Free To Choose 1980 - Vol. 01 The Power of the Market - Full Video

00:57:47
https://www.youtube.com/watch?v=dngqR9gcDDw

Summary

TLDRIn this opening film of a ten-part series by Milton Friedman, the Nobel Prize-winning economist outlines his views on society and his solutions for modern issues. Filmed at the University of Chicago and introduced by Robert McKenzie, Friedman advocates for economic freedom as a pathway to personal liberty. He uses the example of America's past, where immigrants found opportunities without excessive government regulation, to argue that personal and economic freedom goes hand-in-hand. Friedman illustrates his points by exploring the economic landscape of Hong Kong, a place he describes as a 'laboratory experiment' of free market principles at work. Here, limited government interference, low tariffs, and minimal regulation have led to rapid economic growth and improved living standards, even with scarce natural resources. Throughout the documentary, Friedman contrasts Hong Kong's vibrant free-market environment with more heavily regulated economies and argues that governmental controls impede freedom, advocate inefficiency, and often serve corporate interests over public ones. He cites historical trends to emphasize that countries prioritizing the free market tend to flourish economically, benefiting especially their impoverished populations by providing legitimate avenues for progress. The narrative also communicates Friedman's belief that economic freedom underpins political freedom and that advocates for additional regulation often misunderstand or neglect the efficacy of market-driven solutions. The film ends with a debate at the University of Chicago, wherein Friedman defends his economic philosophy against those advocating for more government intervention.

Takeaways

  • 📚 Milton Friedman, a renowned economist, presents a TV series discussing his views on society and economic freedom.
  • 🏞️ America’s history as a land of opportunity was shaped by the economic freedom experienced by immigrants.
  • 🌏 Hong Kong is highlighted as a modern example showcasing the benefits of a free market economy.
  • 📜 Friedman emphasizes limited government intervention to allow free markets to thrive.
  • 💰 Economic freedom supports political freedom, thereby preserving individual liberties.
  • 🔍 Historical examples reveal that free markets foster innovation and social progress.
  • 🚶‍♂️ People historically favored countries with less governmental control for better opportunities, reflecting in migration trends.
  • ✏️ The pencil illustration showcases global cooperation within a free market system facilitated by price signals.
  • 🎯 Modern debates still revolve around finding balance between government intervention and market freedom.
  • 🌱 Friedman argues the freer the economy, the better the prospects for poverty alleviation.

Timeline

  • 00:00:00 - 00:05:00

    Milton Friedman, an esteemed economist and Nobel Prize winner, explores the evolution of the United States from a nation built by immigrants seeking freedom to a modern society. Friedman highlights the role of a free market in fostering opportunity and prosperity, contrasting it with government intervention.

  • 00:05:00 - 00:10:00

    Friedman delves into the history of Manhattan Island and the broader United States, illustrating how immigrants were drawn by freedom and the chance to pursue personal goals. He emphasizes that the lack of regulation and government programs initially enabled economic growth and individual success.

  • 00:10:00 - 00:15:00

    The narrative transitions to Chinatown in New York, where Friedman reflects on his family's immigrant experience, outlining the hard work and lack of government safety nets that characterized early immigrant life. Despite challenging conditions, the freedom to participate in the market offered paths to prosperity.

  • 00:15:00 - 00:20:00

    Friedman observes a factory in Chinatown, noting its violation of modern labor standards but highlighting its role in providing initial opportunities for immigrants. He argues that such environments, while harsh, allowed for upward mobility, a process essential to the American dream and economic freedom.

  • 00:20:00 - 00:25:00

    In Hong Kong, Friedman underscores the economic boom driven by an almost completely free market. With minimal government intervention, Hong Kong exemplifies how free markets can transform societies, offering higher living standards without reliance on natural resources.

  • 00:25:00 - 00:30:00

    Hong Kong's economic growth is attributed to free trade, competition, and adaptation in industries, which have embraced technological advances and market demands. It illustrates the potency of market forces in enhancing living standards and providing opportunities, akin to early American prosperity.

