suggests that self-interest indirectly promotes the public welfare.

  • What are the effects of central planning according to Friedman?

    According to Friedman, central planning leads to economic problems and limits the country's development potential, as seen in India.

  • How is Japan's economic transformation depicted?

    Japan's economic transformation is depicted as a result of adopting free trade and integrating foreign methods like the jacquard loom, leading to a flourishing economy.

  • What example demonstrates successful free trade in the video?

    Britain's transition to free trade in the 19th century, which freed up markets and boosted its global economic position, is an example given in the video.

  • What modern issue does Friedman address regarding trade?

    Friedman addresses modern issues of protectionism, like subsidies in international shipbuilding and the need for the US to promote free trade regardless of other countries' actions.

  • What is Friedman's stance on laws preventing import competition?

    Friedman argues against laws preventing import competition, claiming they ultimately harm consumers and a country's economic health.

  • What setting is used for the post-film discussion?

    The post-film discussion takes place at the Harper Library at the University of Chicago.

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الترجمات
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التمرير التلقائي:
  • 00:00:01
    Hello, I'm Robert McKenzie.
  • 00:00:02
    Last week in this series,
  • 00:00:04
    Milton Friedman, the distinguished economist
  • 00:00:05
    took us to Hong Kong to see a
  • 00:00:07
    free market system in which he had a
  • 00:00:09
    great deal of confidence and faith.
  • 00:00:11
    This week he takes us traveling again
  • 00:00:13
    to India, Japan, and to Europe…to see
  • 00:00:15
    what happens in his view when
  • 00:00:17
    governments decide they can plan and
  • 00:00:19
    control the economic activities
  • 00:00:21
    of their peoples.
  • 00:00:22
    And after the film, we return here to the
  • 00:00:24
    Harper Library at the University of Chicago
  • 00:00:26
    to discuss and to debate the
  • 00:00:28
    ideas of Milton Friedman.
  • 00:00:32
    (opening music)
  • 00:01:02
    (birds singing, woman cutting rice plants)
  • 00:01:09
    It is harvest time and Japanese
  • 00:01:11
    farmers gather their crops for
  • 00:01:12
    the rice market in Kyoto.
  • 00:01:16
    Of course, they will try to get as much
  • 00:01:18
    for it as possible and the buyers will
  • 00:01:20
    try to buy it as cheaply as possible.
  • 00:01:22
    That is how markets are supposed to work.
  • 00:01:24
    That is what Adam Smith,
  • 00:01:26
    the Scotsman who turned economics into
  • 00:01:28
    a modern science, observed 200 years ago.
  • 00:01:33
    He observed something else, too.
  • 00:01:35
    “In every country it is always and
  • 00:01:38
    must be in the interest of the great body
  • 00:01:40
    of people to buy whatever they want
  • 00:01:43
    of those who sell it cheapest.
  • 00:01:46
    The proposition is so very manifest
  • 00:01:48
    that it seems ridiculous to take any
  • 00:01:51
    pains to prove it.
  • 00:01:53
    Nor could it ever have been called
  • 00:01:54
    in question had not the interested sophistry
  • 00:01:57
    of merchants and manufacturers
  • 00:01:59
    confounded the common sense of mankind.
  • 00:02:03
    Their interest is, in this respect,
  • 00:02:06
    directly opposite to that of
  • 00:02:07
    the great body of people.”
  • 00:02:12
    Adam Smith's flash of genius was to see
  • 00:02:15
    how prices that emerged in the market,
  • 00:02:17
    the prices of goods, the wages of labor,
  • 00:02:19
    the cost of transport, could coordinate
  • 00:02:23
    the activities of millions of independent
  • 00:02:25
    people, strangers to one another,
  • 00:02:26
    without anybody telling them what to do.
  • 00:02:34
    His key idea was that self-interest could
  • 00:02:37
    produce an orderly society benefiting
  • 00:02:39
    everybody. It was as though there
  • 00:02:44
    were an invisible hand at work.
  • 00:02:46
    The “invisible hand” is a phrase that was
  • 00:02:48
    introduced by Adam Smith in his great book,
  • 00:02:51
    The Wealth Of Nations, in which he talked
  • 00:02:55
    about the way in which individuals,
  • 00:02:58
    who intended only to pursue their own
  • 00:03:00
    interests, were led by an invisible hand
  • 00:03:02
    to promote the public welfare, which was
  • 00:03:05
    no part of their intention.
  • 00:03:07
    He was talking about the economic market,
  • 00:03:10
    about the market in which people buy and
  • 00:03:12
    sell, and he was pointing out that in order
  • 00:03:15
    for a butcher, or a baker
  • 00:03:17
    or a candlestick maker
  • 00:03:18
    to make an income, he had to produce
  • 00:03:20
    something that somebody wanted to buy.
  • 00:03:22
    Therefore, in the process of promoting
  • 00:03:24
    his own interests and looking to
  • 00:03:25
    his own profit, he ended up serving
  • 00:03:28
    the interests of his customers.
  • 00:03:33
    When Adam Smith published
  • 00:03:34
    The Wealth Of Nations,
  • 00:03:36
    Britain was still a largely rural
  • 00:03:37
    and placid place. But the Industrial
  • 00:03:40
    Revolution was already getting started,
  • 00:03:42
    and standards of life were beginning to rise.
  • 00:03:50
    One obstacle was that trade with other
  • 00:03:52
    nations was still tightly controlled.
  • 00:03:54
    Merchants in the home market had
  • 00:03:56
    persuaded the government of the day
  • 00:03:58
    to impose heavy duties and taxes on
  • 00:04:00
    all foreign imports, in order to insure
  • 00:04:03
    themselves a protected market.
  • 00:04:07
    (sound of waves)
  • 00:04:11
    One of the results was to turn Britain into
  • 00:04:13
    a nation of lawbreakers. Smuggling was
  • 00:04:15
    a national pastime: brandy, wines, tobacco,
  • 00:04:19
    anything with a heavy customs duty on it.
  • 00:04:21
    For years, the revenue men fought
  • 00:04:24
    a losing battle along the shores
  • 00:04:26
    and inlets of the British Isles.
  • 00:04:30
    In 1846, after years of argument and
  • 00:04:33
    partial success, the followers of Adam Smith
  • 00:04:36
    finally persuaded the British Parliament
  • 00:04:38
    to remove all duties on goods imported
  • 00:04:41
    from abroad. Britain embarked on
  • 00:04:43
    complete free trade, giving a further push
  • 00:04:46
    to the rising standard of life.
  • 00:04:49
    What happened in Britain as a consequence
  • 00:04:51
    of releasing the tremendous force of
  • 00:04:53
    self-interest had the unintended effect
  • 00:04:55
    of benefiting millions of people all
  • 00:04:57
    over the world, and by 1851 the evidence
  • 00:05:01
    was proudly on show at the great
  • 00:05:03
    Crystal Palace Exhibition.
  • 00:05:07
    (steam engine sounds)
  • 00:05:13
    Free trade enabled Britain to become the
  • 00:05:15
    work place of the world.
  • 00:05:19
    (city sounds, horses, trains, whistle)
  • 00:05:31
    But was it all an accident?
  • 00:05:33
    I don't think it was.
  • 00:05:34
    Consider what happened in 1868 on
  • 00:05:37
    the other side of the world, in Japan.
  • 00:05:42
    (gong sound, Oriental music)
  • 00:05:44
    For the preceding 300 years, the Japanese
  • 00:05:47
    had lived in almost complete isolation.
  • 00:05:49
    They had discouraged visitors from other
  • 00:05:51
    nations, especially from the West.
  • 00:05:55
    The result was that by the standards of the
  • 00:05:58
    West, Japan was backward.
  • 00:06:04
    It was a feudal society with lords and serfs,
  • 00:06:07
    and woe betide anyone who tried to
  • 00:06:09
    change the order of things.
  • 00:06:17
    Women were third-class citizens.
  • 00:06:20
    In 1868, a new generation of rulers decided
  • 00:06:23
    that the time had come for Japan to make
  • 00:06:26
    contact with the outside world.
  • 00:06:28
    And with the arrival of the first
  • 00:06:30
    foreign traders from the West,
  • 00:06:31
    things began to change.
  • 00:06:33
    The Japanese followed the British trading
  • 00:06:35
    pattern because Britain was the leading
  • 00:06:37
    nation of the world.
  • 00:06:43
    So free trade came to Japan.
  • 00:06:47
    Japan became a magnet for other people's
  • 00:06:49
    ideas and developments.
  • 00:06:54
    One of the first traditional industries to
  • 00:06:56
    feel the effects was weaving. From Europe,
  • 00:06:58
    the Japanese imported the jacquard method,
  • 00:07:01
    a way of programming a loom to
  • 00:07:04
    control the accuracy of the weave,
  • 00:07:05
    and so, to standardize output.
  • 00:07:09
    Workers did well in the new atmosphere,
  • 00:07:11
    and so did their employers.
  • 00:07:15
    (sounds of loom working)
  • 00:07:25
    The adoption of mass production techniques
  • 00:07:27
    meant that workers were able to move
  • 00:07:29
    out of the traditional industries and
  • 00:07:31
    into the new industries, which all added
  • 00:07:34
    to the trade boom.
  • 00:07:41
    None of us can help being affected by the
  • 00:07:44
    intellectual atmosphere that we breathe.