  • 00:30:00 - 00:35:00

    Friedman highlights the voluntary nature of market transactions, contrasting them with government mandates. He credits the free market's ability to integrate diverse contributions towards economic harmony and efficiency, celebrated through the story of a pencil's creation involving global cooperation.

  • 00:35:00 - 00:40:00

    On the border between Hong Kong and China, Friedman draws stark comparisons between the economic and personal freedoms of Hong Kong and the restrictive environment in China. He stresses that economic freedom underpins broader human and political freedoms, essential for societal prosperity.

  • 00:40:00 - 00:45:00

    Friedman laments the erosion of economic freedom in the U.S. due to expanded government intervention, drawing on the example of Hong Kong to advocate for reduced government influence and stronger market freedoms.

  • 00:45:00 - 00:50:00

    In a panel discussion, various experts critique Friedman’s views on economic freedom, labor, and government intervention. Debate centers on historical and modern roles of government in shaping economic conditions and ensuring public welfare, with varying interpretations of American economic history.

  • 00:50:00 - 00:57:47

    Discussions reveal tensions between free market principles and government regulation, examining the implications of both on American society, as participants debate the balance of freedom and government, domestic versus international competition, and historical progress.

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Mind Map

Video Q&A

  • Who is the main focus of the film series at the University of Chicago mentioned in the summary, and what is its primary theme?

    The film series focuses on Milton Friedman, an economist of international repute, and the primary theme is his view of society, the economy, and solutions for contemporary issues.

  • What historical perspective is provided by Milton Friedman in his discussion about America as a land of opportunity?

    Milton Friedman discusses America as a land of opportunity, highlighting the role of immigrants and the economic freedom they experienced in building a new nation.

  • What example does Friedman use to illustrate the concept of the free market?

    Friedman uses Hong Kong as a contemporary example to illustrate the functioning of a free market, showing how limited government intervention has fostered economic growth despite limited natural resources.

  • How does Friedman describe the role of government in a free market?

    Friedman argues that the government's role should be limited to enforcing laws and honoring contracts, allowing the free market to operate without unnecessary regulation.

  • What contrast is drawn between the marketplace in Hong Kong and other more regulated economies?

    The contrast drawn is that in Hong Kong, the absence of tariffs, duties, and government intervention allows a truly free market where individuals are free to trade and innovate, unlike more regulated economies.

  • What stance does Friedman take regarding government intervention and its impact on freedom?

    Friedman contends that increased government intervention curtails individual freedom, and economic freedom is essential for preserving personal freedom.

  • How did Friedman's documentary address the immigration policies of the United States historically?

    Friedman notes that prior to 1913, the United States had complete freedom of immigration, which contributed to its development, a freedom currently nonexistent.

  • What is the significance of using the pencil example in the discussion?

    The pencil example illustrates the complex cooperation involved in a free market, where no single person could produce a product alone, reflecting the global collaboration orchestrated by the price system.

  • What outcomes does Friedman claim are achieved by a free market?

    Friedman claims that a free market ensures productive efficiency, fosters innovation, and preserves peace and harmony by relying on voluntary cooperation.

  • What was Friedman's view on the relationship between the free market and poverty?

    Friedman argued that the freer the economic system, the better the conditions and opportunities for the impoverished to improve their lives.

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  • 00:00:01
    Hello, I'm Robert McKenzie.
  • 00:00:03
    You join me here in this fine old library
  • 00:00:05
    on the campus of the University of Chicago.
  • 00:00:07
    We are about to see the first of 10 films by
  • 00:00:09
    Milton Friedman, an economist of
  • 00:00:11
    international repute, winner of the
  • 00:00:13
    Nobel Prize, one of the most controversial
  • 00:00:16
    and stimulating Americans of our time.
  • 00:00:18
    In the weeks that lie ahead as Friedman’s
  • 00:00:20
    first major television series unfolds,
  • 00:00:22
    the famous and influential men and women
  • 00:00:24
    who’ll occupy those seats are going to
  • 00:00:26
    have a lot to say about Friedman’s view
  • 00:00:28
    of the society in which we live today,
  • 00:00:30
    and his solutions for the ills of our time.
  • 00:00:33
    For that’s what the series is about:
  • 00:00:34
    Milton Friedman's view of the way
  • 00:00:36
    we live now, and where we’re headed.
  • 00:00:38
    Now like some people here
  • 00:00:39
    you may be appalled by his ideas,
  • 00:00:41
    like others, extremely enthusiastic about
  • 00:00:43
    about them. Whichever way it goes,
  • 00:00:45
    I think you will be fascinated by
  • 00:00:46
    what Milton Friedman has to say.
  • 00:00:51
    (opening music)
  • 00:01:24
    (radio newscast of morning weather)
  • 00:01:32
    Milton Friedman's voice:
  • 00:01:33
    Once all of this was a swamp,
  • 00:01:36
    covered with forest.
  • 00:01:39
    The Canarsie Indians who lived here
  • 00:01:40
    traded the 22 square miles of
  • 00:01:42
    soggy Manhattan Island to the Dutch
  • 00:01:44
    for $24.00 worth of cloth and trinkets.
  • 00:01:47
    (seagulls squawking)
  • 00:01:48
    The newcomers founded a city,
  • 00:01:50
    New Amsterdam, at the edge
  • 00:01:51
    an empty continent.
  • 00:01:53
    In the years that followed,
  • 00:01:54
    it proved a magnet for millions of
  • 00:01:56
    people from across the Atlantic,
  • 00:01:58
    people who were driven by fear and poverty,
  • 00:02:01
    who were attracted by the promise
  • 00:02:02
    of freedom and plenty.
  • 00:02:04
    They fanned out over the continent
  • 00:02:05
    and built a new nation with their
  • 00:02:07
    sweat, their enterprise and their vision
  • 00:02:09
    of a better future.
  • 00:02:12
    For the first time in their lives,
  • 00:02:14
    many were truly free to pursue
  • 00:02:16
    their own objectives.
  • 00:02:17
    That freedom released the human
  • 00:02:19
    energies which created the United States.
  • 00:02:23
    For the immigrants who were
  • 00:02:25
    welcomed by this statue,
  • 00:02:26
    America was truly a
  • 00:02:27
    land of opportunity.
  • 00:02:31
    (steamboat horn)
  • 00:02:39
    They poured ashore in their best clothes,
  • 00:02:42
    eager and expectant, carrying
  • 00:02:43
    what little they owned.
  • 00:02:45
    They were poor, but they all had
  • 00:02:47
    a great deal of hope.
  • 00:02:49
    (people walking, talking)
  • 00:02:54
    Once they arrived,
  • 00:02:54
    they found, as my parents did,
  • 00:02:56
    not an easy life, but a very hard life.
  • 00:02:59
    But for many there were
  • 00:03:00
    friends and relatives to help them
  • 00:03:01
    get started -- to help them
  • 00:03:03
    make a home, get a job,
  • 00:03:04
    settle down in the new country.
  • 00:03:07
    (trolley bell and horses clip-clopping)
  • 00:03:12
    There were many rewards for
  • 00:03:13
    hard work, enterprise and ability.
  • 00:03:16
    Life was hard, but opportunity was real.
  • 00:03:22
    There were few government programs
  • 00:03:24
    to turn to and nobody expected them.
  • 00:03:26
    But also, there were
  • 00:03:27
    few rules and regulations.
  • 00:03:30
    There were no licenses,
  • 00:03:31
    no permits, no red tape
  • 00:03:32
    to restrict them.
  • 00:03:34
    They found, in fact, a free market,
  • 00:03:36
    and most of them thrived on it.
  • 00:03:41