  • 00:07:46
    In the middle of the 19th century, when
  • 00:07:48
    Japan ended her self-imposed isolation and
  • 00:07:51
    entered the modern age, it never occurred
  • 00:07:55
    to her leaders to follow any other course
  • 00:07:57
    than that of free enterprise
  • 00:07:58
    and free markets.
  • 00:08:00
    That was the intellectual atmosphere of the
  • 00:08:02
    time, created by Britain's success in
  • 00:08:05
    applying the principles of Adam Smith.
  • 00:08:08
    In 1948, when India achieved independence,
  • 00:08:13
    her leaders had all been trained in Great
  • 00:08:15
    Britain. They had sat at the feet of Harold
  • 00:08:18
    Laski and his associates at the London
  • 00:08:21
    School of Economics, or of their
  • 00:08:22
    counterparts at Oxford and Cambridge.
  • 00:08:25
    It never occurred to them to follow any
  • 00:08:27
    other course than that of central planning
  • 00:08:30
    and government control. That was the
  • 00:08:32
    intellectual atmosphere of the time.
  • 00:08:38
    And the intellectual seed took root.
  • 00:08:41
    As it grew, it needed to be honored,
  • 00:08:43
    even worshiped.
  • 00:08:45
    Every year on the anniversary of Gandhi's
  • 00:08:47
    birth, people all over India do just that:
  • 00:08:50
    in homage to the great Mahatma, they sit
  • 00:08:53
    and spin using methods handed down
  • 00:08:55
    through the centuries.
  • 00:08:59
    But it is more than just a
  • 00:09:00
    symbol of honoring the past.
  • 00:09:02
    It typifies the policy that
  • 00:09:04
    they are actually following.
  • 00:09:09
    The new government in 1948 decided that
  • 00:09:12
    India's traditional weaving industry and its
  • 00:09:15
    workers should be protected from 20th
  • 00:09:17
    century industrialization.
  • 00:09:20
    What were the consequences of that policy?
  • 00:09:27
    This is India today, 30 years after winning
  • 00:09:31
    independence. These are scenes of a very
  • 00:09:34
    typical Indian community, one of thousands.
  • 00:09:37
    It is called Anakaputhur, and it is
  • 00:09:40
    about a thousand miles south of the
  • 00:09:42
    capital, New Delhi.
  • 00:09:51
    This is not the kind of life the government
  • 00:09:53
    intended to perpetuate,
  • 00:09:55
    but it is one result of their policy.
  • 00:09:58
    By subsidizing the cotton that the
  • 00:09:59
    villagers spin and the cloth that
  • 00:10:02
    they weave, they made it difficult for
  • 00:10:03
    modern industry to develop.
  • 00:10:08
    (village sounds, vendor selling wares)
  • 00:10:22
    This is sizing. It's an essential technique
  • 00:10:24
    in cloth production where the yarn is
  • 00:10:27
    smoothed clean.
  • 00:10:30
    (people working, talking)
  • 00:10:36
    A modern machine could do the same thing
  • 00:10:38
    in a hundredth of the time.
  • 00:10:42
    The result of government planning to
  • 00:10:44
    modernize industry, is that the number of
  • 00:10:46
    handlooms roughly doubled in the first
  • 00:10:48
    30 years after India's independence.
  • 00:10:51
    Today, in thousands of villages
  • 00:10:53
    throughout India, the sound of
  • 00:10:55
    handlooms can be heard from early in
  • 00:10:57
    the morning until late at night.
  • 00:10:59
    In this village alone, there are more
  • 00:11:02
    than 3,000 handlooms in operation.
  • 00:11:08
    Since 1948, three generations of villagers
  • 00:11:11
    have sat at these looms, making cloth with
  • 00:11:14
    patterns that never vary, using methods
  • 00:11:17
    that never change.
  • 00:11:22
    There is nothing wrong with this activity,
  • 00:11:25
    provided it survives the test of the market,
  • 00:11:27
    provided it is the way in which these
  • 00:11:29
    people can use their abilities and
  • 00:11:31
    their energies most effectively.
  • 00:11:33
    After all, in Japan, where the government
  • 00:11:35
    has not specially encouraged the handloom
  • 00:11:38
    industry, there remains a very small,
  • 00:11:40
    but very productive, handloom segment.
  • 00:11:44
    The trouble here is that this industry
  • 00:11:47
    exists only because the government
  • 00:11:49
    has subsidized it, supported it; because
  • 00:11:52
    it has, in effect, imposed taxes, direct
  • 00:11:55
    and indirect, on the rest of the people
  • 00:11:57
    of India, people who are no better off
  • 00:11:59
    than these people are, in order to enable
  • 00:12:02
    this activity to continue.
  • 00:12:05
    Other industries, both textile industries and
  • 00:12:08
    industries of a variety of kinds, have been
  • 00:12:10
    restricted, explicitly kept back,
  • 00:12:12
    prevented from providing
  • 00:12:14
    more productive employment,
  • 00:12:15
    in order to make room for this industry.
  • 00:12:19
    The effect has been to inhibit the
  • 00:12:21
    development, to prevent the growth,
  • 00:12:23
    to prevent the dynamic activity that could
  • 00:12:26
    otherwise develop out of the energies and
  • 00:12:28
    the abilities of the people of India.
  • 00:12:31
    (hand looms operating)
  • 00:12:38
    This looks like a factory, but it is also
  • 00:12:40
    home for the people who work here.
  • 00:12:43
    When they are not sitting at their looms,
  • 00:12:44
    they eat and sleep in a corner of this hut.
  • 00:12:56
    Throughout the world, governments always
  • 00:12:59
    profess to be forward-looking. In practice,
  • 00:13:03
    they are always backward-looking, either
  • 00:13:05
    protecting the industries that exist,
  • 00:13:09
    or making sure that whatever ventures
  • 00:13:10
    they have decided to undertake are
  • 00:13:13
    encouraged and developed.
  • 00:13:16
    This occurs at the expense of the kind of
  • 00:13:19
    healthy development of new, dynamic,
  • 00:13:23
    adaptive industries that would surely occur
  • 00:13:26
    if the market were allowed to operate freely;
  • 00:13:29
    if it were allowed to separate out the
  • 00:13:32
    unsuccessful ventures from the successful
  • 00:13:34
    ones, discouraging the unsuccessful
  • 00:13:37
    and encouraging the successful.
  • 00:13:44
    India has tremendous economic and human
  • 00:13:46
    potential, every bit as much as Japan had
  • 00:13:49
    a century ago.
  • 00:13:52
    The human tragedy is that in India,
  • 00:13:55
    that potential has been stifled by
  • 00:13:57
    the straightjacket imposed by an all-wise
  • 00:14:00
    and paternalistic government.
  • 00:14:05
    Central planning, in practice, has condemned
  • 00:14:08
    India's masses to poverty and misery.
  • 00:14:14
    (people walking, street sounds)
  • 00:14:23
    We know what has happened in Japan;
  • 00:14:25
    free trade set off a process that
  • 00:14:27
    revolutionized Japan and
  • 00:14:29
    the lives of its people.
  • 00:14:31
    Improvements in material well-being went
  • 00:14:33
    hand-in-hand with the elimination of the
  • 00:14:35
    rigid social structure of a century ago.
  • 00:14:38
    It's no accident. As always, economic
  • 00:14:41
    freedom promotes human freedom.
  • 00:14:45
    And in the meantime, what has happened
  • 00:14:47
    to the Japanese weaving industry?
  • 00:14:55
    This is how textiles start life in a Japanese
  • 00:14:58
    weaving shed today. A design for cloth is
  • 00:15:01
    placed on a drum.
  • 00:15:03
    As it revolves, it is scanned by
  • 00:15:05
    an electric eye. Each color, each variation in
  • 00:15:09
    the pattern and texture, is transmitted
  • 00:15:11
    faithfully to a computer.
  • 00:15:13
    (mechanical loom operating)
  • 00:15:18
    It's all that the modern
  • 00:15:20
    loom of Japan requires.
  • 00:15:29
    This loom is fitted with electronics that
  • 00:15:32
    make it one of the most sophisticated of
  • 00:15:33
    its sort in the world. The fabric that it
  • 00:15:36
    produces is the best silk of its kind.
  • 00:15:40
    Thanks to the speed and efficiency of these
  • 00:15:42
    machines, the price of the silk is competitive.
  • 00:15:47
    The workers are highly skilled and well-paid.
  • 00:15:50
    With the new technology, there is very little
  • 00:15:52
    a loom like this cannot produce.
  • 00:15:56
    This piece will become the sash
  • 00:15:58
    of a traditional bridal gown.
  • 00:16:08
    These are machine-made products, but by
  • 00:16:10
    any standards, they are beautiful. They can
  • 00:16:13
    stand comparison with the very finest work
  • 00:16:15
    of the handloom. And it's not merely the
  • 00:16:18
    end product itself that is remarkable.
  • 00:16:22
    The sophisticated technology which was
  • 00:16:23
    developed to make all of this possible,
  • 00:16:25
    has been adapted to other processes,
  • 00:16:27
    part of the self-generating development
  • 00:16:29
    under free enterprise, and it all stems from
  • 00:16:32
    an ancient, traditional industry, weaving,
  • 00:16:35
    that imported a new method for controlling
  • 00:16:38
    its looms when Japan turned to
  • 00:16:39
    free trade more than a century ago.
  • 00:16:45
    Yet believe it or not, many still maintain
  • 00:16:48
    today that markets cannot be left to
  • 00:16:50
    operate freely, that they must be controlled
  • 00:16:53
    by government. This dockside is in Scotland.