    Many people still come to the United States
  • 00:03:43
    driven by the same pressures
  • 00:03:45
    and attracted by the same promise.
  • 00:03:47
    You can find them in places like this.
  • 00:03:49
    It's Chinatown in New York, one of
  • 00:03:51
    the centers of the garment industry,
  • 00:03:53
    a place where hundreds of thousands
  • 00:03:54
    of newcomers have had their first
  • 00:03:56
    taste of life in the new country.
  • 00:04:01
    The people who live and work here
  • 00:04:02
    are like the early settlers.
  • 00:04:04
    They want to better their lot and they are
  • 00:04:05
    prepared to work hard to do so.
  • 00:04:10
    Although I haven't often been in factories
  • 00:04:12
    like this, it's all very familiar to me,
  • 00:04:15
    because this is exactly the same kind of
  • 00:04:17
    a factory that my mother worked in
  • 00:04:20
    when she came to this country
  • 00:04:21
    for the first time at the age of 14,
  • 00:04:24
    almost 90 years ago.
  • 00:04:27
    And if there had not been
  • 00:04:28
    factories like this here then at which
  • 00:04:30
    she could have started to work
  • 00:04:31
    and earned a little money
  • 00:04:34
    she wouldn't have been able to come.
  • 00:04:35
    And if I existed at all, I'd be
  • 00:04:37
    a Russian or a Hungarian
  • 00:04:38
    today, instead of American.
  • 00:04:41
    Of course she didn't stay here a long time.
  • 00:04:43
    She stayed here while she learned
  • 00:04:44
    the language, while she developed
  • 00:04:46
    some feeling for the country,
  • 00:04:48
    and gradually she was able to
  • 00:04:50
    make a better life for herself.
  • 00:04:53
    Similarly, the people who are here now,
  • 00:04:55
    they are like my mother, mostly
  • 00:04:57
    immigrants from a distant country.
  • 00:04:59
    They came here because they liked it
  • 00:05:01
    here better and had more opportunities.
  • 00:05:03
    A place like this gives them a chance
  • 00:05:05
    to get started.
  • 00:05:06
    They are not going to stay here
  • 00:05:07
    very long or forever.
  • 00:05:09
    On the contrary, they and their children
  • 00:05:11
    will make a better life for themselves
  • 00:05:13
    as they take advantage of the opportunities
  • 00:05:16
    that a free market provides to them.
  • 00:05:20
    The irony is that this place violates many of
  • 00:05:23
    the standards that we now regard as
  • 00:05:25
    every worker's right.
  • 00:05:26
    It is poorly ventilated,
  • 00:05:28
    it is over-crowded,
  • 00:05:29
    the workers accept less than union rate-
  • 00:05:31
    it breaks every rule in the book.
  • 00:05:33
    But if it were closed down,
  • 00:05:35
    who would benefit?
  • 00:05:36
    Certainly not the people here.
  • 00:05:37
    Their lives may seem pretty tough
  • 00:05:39
    compared to our own,
  • 00:05:41
    but that’s only because
  • 00:05:42
    our parents or grandparents
  • 00:05:43
    went through that stage for us.
  • 00:05:45
    We’ve been able to start at a higher point.
  • 00:05:54
    Frank Visalli's father was 12 years old
  • 00:05:57
    when he arrived all alone
  • 00:05:58
    in the United States.
  • 00:05:59
    He had come from Sicily.
  • 00:06:00
    That was 53 years ago.
  • 00:06:06
    Frank is a successful dentist
  • 00:06:08
    with a wife and family.
  • 00:06:09
    They live in Lexington, Massachusetts.
  • 00:06:12
    (pouring wine, chatting with wife)
  • 00:06:20
    There is no doubt in Frank's mind
  • 00:06:21
    what freedom combined with opportunity
  • 00:06:23
    meant to his father and then to him,
  • 00:06:26
    or what his Italian grandparents would think
  • 00:06:28
    if they could see how he lives now.
  • 00:06:31
    They would not believe what they would see,
  • 00:06:34
    that a person could emigrate
  • 00:06:36
    from a small island and make such success
  • 00:06:39
    out of their life,
  • 00:06:40
    because to them they were mostly related
  • 00:06:43
    to the fields,
  • 00:06:45
    working in the field as a peasant.
  • 00:06:47
    My father, he came over,