  • 00:16:56
    A British government, a socialist
  • 00:16:58
    government, decided that its role was to
  • 00:17:00
    protect the workers here from competition.
  • 00:17:06
    So down there in governed shipyards,
  • 00:17:07
    they are building these vessels for the
  • 00:17:09
    Polish government. To get the order,
  • 00:17:14
    the British government is using the
  • 00:17:15
    money of British taxpayers to subsidize
  • 00:17:17
    the work. In other words, British people
  • 00:17:21
    are making these ships in order to
  • 00:17:24
    sell them at a loss to the Poles.
  • 00:17:27
    (heavy machinery sounds)
  • 00:17:30
    Not only the Poles, but also we in America
  • 00:17:33
    benefit from this kind of philanthropy.
  • 00:17:39
    The steel industry in the United States makes
  • 00:17:41
    a fine product. Other countries do, too.
  • 00:17:44
    And their steel is often cheaper, sometimes
  • 00:17:47
    because their taxpayers subsidize it.
  • 00:17:49
    So why shouldn't the American
  • 00:17:51
    consumer buy steel wherever he can
  • 00:17:53
    get it cheapest -- at home or abroad?
  • 00:17:56
    The American steel industry works
  • 00:17:58
    very hard trying to persuade us
  • 00:18:00
    that it's not in our self-interest
  • 00:18:02
    to buy in the cheapest market.
  • 00:18:05
    They urge the government to restrict
  • 00:18:07
    what they call unfair competition,
  • 00:18:09
    though, of course, they recognize
  • 00:18:11
    that there are dangers in this.
  • 00:18:13
    The dilemma of asking our government
  • 00:18:15
    for assistance in this problem of unfair
  • 00:18:19
    competition bothers many of us,
  • 00:18:22
    because the sword does cut both ways.
  • 00:18:25
    But we believe that what we have attempted
  • 00:18:28
    to do is far different than the kinds of
  • 00:18:32
    direct government involvement that occur
  • 00:18:34
    in many of the foreign nations around
  • 00:18:36
    the world, where the governments provide
  • 00:18:38
    direct financial assistance in the
  • 00:18:41
    form of either ownership or loans or
  • 00:18:43
    subsidies in some fashion or another.
  • 00:18:46
    What we have attempted to do is
  • 00:18:48
    simply to get our government to
  • 00:18:50
    enforce the United States laws against
  • 00:18:53
    unfair competition that have been
  • 00:18:55
    on the United States' books. We draw clear
  • 00:18:59
    distinction between that and, for example,
  • 00:19:02
    the several hundred-million dollars that the
  • 00:19:06
    French government has granted to the
  • 00:19:07
    French steel companies, or that the British
  • 00:19:11
    Steel Corporation has received $1.3 billion
  • 00:19:13
    for capital investment this year.
  • 00:19:15
    So that while we are uneasy in any way
  • 00:19:20
    interfacing with our government in what
  • 00:19:22
    we traditionally believe are the free
  • 00:19:25
    enterprise prerogatives, yet what we
  • 00:19:29
    are only asking for is that the
  • 00:19:31
    government enforce the laws
  • 00:19:33
    that our congress has passed.
  • 00:19:35
    I'm not sure that's really any different
  • 00:19:37
    than asking someone to arrest someone
  • 00:19:40
    that commits a crime. I don't think we
  • 00:19:43
    would be accused of being reactionary if we
  • 00:19:48
    reported somebody who was stealing to the
  • 00:19:52
    police if it were in violation of a U.S. law.
  • 00:19:55
    We think that we're doing exactly the same
  • 00:19:57
    thing when we bring cases against foreign
  • 00:20:01
    producers who we believe are
  • 00:20:03
    violating U.S. laws.
  • 00:20:11
    The fallacy with that argument is that it
  • 00:20:13
    begs the real question. Why should there
  • 00:20:16
    be laws that in effect prevent you and
  • 00:20:18
    me from buying in the cheapest market?
  • 00:20:23
    When anyone complains about unfair
  • 00:20:25
    competition, consumers beware.
  • 00:20:28
    That is really a cry for special privilege
  • 00:20:32
    always at the expense of the consumer.
  • 00:20:35
    What we needed in this country is free
  • 00:20:39
    competition. As consumers buying in an
  • 00:20:42
    international market, the more unfair
  • 00:20:45
    the competition the better.
  • 00:20:46
    That means lower prices and better
  • 00:20:48
    quality for us. If foreign governments
  • 00:20:51
    want to use their taxpayers’ money to
  • 00:20:54
    sell people in the United States goods
  • 00:20:56
    below cost, why should we complain?
  • 00:20:59
    Their own taxpayers will complain soon
  • 00:21:00
    enough, and it will not last for very long.
  • 00:21:04
    History provides lots of evidence on what
  • 00:21:07
    happens when government-protected
  • 00:21:10
    industries compete with industries who have
  • 00:21:13
    to operate in an open and free market. It's
  • 00:21:15
    almost always the government-protected
  • 00:21:18
    industries that come out second best.
  • 00:21:20
    Ask Sir Freddy Laker, the Englishman who
  • 00:21:23
    introduced low cost air traffic across the
  • 00:21:26
    Atlantic. Who were his chief competitors?
  • 00:21:29
    They were all government-protected,
  • 00:21:32
    government-financed,
  • 00:21:34
    government-regulated airlines.
  • 00:21:37
    He came out very well, made a mint of
  • 00:21:40
    money. And you and I have gotten
  • 00:21:42
    cheaper travel across the Atlantic.
  • 00:21:45
    Nothing would promote the long run health
  • 00:21:48
    of the steel industry, make it into a more
  • 00:21:50
    efficient, profitable and productive industry,
  • 00:21:53
    than for the U.S. government to keep its
  • 00:21:56
    hands off, neither providing special
  • 00:21:59
    privileges, nor imposing special restraints.
  • 00:22:02
    And what is true for the steel industry is true
  • 00:22:05
    for every other industry in the country.
  • 00:22:13
    These women work in an industry that
  • 00:22:15
    so far hasn't asked for special protection --
  • 00:22:17
    the silicon chip industry. Every one of these
  • 00:22:19
    small squares on this disk is a highly
  • 00:22:21
    complicated and integrated microcircuit.
  • 00:22:27
    An American technician examines
  • 00:22:29
    them for defects.
  • 00:22:31
    It is highly skilled work, and she's had a lot
  • 00:22:33
    of training. When she has done her job,
  • 00:22:36
    the rejects will be separated from the rest,
  • 00:22:39
    and the good circuits will be packed up and
  • 00:22:42
    sent halfway around the world to Malaysia.
  • 00:22:48
    The product of American technological
  • 00:22:50
    skills returns looking like this. Each
  • 00:22:53
    microcircuit has been enclosed in ceramic by
  • 00:22:56
    a Malaysian worker who is highly
  • 00:22:57
    productive at this sort of work.
  • 00:23:00
    But the Malaysians are not able to test their
  • 00:23:01
    products, so back they come here to
  • 00:23:04
    America to be fed into these machines.
  • 00:23:09
    American engineers are good at producing
  • 00:23:11
    sophisticated machines. In an operation
  • 00:23:14
    that lasts a fraction of a second, these
  • 00:23:17
    machines can test every circuit, can grade it
  • 00:23:19
    for quality, and then can sort it into one of
  • 00:23:22
    six different categories of reliability.
  • 00:23:26
    The invisible hand in this free market has
  • 00:23:28
    done wonders for both the American girls
  • 00:23:30
    and their Malaysian counterparts. And that's
  • 00:23:35
    not the end yet, because American silicon
  • 00:23:38
    chips are exported to many countries where
  • 00:23:41
    foreign workers assemble them.
  • 00:23:43
    The final product is then returned to our
  • 00:23:45
    stores so that you and I, the consumers,
  • 00:23:48
    can benefit from $10.00 calculators,
  • 00:23:50
    as well as from a lot of other
  • 00:23:53
    electronic devices that not
  • 00:23:55
    long ago simply did not exist.
  • 00:24:04
    When this Hi-Fi equipment first came on the
  • 00:24:06
    market, only the rich could afford it.
  • 00:24:10
    (classical music playing on stereo)
  • 00:24:35
    (man speaking on phone)
  • 00:24:40
    But even when the international market
  • 00:24:42
    in labor is seen to work to everyone's
  • 00:24:43
    advantage, people still put up arguments
  • 00:24:46
    against it. The usual argument against
  • 00:24:50
    complete free trade is that cheap labor from
  • 00:24:53
    abroad will take jobs away from
  • 00:24:55
    workers at home.
  • 00:24:56
    Well...what is cheap?
  • 00:24:58
    A Japanese worker is paid in yen;
  • 00:25:00
    an American worker is paid in dollars.
  • 00:25:02
    How do we compare the yen with the dollar?
  • 00:25:04
    We need some way of transforming the
  • 00:25:06
    one into the other. That is where the
  • 00:25:08
    exchange rate enters in --
  • 00:25:10
    the price of yen in terms of the dollar.
  • 00:25:13
    Suppose, at some exchange rate,
  • 00:25:16
    Japanese goods are in general cheaper than
  • 00:25:19
    American goods. Then we will be buying
  • 00:25:21
    much from Japan and selling little to them.
  • 00:25:24
    But what will the Japanese do with the
  • 00:25:26
    extra dollars they earn?
  • 00:25:27
    They don't want to buy American goods.
  • 00:25:30
    By assumption, those are all dear.
  • 00:25:32
    They want to buy Japanese goods.
  • 00:25:34
    But to buy Japanese goods, they need yen.
  • 00:25:36
    Calls will come in from all over the world to
  • 00:25:39
    places like this, offering to buy
  • 00:25:42
    yen for dollars. But there will be
  • 00:25:44
    more offers to buy yen than to sell yen.
  • 00:25:47
    In order to get customers, those offering to
  • 00:25:50
    buy will have to raise the price. The price of
  • 00:25:53
    yen in terms of dollars will go up.
  • 00:25:55
    As you remember, that is what happened in
  • 00:25:57
    1977 and 1978. By late 1978, it took 50%
  • 00:26:02
    more dollars to buy a given amount of yen
  • 00:26:04
    than it had taken a year earlier.
  • 00:26:06
    But what happens when the price of
  • 00:26:10
    yen in terms of dollars goes up?
  • 00:26:13
    Japanese labor is no longer so cheap.
  • 00:26:15
    Japanese goods are no longer so attractive
  • 00:26:17
    to American consumers. On the other hand,
  • 00:26:19
    American labor is no longer so
  • 00:26:22
    dear to Japanese.
  • 00:26:23
    American goods are more attractive
  • 00:26:25
    to the Japanese. We will export more
  • 00:26:28
    to them. We will import less from them.
  • 00:26:31
    New jobs will be created in export industries
  • 00:26:34
    to replace any jobs that might have been
  • 00:26:36
    lost in industries competing with imports.
  • 00:26:39
    That is how a free market and foreign
  • 00:26:42
    exchange balances trade around the world
  • 00:26:44
    when it is permitted to operate.
  • 00:26:52
    The problem is that more often than not,
  • 00:26:54
    a free market is not permitted to operate.
  • 00:26:57
    For reasons that seem to make sense if you
  • 00:26:59
    don't examine them carefully,
  • 00:27:00
    governments insist on interfering.
  • 00:27:03
    But when they do, it's not possible to hide
  • 00:27:05
    the harmful effects for very long.
  • 00:27:09
    The main reason why the Japanese yen went
  • 00:27:12
    up so sharply in price in 1977 and 1978,
  • 00:27:17
    was because the Japanese government had
  • 00:27:19
    been trying to prevent the yen from going
  • 00:27:22
    up in price. In the process, what might have
  • 00:27:25
    been small disturbances were allowed to
  • 00:27:27
    accumulate into a major gap in trade.
  • 00:27:32
    As a result, when market forces finally were
  • 00:27:35
    permitted to operate, as sooner or later they
  • 00:27:37
    must be, it took a major change in the yen
  • 00:27:41
    exchange rate to bring things back into line.
  • 00:27:45
    Why don't governments learn?
  • 00:27:47
    Because governments never learn,
  • 00:27:49
    only people learn, and the people who
  • 00:27:52
    learn today may not be the people in
  • 00:27:55
    charge of economic policy tomorrow.
  • 00:27:58
    As you contemplate this, you may come
  • 00:28:00
    to agree with me that what we need are
  • 00:28:04
    Constitutional restraints on the power of
  • 00:28:07
    government to interfere with free markets
  • 00:28:09
    in foreign exchange, in foreign trade,
  • 00:28:12
    in many other aspects of our lives.
  • 00:28:17
    (music)
  • 00:28:20
    Now, here in Chicago, the special guests who
  • 00:28:22
    have been watching that film have their say.
  • 00:28:24
    This film has set me on edge.
  • 00:28:27
    There is political, social, ethical
  • 00:28:31
    considerations, which do not reflect,
  • 00:28:33
    in the economic philosophy put out.
  • 00:28:37
    There is a pervading feeling in this that
  • 00:28:41
    the individual worker is to be totally
  • 00:28:43
    sacrificed for the overall good of society.
  • 00:28:46
    I see -- I don't see how possibly you can
  • 00:28:48
    sacrifice individuals for overall good of
  • 00:28:51
    society because society is nothing but
  • 00:28:53
    those millions and millions of individuals,
  • 00:28:55
    put together.
  • 00:28:56
    And nowhere is there any
  • 00:28:58
    consideration given to the
  • 00:28:59
    social and the ethical aspects of the
  • 00:29:01
    free trade formula that you advocate.
  • 00:29:04
    Let's get other views now, around the group.
  • 00:29:06
    What's your reaction, Don Rumsfeld,
  • 00:29:08
    as a businessman, to the idea that Milton
  • 00:29:10
    Friedman's advanced, that America ought to
  • 00:29:12
    buy in the cheapest markets, the cheapest
  • 00:29:14
    goods, without protecting against them?
  • 00:29:17
    I swore I would never even try to defend
  • 00:29:19
    Milton Friedman. And I won't. But let me
  • 00:29:23
    comment, first, on Dick's comment.
  • 00:29:26
    It bothers me to hear social and moral
  • 00:29:32
    arguments invoked in an issue like this,
  • 00:29:35
    because it seems to me the measure is
  • 00:29:37
    what actually happens to human beings.
  • 00:29:39
    Each individual ought to be concerned
  • 00:29:41
    about humanity. For a single individual
  • 00:29:43
    who is unemployed,
  • 00:29:44
    that's a hundred percent unemployment.
  • 00:29:46
    FRIEDMAN: (Absolutely.)
  • 00:29:46
    And we recognize that. I recognize that.
  • 00:29:48
    But the real world is, if you, as the film did,
  • 00:29:52
    go to India, if you want to see things that
  • 00:29:55
    one can describe as inhumane, and poverty,
  • 00:29:58
    and problems of human beings, they exist.
  • 00:30:01
    And the test ought to be: What works?
  • 00:30:02
    What, in fact, will provide a circumstance
  • 00:30:05
    that will be more dynamic,
  • 00:30:07
    and more productive in the world?
  • 00:30:09
    It is true that in the long run
  • 00:30:10
    we would all be better off
  • 00:30:11
    with free trade. I agree with Milton.
  • 00:30:13
    But it's the short run that matters,
  • 00:30:15
    and in the short run there are serious
  • 00:30:17
    adjustment problems. Now there's no
  • 00:30:19
    question that the developing countries need
  • 00:30:21
    access to markets such as
  • 00:30:24
    American markets.
  • 00:30:25
    And America needs them to export so that
  • 00:30:29
    they can export more to developing
  • 00:30:30
    countries. American exports to developing
  • 00:30:33
    countries have moved from something like
  • 00:30:35
    twenty percent of total exports to thirty
  • 00:30:37
    percent over the last ten years.
  • 00:30:39
    But the adjustment is important,
  • 00:30:42
    because what is happening at present is that
  • 00:30:45
    it's not just a random group of workers that
  • 00:30:48
    is affected by this trade, it's the most
  • 00:30:50
    disadvantaged and underprivileged workers
  • 00:30:53
    in America which are being affected,
  • 00:30:56
    and they are, by and large, women, and
  • 00:30:59
    members of minorities;
  • 00:31:01
    in garments, in electronics. And I think that
  • 00:31:04
    the adjustment consists of action on both
  • 00:31:07
    the developing and
  • 00:31:08
    the developed countrysides.
  • 00:31:09
    From the -- let's take the American side.
  • 00:31:11
    On the American side, the unions and
  • 00:31:14
    industry, I think, have to get off discussion
  • 00:31:16
    about moral issues and get their act in order.
  • 00:31:19
    I couldn't agree more with Helen.
  • 00:31:21
    I think there is a very valid income
  • 00:31:23
    distributional problem involved here.
  • 00:31:26
    Certainly society gets better off, consumers
  • 00:31:29
    get better off as a result of cheaper imports,
  • 00:31:32
    and I'm all for that, and there I agree
  • 00:31:33
    completely with Milton.
  • 00:31:34
    But if the incidence of the adjustment falls
  • 00:31:38
    on disadvantaged groups, then you would
  • 00:31:40
    want to do something about it, if this really
  • 00:31:42
    becomes an ethical issue.
  • 00:31:44
    But the other thing, which I think Milton
  • 00:31:45
    does bring up, which I disagree sharply with,
  • 00:31:47
    is: Suppose the foreign governments do
  • 00:31:49
    subsidize and actively promote exports to
  • 00:31:53
    you. Should you just sit back and just say,
  • 00:31:55
    "Well, we're going to be better off as
  • 00:31:58
    a result of this."
  • 00:31:59
    I don't think that takes into account
  • 00:32:01
    the fact of the whole international system
  • 00:32:03
    can break down as a result of what
  • 00:32:06
    people perceive in pluralist economies
  • 00:32:08
    as unfair competition emerging.
  • 00:32:11
    And I think this is really what you're
  • 00:32:12
    beginning to see. So we do need some
  • 00:32:14
    sanctions. I mean, I may receive
  • 00:32:15
    stolen property, and I'm better off.
  • 00:32:17
    Of course I'm better off.
  • 00:32:19
    But if, as a result of this, I encourage theft,
  • 00:32:21
    I think few people would agree that was
  • 00:32:24
    something one didn’t want to worry about.
  • 00:32:26
    Before I call in Milton Friedman on this,
  • 00:32:27
    a reaction to the comments?
  • 00:32:29
    Yes. Really to Don and to Helen.
  • 00:32:31
    Don, you choose to set aside, or you
  • 00:32:34
    appear to choose to set aside the social
  • 00:32:36
    and the ethical considerations. And -
  • 00:32:40
    Not at all, what I said was:
  • 00:32:41
    You have to put the fact on a scale,
  • 00:32:43
    that there are social and ethical
  • 00:32:44
    considerations with a free market or without
  • 00:32:47
    one. And the tendency is for people to
  • 00:32:50
    invoke morality only on their side,
  • 00:32:53
    and not to recognize that there are problems
  • 00:32:55
    of human being in this world that are
  • 00:32:58
    going to occur in each case.
  • 00:32:59
    And the measure, or the test ought to be:
  • 00:33:01
    What actually happens out there?
  • 00:33:03
    And address that question.
  • 00:33:05
    But you must, you must also very much
  • 00:33:07
    consider the social aspect of this situation.
  • 00:33:10
    Helen's comment, the short-term
  • 00:33:12
    displacement. I have a question for Milton
  • 00:33:14
    at this point: How long do you put as a
  • 00:33:19
    timetable on the displacement of these
  • 00:33:21
    people, of these workers?
  • 00:33:23
    Five years, ten years, a generation?
  • 00:33:26
    How long will it be before overall society,
  • 00:33:30
    you know, balances itself out and
  • 00:33:32
    the individual is no longer hurt?
  • 00:33:35
    Let me take your first -- your last question
  • 00:33:37
    first and then go to your basic question.
  • 00:33:39
    I have always been in favor of phasing out
  • 00:33:42
    tariffs over a five-year period, a twenty
  • 00:33:44
    percent reduction a year for five years to
  • 00:33:46
    give people time to adjust.
  • 00:33:48
    Now to your fundamental issue.
  • 00:33:49
    I thought I had heard every objection to my
  • 00:33:52
    views imaginable, but you are the first one
  • 00:33:56
    who has ever accused me of putting the
  • 00:33:58
    interests of society as a whole ahead of the
  • 00:34:01
    interests of individuals.
  • 00:34:02
    If there is one element in my social
  • 00:34:04
    philosophy, in my ethical philosophy
  • 00:34:06
    that's predominant, it is that the ultimate
  • 00:34:08
    unit is the human being, the individual,
  • 00:34:11
    and that society is a means whereby
  • 00:34:14
    we jointly achieve our objectives.
  • 00:34:17
    I would argue that the social and moral
  • 00:34:18
    issues are all on the side of free trade,
  • 00:34:20
    that it is you, and people like you,
  • 00:34:23
    who introduce protection,
  • 00:34:27
    who are the ones who are violating
  • 00:34:29
    fundamental social and moral issues.
  • 00:34:31
    Tell me, what trade union represents the
  • 00:34:33
    workers who are displaced because high
  • 00:34:36
    tariffs reduce exports from this country?
  • 00:34:39
    Because high tariffs make steel, for example,
  • 00:34:42
    or other goods, more expensive.
  • 00:34:45
    As a result, those industries which use steel
  • 00:34:48
    have fewer -- have to charge higher prices,
  • 00:34:51
    they have fewer employees, the export
  • 00:34:54
    industries that would grow up to balance the
  • 00:34:57
    imports -- tell me, what union represents
  • 00:34:58
    them? What moral and ethical view do you
  • 00:35:02
    have about their interests?
  • 00:35:04
    You still haven't answered my basic question:
  • 00:35:06
    How long of a time period, how long of a
  • 00:35:10
    frame -- five years, ten years, a generation?
  • 00:35:12
    You still haven't answered it.
  • 00:35:14
    I said -- I said five years.
  • 00:35:14
    Could we be clear, Milton, on this point?
  • 00:35:16
    You're saying, though, that tariffs should be
  • 00:35:18
    phased out over five years regardless of
  • 00:35:21
    the action of other countries. It's not a sort
  • 00:35:23
    of negotiation or anything else?
  • 00:35:25
    Regardless. Regardless of the actions of
  • 00:35:26
    other countries. So far, obviously,
  • 00:35:28
    I would prefer to have other
  • 00:35:29
    countries reduce their tariffs --
  • 00:35:30
    But if they don't move,
  • 00:35:31
    America should move?
  • 00:35:31
    FRIEDMAN: Absolutely.
  • 00:35:32
    Do you go along with that, Don Rumsfeld?
  • 00:35:34
    In others words, you're against reciprocal -
  • 00:35:38
    FRIEDMAN: I'm not against -
  • 00:35:39
    -- you favor getting to truly reciprocal trade,
  • 00:35:41
    but you're willing to get there unilaterally?
  • 00:35:43
    FRIEDMAN: Yeah.
  • 00:35:46
    It seems to me that it's probably worth
  • 00:35:48
    moving in that direction.
  • 00:35:52
    I don't know where I would stop. I am not --
  • 00:35:54
    Well, it's a five-year program.
  • 00:35:55
    Will you buy that?
  • 00:35:57
    Well, it seems to me that you get action,
  • 00:35:58
    reaction. To the extent you're doing
  • 00:36:00
    something that makes sense for human
  • 00:36:01
    beings, presumably, that would be
  • 00:36:04
    persuasive with others. Presumably there
  • 00:36:07
    would be a logical sequence where other
  • 00:36:10
    countries would begin to sense that that had
  • 00:36:13
    a certain degree of validity in the world.
  • 00:36:16
    McKENZIE: Will that happen, Helen Hughes?
  • 00:36:18
    Providing you do something for the
  • 00:36:20
    displaced workers in the country
  • 00:36:21
    in which they're displaced.
  • 00:36:23
    Because if you don't do
  • 00:36:25
    something, if you don't take some action,
  • 00:36:27
    and it's generally got to be government
  • 00:36:28
    action, you will get such a backlash that
  • 00:36:31
    you'll be back in the thirties with the sort of
  • 00:36:33
    thing that happened with
  • 00:36:34
    high unemployment.
  • 00:36:36
    Could we go -- Milton.
  • 00:36:37
    There's a direct challenge.
  • 00:36:38
    What would you do about displaced workers,
  • 00:36:40
    or let the slack be taken up by other -
  • 00:36:42
    I believe that you have to separate and
  • 00:36:44
    should separate sharply the issue of what
  • 00:36:46
    you do about people in distress,
  • 00:36:47
    from how you handle the industrial system.
  • 00:36:50
    I do not believe you ought to have a
  • 00:36:51
    special program for displaced workers.
  • 00:36:53
    What you ought to have, and what all
  • 00:36:55
    societies do have, is some mechanism,
  • 00:36:57
    voluntary or governmental, which will assist
  • 00:37:00
    people in distress. We have another program
  • 00:37:02
    in this series, which deals with exactly that
  • 00:37:04
    issue, in which I come out, as you know,
  • 00:37:06
    in favor of a negative income tax as
  • 00:37:08
    a way to do it.
  • 00:37:09
    But I think it's a great mistake
  • 00:37:11
    to try to link it directly with tariffs.
  • 00:37:15
    And the reason is:
  • 00:37:15
    That many people who are displaced are not
  • 00:37:18
    in trouble. Many of those have good
  • 00:37:20
    alternatives. Some of them will benefit from
  • 00:37:22
    it. There are some who will be in distress,
  • 00:37:24
    of course, but there are always people who
  • 00:37:25
    are in distress for all sorts of reasons.
  • 00:37:27
    In a dynamic society, demands are going up
  • 00:37:29
    here, demands are going up there.
  • 00:37:31
    There is no more reason in my opinion to
  • 00:37:34
    have a special program for those who are
  • 00:37:36
    displaced because of the changes in
  • 00:37:38
    demand and supply in the international
  • 00:37:40
    scene, than because of the changes
  • 00:37:41
    on the domestic scene.
  • 00:37:42
    A quick reaction to that -
  • 00:37:43
    Why would you want to return to a concept
  • 00:37:45
    that this country exists, you know,
  • 00:37:47
    had in 1900? Why would you want to return
  • 00:37:49
    to where a few control the economic destiny
  • 00:37:53
    of every working man and woman?
  • 00:37:55
    It's exactly the other way, Mr. Deason.
  • 00:37:56
    The best way to limit the control of a few is
  • 00:38:01
    free trade on a worldwide basis.
  • 00:38:02
    There is no measure whatsoever that would
  • 00:38:04
    do more to prevent private monopoly
  • 00:38:07
    development than complete free trade.
  • 00:38:09
    It would do -- be far more effective than
  • 00:38:11
    all the antitrust suits in the world.
  • 00:38:13
    I totally disagree.
  • 00:38:14
    You would wind up with a situation like in
  • 00:38:16
    the movie Rollerball, where corporations
  • 00:38:19
    carved out their spheres of economic
  • 00:38:22
    influence throughout the world,
  • 00:38:23
    and controlled everything.
  • 00:38:25
    It would be controlled by corporations -
  • 00:38:27
    FRIEDMAN: You saw the -
  • 00:38:28
    DEASON: -- in its entirety.
  • 00:38:29
    FRIEDMAN: Excuse me. You saw the picture
  • 00:38:30
    of Hong Kong, didn't you?
  • 00:38:31
    DEASON: Yes.
  • 00:38:32
    Where are those corporations there?
  • 00:38:35
    We might get down that alley and have a
  • 00:38:37
    difficulty in finding our way out of it. Could
  • 00:38:39
    we move to another big theme in the film:
  • 00:38:41
    that is, that the third-world countries have,
  • 00:38:44
    broadly speaking, made a very serious
  • 00:38:46
    error in moving into planned economies,
  • 00:38:48
    from beginning to end, and you use a phrase
  • 00:38:51
    in the case of India, "Central planning has
  • 00:38:53
    condemned the Indian masses to
  • 00:38:54
    poverty and misery."
  • 00:38:56
    Now, what's your reaction to that, sir?
  • 00:38:58
    I partly agree with Milton as well as I largely
  • 00:39:01
    disagree with him. I think it is true that the
  • 00:39:04
    invisible hand ought to be seen more in the
  • 00:39:06
    poor countries, (Laughter) than it is, and
  • 00:39:09
    I would like to see the iron fist disappear.
  • 00:39:11
    Unfortunately, it's the other way around.
  • 00:39:14
    On the other hand, I think it cannot be
  • 00:39:16
    maintained that laissez-faire is the answer,
  • 00:39:21
    either that it's a necessary or a sufficient
  • 00:39:23
    condition for development.
  • 00:39:24
    Let me go to Milton's examples and,
  • 00:39:27
    you know, refer to Japan.
  • 00:39:29
    Japan is a prime example, actually, of where
  • 00:39:31
    the visible hand is invisible to everybody
  • 00:39:34
    who is outside of Japan. But it's writ large
  • 00:39:37
    on the wall for the Japanese.
  • 00:39:39
    The Japanese government, right from the
  • 00:39:41
    Meiji Restoration, has taken a very active
  • 00:39:43
    interest in the development of the country.
  • 00:39:46
    It has regulated technology and imports.
  • 00:39:48
    Even to this date the government and
  • 00:39:50
    business have a sort of strong symbiotic
  • 00:39:53
    relationship. I think it's just --
  • 00:39:55
    MCKENZIE: Highly paternalistic.
  • 00:39:56
    -- and business is highly paternalistic.
  • 00:39:58
    I don't think it's a valid example at all
  • 00:40:01
    of what I believe was the implication
  • 00:40:05
    of Milton's program.
  • 00:40:06
    Let's bring in Helen Hughes.
  • 00:40:07
    On this theme, has the third-world made
  • 00:40:08
    a disastrous mistake in almost
  • 00:40:11
    unanimously moving into planned
  • 00:40:12
    economies, rather than the free market?
  • 00:40:14
    Well, first of all, it hasn't almost
  • 00:40:16
    unanimously moved into planned economies.
  • 00:40:18
    McKENZIE: Overwhelmingly so.
  • 00:40:19
    Not even overwhelmingly.
  • 00:40:20
    I mean, India is a large country, but the
  • 00:40:23
    majority of developing countries are not
  • 00:40:26
    centrally planned; they have some sort
  • 00:40:28
    of planning. Secondly, some of the countries
  • 00:40:32
    which have been most successful have had
  • 00:40:34
    the highest government intervention.
  • 00:40:35
    The best examples are Taiwan, Korea,
  • 00:40:38
    Brazil, Singapore. And even in Hong Kong,
  • 00:40:42
    which is often held up as an example
  • 00:40:44
    of no government intervention,
  • 00:40:46
    I mean this is just not true.
  • 00:40:48
    The Hong Kong government has provided the
  • 00:40:51
    infrastructure. It has provided the roads and
  • 00:40:53
    the ports and schools. And it's been very
  • 00:40:55
    important. But when you move to a country
  • 00:40:58
    like Malawi or Papua, New Guinea, you can't
  • 00:41:02
    do without government intervention.
  • 00:41:03
    There is nothing there.
  • 00:41:05
    There are no entrepreneurs in place,
  • 00:41:06
    and the American entrepreneurs are not
  • 00:41:08
    interested in small places like that.
  • 00:41:12
    I'm not in favor of no government
  • 00:41:13
    intervention. I never have been.
  • 00:41:14
    I point out in the film that what
  • 00:41:17
    the government did in Hong Kong
  • 00:41:19
    was very important.
  • 00:41:20
    The question is: What kind of intervention?
  • 00:41:21
    And in the states you've described, in the
  • 00:41:23
    places you have described where you've had
  • 00:41:25
    success, governmental intervention has
  • 00:41:28
    been of a rather special kind.
  • 00:41:30
    It has provided infrastructure.
  • 00:41:31
    It has not tried to determine the outline of
  • 00:41:35
    industrial production, the areas in which
  • 00:41:38
    industry should go, exactly what the
  • 00:41:40
    allocation of -- it has not gone in
  • 00:41:41
    for central planning.
  • 00:41:42
    HUGHES: Well that's just not true in Korea.
  • 00:41:44
    I mean, you are factually wrong because in
  • 00:41:46
    Korea the government has actually -
  • 00:41:49
    FRIEDMAN: Oh, it is true in Taiwan.
  • 00:41:50
    It's fairly true in Taiwan, but not in Korea,
  • 00:41:53
    which has grown faster than any other
  • 00:41:55
    country. Where Korean exports have been
  • 00:41:58
    determined to a very large extent, by direct
  • 00:42:01
    government intervention. I think your point
  • 00:42:03
    is: what sort of government intervention,
  • 00:42:06
    what for, and what are the trade-offs
  • 00:42:09
    between government intervention and the
  • 00:42:11
    free market? These are the relevant issues.
  • 00:42:14
    What is the role of government in relation to
  • 00:42:16
    the market economy? How do you see it
  • 00:42:18
    performing, Don Rumsfeld, do you want to
  • 00:42:21
    see government, as it were, enforcing
  • 00:42:23
    competition by chasing down monopoly,
  • 00:42:26
    restrictive practices, and all the rest
  • 00:42:28
    of it in the society?
  • 00:42:29
    The record's clear that they don't do it well.
  • 00:42:31
    They can't manage the --
  • 00:42:32
    But does that mean they shouldn't
  • 00:42:33
    do it at all, or do it better?
  • 00:42:34
    Take the wage-price controls in the
  • 00:42:35
    United States of America.
  • 00:42:36
    I happen to have been involved,
  • 00:42:37
    and I don't say it with any great pride.
  • 00:42:39
    The real world is -- I don't care
  • 00:42:42
    about good intentions,
  • 00:42:42
    I don't care about brains,
  • 00:42:44
    I don't care about integrity,
  • 00:42:46
    the fact of the matter is they're not smart
  • 00:42:48
    enough to manage the wages and prices
  • 00:42:49
    of every American, 215 million strong.
  • 00:42:53
    They can't do it well. They do it poorly.
  • 00:42:56
    And the weight of that is harmful.
  • 00:43:00
    It's graphically shown in every document
  • 00:43:03
    issued by the Council of Economic Advisors
  • 00:43:05
    in the United States.
  • 00:43:06
    But what about the additional question,
  • 00:43:07
    though, does the government properly,
  • 00:43:09
    in this country or elsewhere,
  • 00:43:11
    insure competition by other devices?
  • 00:43:13
    I'm not talking now about price control,
  • 00:43:15
    wage control, but insuring competition
  • 00:43:17
    rather than permitting price-fixing
  • 00:43:20
    or agreements and monopoly.
  • 00:43:22
    What do you feel about it?
  • 00:43:23
    I feel the government properly
  • 00:43:24
    acts in that area. It must --
  • 00:43:25
    the government must be there
  • 00:43:27
    to insure competition.
  • 00:43:28
    The government's not smart enough --
  • 00:43:30
    look at the Antitrust Law.
  • 00:43:32
    You talk about a patch --
  • 00:43:33
    the implementation of antitrust regulations
  • 00:43:36
    in the United States,
  • 00:43:36
    between the Department of Justice and
  • 00:43:39
    the FTC. It's a -- it's a patchwork mess.
  • 00:43:42
    There isn't any logic to it.
  • 00:43:44
    People don't know what to do.
  • 00:43:45
    They don't -- they can't get answers.
  • 00:43:48
    They're inhibited from mergers
  • 00:43:51
    and consolidations that would make a lot of
  • 00:43:52
    sense from the standpoint of the consumer.
  • 00:43:56
    And would make even more sense from
  • 00:43:57
    the point of multi-national corporations.
  • 00:43:59
    I think that one of the points you're making
  • 00:44:01
    is that it's very hard for the government
  • 00:44:03
    to intervene in a very large country,
  • 00:44:05
    like India or the United States.
  • 00:44:08
    But compare government intervention
  • 00:44:10
    in some of the small, homogenous countries
  • 00:44:13
    of Europe or Singapore,
  • 00:44:15
    and I think that's very important.
  • 00:44:17
    Switzerland
  • 00:44:17
    has a great deal of government intervention.
  • 00:44:19
    Sweden, Denmark, Norway --
  • 00:44:22
    I've just quoted you
  • 00:44:23
    the four highest-income countries
  • 00:44:25
    in the world. They do have intervention
  • 00:44:27
    to try and protect the functioning of
  • 00:44:30
    of the market system,
  • 00:44:32
    and to make it more efficient.
  • 00:44:33
    Milton is absolutely right
  • 00:44:34
    that if you're talking about central planning,
  • 00:44:36
    that has been disastrous.
  • 00:44:38
    Absolutely, in terms of having targeted
  • 00:44:41
    industrial allocations and so on;
  • 00:44:43
    I mean there's absolutely no doubt
  • 00:44:44
    in anybody's mind who has studied
  • 00:44:46
    the problem over the last twenty years.
  • 00:44:47
    McKENZIE: Disastrous in India, too.
  • 00:44:48
    In India as well, very definitely.
  • 00:44:49
    McKENZIE: You advised on that, didn't you?
  • 00:44:51
    No, not on centralized planning, no.
  • 00:44:53
    (Laughing)
  • 00:44:54
    RUMSFELD: That wasn't a clear question
  • 00:44:55
    RUMSFELD: anyway. (Laughter)
  • 00:44:56
    FRIEDMAN: That's all right. I was over there
  • 00:44:58
    FRIEDMAN: as an advisor, too.
  • 00:44:59
    BHAGWATI: I'm on the side of
  • 00:45:00
    the angels on that. For a number of years --
  • 00:45:04
    I'm supposed to be a friend of Milton's there,
  • 00:45:05
    which is disastrous.
  • 00:45:06
    (Laughing)
  • 00:45:07
    To give advice is one thing.
  • 00:45:09
    To have it taken is a different one.
  • 00:45:14
    I agree very much with
  • 00:45:15
    what Helen Hughes has said,
  • 00:45:17
    that the more homogenous the country,
  • 00:45:18
    the less harm the government
  • 00:45:20
    will do by intervening.
  • 00:45:21
    I don't believe it does positive good.
  • 00:45:22
    I just simply believe it does less harm.
  • 00:45:24
    But, as to antitrust --
  • 00:45:26
    McKENZIE: Yeah.
  • 00:45:27
    I am in favor of the laws which make
  • 00:45:31
    agreements in restraint of trade illegal.
  • 00:45:35
    Most of the rest of the antitrust apparatus
  • 00:45:38
    has promoted monopoly
  • 00:45:39
    instead of hindered monopoly.
  • 00:45:40
    If you look at where there are
  • 00:45:42
    monopolistic elements in the world
  • 00:45:45
    and in the United States, including
  • 00:45:47
    the multi-nationals you want to refer to,
  • 00:45:50
    in almost every case that monopoly derived
  • 00:45:53
    from a special grant by government.
  • 00:45:55
    And therefore, the problem is not,
  • 00:45:57
    how does government enforce competition?
  • 00:45:59
    How do you keep government
  • 00:46:01
    from setting up monopolies?
  • 00:46:02
    That's the real problem, if you look
  • 00:46:03
    at the real world, and not at the preamble,
  • 00:46:07
    the language, of antitrust measures
  • 00:46:10
    and similar laws.
  • 00:46:11
    How close are you to what Deason
  • 00:46:12
    was saying a moment ago in this area?
  • 00:46:14
    He would seem to be arguing with you
  • 00:46:15
    that there was a responsibility
  • 00:46:17
    to make competition work.
  • 00:46:19
    The responsibility is to set up a framework
  • 00:46:21
    of laws and of arrangements, under which
  • 00:46:24
    competition will flourish. And the most --
  • 00:46:27
    McKENZIE: Inevitably flourish? I mean, or -
  • 00:46:30
    Well, so far as I know, I don't know of any
  • 00:46:32
    case in history in which monopolies have
  • 00:46:35
    able to maintain themselves for very long
  • 00:46:38
    without having government assistance
  • 00:46:40
    directly come in on their side.
  • 00:46:41
    The trade union monopolies that Mr. Deason
  • 00:46:44
    represents would never have the kind of
  • 00:46:46
    power they do now if it weren't for the
  • 00:46:48
    special privileges which government has
  • 00:46:49
    granted to them.
  • 00:46:50
    I can perfectly well understand his being in
  • 00:46:53
    favor of such action, of antitrust action by
  • 00:46:55
    the government, because it really is
  • 00:46:58
    is pro-monopoly action, in the main.
  • 00:47:00
    Why were those exemptions to monopoly
  • 00:47:03
    laws given to unions?
  • 00:47:04
    Because of the political power of unions,
  • 00:47:06
    of course. I'm not questioning that.
  • 00:47:08
    and because -- and because of the
  • 00:47:09
    tremendous imbalance of power of
  • 00:47:11
    companies at the time that unions were
  • 00:47:12
    getting their start.
  • 00:47:14
    There's one concluding idea toward the
  • 00:47:16
    end of your script that I'd like to look at,
  • 00:47:19
    because it seemed to me to be most
  • 00:47:21
    provocative.
  • 00:47:21
    You talked about the need for Constitutional
  • 00:47:23
    restraints on governments to prevent
  • 00:47:27
    them interfering in foreign exchange free
  • 00:47:29
    markets, and in foreign trade.
  • 00:47:31
    Now what have you in mind, Milton,
  • 00:47:33
    when you say "Constitutional restraints"?
  • 00:47:35
    I -- no doubt what I have in mind
  • 00:47:36
    if I, if I could persuade the public,
  • 00:47:39
    I would like it to adopt a constitutional
  • 00:47:41
    amendment strictly parallel to the
  • 00:47:44
    constitutional prohibition in the text
  • 00:47:47
    of the Constitution, against the central
  • 00:47:49
    government -- I'm sorry, against state
  • 00:47:52
    governments imposing tariffs on imports.
  • 00:47:53
    I would like to have a constitutional
  • 00:47:55
    amendment, which would read,
  • 00:47:56
    "The Congress shall not impose
  • 00:47:59
    any taxes on imports, or give any subsidies
  • 00:48:05
    to exports, except such as may be
  • 00:48:09
    necessary."
  • 00:48:10
    I think the wording of the Constitution is that
  • 00:48:11
    the states are permitted to do it if it's
  • 00:48:13
    necessary for inspection.
  • 00:48:14
    That's the excuse under which California
  • 00:48:17
    inspects you every time you drive past to see
  • 00:48:19
    whether you're carrying any plants or fruits
  • 00:48:21
    or vegetables.
  • 00:48:22
    DEASON: Milton, let me ask you a question.
  • 00:48:24
    How long do you think that the United States
  • 00:48:25
    would survive if the United States enacted
  • 00:48:30
    what you would like to have?
  • 00:48:31
    I think the United States would prosper
  • 00:48:32
    in a way that is hardly imaginable today.
  • 00:48:35
    It would be an example and a beacon
  • 00:48:37
    to the rest of the world.
  • 00:48:38
    What kind of sense does it make, here
  • 00:48:40
    we are supposedly the leaders of the world.
  • 00:48:42
    We are the ones who promote freedom,
  • 00:48:44
    and free enterprise, and individual initiative.
  • 00:48:47
    And what do we do? We force puny little
  • 00:48:49
    Hong Kong to impose limits, restrictions
  • 00:48:52
    on its exports at tariffs, in order
  • 00:48:54
    to protect our textile workers.
  • 00:48:56
    We go to Japan, and we say to Japan,
  • 00:48:59
    "For God sakes, you got to limit the number
  • 00:49:00
    of television sets you come out."
  • 00:49:01
    Instead of doing that, we ought to be setting
  • 00:49:03
    an example to the world, and if we set the
  • 00:49:05
    kind of an example to the world that
  • 00:49:07
    Great Britain set to the world in the 19th
  • 00:49:09
    century, it would be a tremendous --
  • 00:49:12
    it would have a tremendous impact, it would
  • 00:49:14
    strengthen our moral position in the world,
  • 00:49:16
    it would strengthen our ethical position
  • 00:49:18
    in the world. Instead of giving money to
  • 00:49:20
    underdeveloped countries to produce
  • 00:49:22
    products which we then refuse to buy
  • 00:49:23
    and don't let them export to us,
  • 00:49:25
    we would be saying to the rest of the world,
  • 00:49:28
    "If you produce anything, if you can produce
  • 00:49:29
    anything and have a market here, come,
  • 00:49:31
    we're delighted to buy it, and we'll produce
  • 00:49:34
    things for you to buy."
  • 00:49:35
    That's the kind of a pattern I would like
  • 00:49:37
    to see the United States establish.
  • 00:49:39
    McKENZIE: Would your members buy that?
  • 00:49:40
    DEASON: Never. That's a -
  • 00:49:42
    FRIEDMAN: Never is a long word, sir.
  • 00:49:43
    Yes, you're right.
  • 00:49:44
    -- and you must distinguish between -
  • 00:49:46
    DEASON: And one should never say never.
  • 00:49:47
    our union officials would not buy it.
  • 00:49:49
    But I am not sure your members wouldn't.
  • 00:49:51
    My members would not. No. My members
  • 00:49:52
    would never buy it either.
  • 00:49:54
    I cannot conceive of the United States
  • 00:49:56
    setting itself up to become a target
  • 00:49:58
    for the rest of the world.
  • 00:49:59
    FRIEDMAN: It's not a target.
  • 00:50:01
    There would be absolutely nothing that
  • 00:50:02
    would require or compel any other country
  • 00:50:05
    to enact any reciprocal
  • 00:50:06
    agreements relative to tariffs-
  • 00:50:08
    FRIEDMAN: That's right.
  • 00:50:08
    and until such time as they have
  • 00:50:11
    succeeded in dumping in the
  • 00:50:12
    United States -- and I used dumping
  • 00:50:13
    in the broadest sense of the word
  • 00:50:15
    -- any and every product, either
  • 00:50:16
    government subsidized by a foreign
  • 00:50:18
    government, either put there because
  • 00:50:20
    of multi-national corporations
  • 00:50:21
    manufacturing facilities in a foreign country,
  • 00:50:24
    until they have succeeded in absolutely
  • 00:50:27
    draining us dry -
  • 00:50:29
    FRIEDMAN: Draining us dry of what?
  • 00:50:30
    Of every -- of every asset.
  • 00:50:32
    FRIEDMAN: How?
  • 00:50:32
    Of every -
  • 00:50:33
    What would they do
  • 00:50:34
    with the dollars they got?
  • 00:50:35
    They'd probably buy up,
  • 00:50:36
    as they are now, as they -
  • 00:50:37
    If they bought up -
  • 00:50:39
    OFF CAMERA: The choice farmland.
  • 00:50:39
    Yes. Yes.
  • 00:50:42
    McKENZIE: Let's broaden this. On this
  • 00:50:42
    very argument, now and a
  • 00:50:43
    constitutional amendment argument.
  • 00:50:45
    We've learned from our union friend
  • 00:50:47
    he would -- can't sell it and
  • 00:50:49
    won't sell it. Would business buy it?
  • 00:50:52
    Oh, no! They -- speaking -
  • 00:50:56
    (Several people talking at once.)
  • 00:50:58
    I'm not saying whether I'd buy it,
  • 00:50:59
    I’m saying whether business would
  • 00:51:00
    buy it, which is the question.
  • 00:51:01
    No, when I -- I speak not as
  • 00:51:03
    a businessman, but as an
  • 00:51:04
    ex-government employee,
  • 00:51:07
    whenever proposals like that came up,
  • 00:51:10
    one of the first things people
  • 00:51:11
    see happen is government -business
  • 00:51:13
    and labor come in in lock-step, saying,
  • 00:51:16
    "Horrors, horrors, the sky is falling!"
  • 00:51:20
    There's a commonality of interests
  • 00:51:22
    there and people get used to what is,
  • 00:51:25
    they get terribly conservative, and
  • 00:51:26
    they know how to work the system
  • 00:51:28
    the way it exists, and particularly the
  • 00:51:30
    the big unions and the big business,
  • 00:51:31
    and they get very satisfied with it,
  • 00:51:34
    they can manage it pretty well,
  • 00:51:36
    and any time you try to unravel
  • 00:51:37
    any kind of regulation or restriction
  • 00:51:40
    or government intrusion,
  • 00:51:42
    they're philosophically for it,
  • 00:51:44
    but in the practical world,
  • 00:51:45
    they don't want you to change the drill,
  • 00:51:47
    they just figured out how to work this.
  • 00:51:49
    Why should you then change it and
  • 00:51:51
    make it all that more complicated?
  • 00:51:53
    No, I think you'd get a good deal of reaction,
  • 00:51:55
    just like you did out of the
  • 00:51:56
    steel company in your television show.
  • 00:51:58
    McKENZIE: And what would the international
  • 00:52:00
    reaction be, do you think, as an
  • 00:52:00
    international economist?
  • 00:52:01
    Supposing Milton got his amendment,
  • 00:52:03
    constitutional amendment, which had that
  • 00:52:05
    effect, how would other countries react to it?
  • 00:52:08
    Well, I think Milton's fundamental example
  • 00:52:11
    of why not be like Britain
  • 00:52:12
    in the 19th century is wrong.
  • 00:52:14
    Britain in the 19th century was the
  • 00:52:16
    industrialized country; it was
  • 00:52:19
    well ahead of everybody else.
  • 00:52:20
    McKENZIE: Many decades ahead.
  • 00:52:21
    Many decades ahead of everybody else,
  • 00:52:23
    and it was making larger profits,
  • 00:52:25
    larger economic rents on its production,
  • 00:52:28
    and it was doing it at very great cost
  • 00:52:31
    to the workers in Britain.
  • 00:52:33
    The workers in Britain were greatly exploited
  • 00:52:36
    under those circumstances, and we
  • 00:52:38
    don't want to go back to that.
  • 00:52:40
    The international situation is much
  • 00:52:43
    more complex, and countries -- there are
  • 00:52:46
    countries at different levels of development,
  • 00:52:48
    countries with different social systems, and
  • 00:52:51
    countries with different social objectives,
  • 00:52:53
    so I think that the solution,
  • 00:52:56
    you know, is wrongly founded, and
  • 00:52:58
    it's millenarian, it's utopian.
  • 00:53:00
    I think that we have to
  • 00:53:02
    think of a much more
  • 00:53:04
    realistic process of discussion,
  • 00:53:08
    negotiation, such as has taken place
  • 00:53:11
    through GATT, to get to where
  • 00:53:13
    we're going, without hurting the people
  • 00:53:15
    who pay for the adjustment,
  • 00:53:17
    and that is basically the workers,
  • 00:53:19
    not the economists.
  • 00:53:20
    Could I just comment briefly?
  • 00:53:21
    McKENZIE: Yeah.
  • 00:53:22
    I worry about the argument that
  • 00:53:24
    because of the complexities
  • 00:53:26
    of international relations, that
  • 00:53:28
    therefore they must be planned and
  • 00:53:29
    managed. By definition, we're not capable
  • 00:53:32
    of managing the world economy.
  • 00:53:34
    Each instance when we try to do it
  • 00:53:37
    it doesn't work out
  • 00:53:38
    quite the way we intended.
  • 00:53:40
    I don't apologize for a moment for setting
  • 00:53:42
    for being millenarian; because I think
  • 00:53:44
    unless we know where we want to go,
  • 00:53:48
    the timid steps that we take
  • 00:53:49
    in that direction will go
  • 00:53:52
    in the wrong direction.
  • 00:53:53
    And if we're gonna go in the right
  • 00:53:54
    direction, we ought to have a view.
  • 00:53:56
    But I want to be sure to
  • 00:53:57
    get down on the record a very
  • 00:53:59
    strong objection to the statement of fact
  • 00:54:01
    by Helen Hughes about 19th century Britain.
  • 00:54:03
    I believe it is simply wrong.
  • 00:54:05
    The workers were not exploited.
  • 00:54:07
    The studies that have been done recently
  • 00:54:09
    have shown over and over again that
  • 00:54:10
    the 19th century was a period
  • 00:54:12
    in which the ordinary English worker
  • 00:54:14
    experienced a very rapid and
  • 00:54:16
    very substantial rise in his standard of life.
  • 00:54:18
    England did not stand alone.
  • 00:54:20
    Japan had complete free trade for 30 years
  • 00:54:22
    after the Meiji Restoration.
  • 00:54:24
    Japan in more recent years has not.
  • 00:54:26
    Japan in more recent years
  • 00:54:27
    is not an example I would cite.
  • 00:54:29
    But in its early years
  • 00:54:30
    it had complete free trade.
  • 00:54:31
    So I don't believe England stands alone.
  • 00:54:34
    Now on the more --
  • 00:54:35
    McKENZIE: Politics of it.
  • 00:54:36
    On the politics of it, of course
  • 00:54:38
    it's not politically feasible, why?
  • 00:54:40
    Because it's only in the general interest
  • 00:54:42
    and in nobody's special interest.
  • 00:54:44
    Each of us is fundamentally --
  • 00:54:47
    has more concern with our role as
  • 00:54:50
    a producer of one product than
  • 00:54:52
    we have as a consumer of a
  • 00:54:53
    thousand and one products.
  • 00:54:55
    The benefits of a tariff are visible.
  • 00:54:58
    Mr. Deason can see that his workers
  • 00:55:01
    are quote, "Protected."
  • 00:55:03
    The harm which a tariff does is invisible.
  • 00:55:06
    It's spread widely. There are people who
  • 00:55:07
    don't have jobs because of the tariff,
  • 00:55:09
    but they don't know they don't have jobs.
  • 00:55:11
    There's nobody who can organize them.
  • 00:55:13
    Consumers all over are paying a little
  • 00:55:14
    more for this, that and the other thing.
  • 00:55:16
    They don't recognize that the reason
  • 00:55:17
    they're paying for it
  • 00:55:19
    is because of the tariff.
  • 00:55:21
    The businessmen? I have never been in
  • 00:55:24
    I'm not pro business,
  • 00:55:26
    I'm pro free enterprise...
  • 00:55:28
    which is a very different thing,
  • 00:55:30
    and the reason I'm pro free enterprise
  • 00:55:31
    RUMSFELD:Don't point at me
  • 00:55:32
    when you say that!(Laughter)
  • 00:55:33
    No, no. I don't mean to point to you, Don.
  • 00:55:36
    I point to the business community,
  • 00:55:38
    because you are an exception.
  • 00:55:39
    McKenzie:Because actually there was a
  • 00:55:41
    tacit alliance because that way...
  • 00:55:43
    Oh there's -
  • 00:55:44
    to prevent you from achieving your purpose.
  • 00:55:45
    Oh, there's no doubt that there's such
  • 00:55:46
    an alliance. In my opinion,
  • 00:55:48
    the strongest argument for free enterprise
  • 00:55:51
    is that it prevents anybody
  • 00:55:53
    from having too much power.
  • 00:55:55
    Whether that person is a government official,
  • 00:55:58
    a trade union official,
  • 00:55:59
    or a business executive.
  • 00:56:01
    It forces them to put up or shut up.
  • 00:56:04
    They either have to deliver the goods,
  • 00:56:05
    produce something that people are
  • 00:56:06
    willing to pay for, willing to buy,
  • 00:56:08
    or else they have to go
  • 00:56:09
    into a different business.
  • 00:56:10
    Well, there we must leave the argument
  • 00:56:12
    for this week, and I hope you'll
  • 00:56:13
    join us again for the next episode of
  • 00:56:15
    Free To Choose.
  • 00:56:17
    (closing music)
الوسوم
  • Milton Friedman
  • free market
  • central planning
  • invisible hand
  • Japan
  • India
  • trade
  • economics
  • government intervention
  • Adam Smith