  • 00:06:49
    he made something for himself,
  • 00:06:51
    and then he tried to build a family structure.
  • 00:06:55
    Whatever he did was for his family.
  • 00:06:57
    It was for a better life for his family.
  • 00:07:00
    And I can always remember
  • 00:07:02
    him telling me that,
  • 00:07:03
    you know, the number one thing in life
  • 00:07:05
    is you should get an education
  • 00:07:07
    to become a professional person.
  • 00:07:09
    (dinner conversation, dishes clinking)
  • 00:07:15
    The Visalli family,
  • 00:07:16
    ike all of us who live
  • 00:07:18
    in the United States today,
  • 00:07:19
    owe much to the climate of freedom
  • 00:07:21
    we inherited from the founders
  • 00:07:23
    of our country,
  • 00:07:23
    the climate that gave full scope
  • 00:07:25
    to the poor from other lands who came
  • 00:07:27
    here, and were able to make better
  • 00:07:28
    lives for themselves and their children.
  • 00:07:36
    But in the past 50 years,
  • 00:07:38
    we've been squandering that inheritance
  • 00:07:40
    by allowing government to control
  • 00:07:43
    more and more of our lives,
  • 00:07:44
    instead of relying on ourselves.
  • 00:07:46
    We need to rediscover the old truths
  • 00:07:48
    that the immigrants knew in their bones;
  • 00:07:50
    what economic freedom is,
  • 00:07:52
    and the role it plays
  • 00:07:54
    in preserving personal freedom.
  • 00:07:57
    (gong and Oriental music)
  • 00:08:06
    That's why I came here
  • 00:08:08
    to the South China Sea.
  • 00:08:10
    It's a place where there’s
  • 00:08:11
    an almost laboratory experiment
  • 00:08:13
    in what happens when government is limited
  • 00:08:15
    to its proper function and leaves people free
  • 00:08:18
    to pursue their own objectives.
  • 00:08:24
    If you want to see how the free market
  • 00:08:26
    really works this is the place to come:
  • 00:08:30
    Hong Kong, a place with hardly
  • 00:08:32
    any natural resources.
  • 00:08:34
    About the only one you can name
  • 00:08:36
    is a great harbor.
  • 00:08:37
    Yet the absence of natural resources
  • 00:08:39
    hasn't prevented
  • 00:08:40
    rapid economic development.
  • 00:08:47
    Ships from all nations come here
  • 00:08:49
    to trade because there are no duties,
  • 00:08:51
    no tariffs on imports or exports.
  • 00:08:56
    The power of the free market
  • 00:08:57
    has enabled the industrious people
  • 00:08:59
    of Hong Kong to transform
  • 00:09:01
    what was once barren rock
  • 00:09:03
    into one of the most thriving
  • 00:09:04
    and successful places in Asia.
  • 00:09:09
    Aside from its harbor,
  • 00:09:10
    the only other important resource
  • 00:09:12
    of Hong Kong is people -
  • 00:09:14
    over 4½ million of them.
  • 00:09:20
    Like America a century ago,
  • 00:09:21
    Hong Kong in the past few decades
  • 00:09:23
    has been a haven for people
  • 00:09:25
    who sought the freedom to make the most
  • 00:09:27
    of their own abilities.
  • 00:09:28
    (traffic and marketplace sounds)
  • 00:09:32
    Many of them are refugees from countries
  • 00:09:35
    that don't allow the economic
  • 00:09:36
    and political freedom
  • 00:09:37
    that is taken for granted in Hong Kong.
  • 00:09:39
    Despite rapid population growth,
  • 00:09:41
    despite the lack of natural resources,
  • 00:09:43
    the standard of living
  • 00:09:45
    is one of the highest in all of Asia.
  • 00:09:50
    (sewing machine & factory noises)
  • 00:09:52
    People work hard,
  • 00:09:53
    but Hong Kong's success
  • 00:09:55
    is not based on the exploitation of workers.
  • 00:09:57
    Wages in Hong Kong have gone up
  • 00:10:00
    four-fold since the War,
  • 00:10:01
    and that's after allowing for inflation.
  • 00:10:08
    The workers are free;
  • 00:10:09
    free to work what hours they choose,
  • 00:10:11
    free to move to other jobs if they wish.
  • 00:10:14
    The market gives them that choice.
  • 00:10:17
    It also determines what they make.
  • 00:10:19
    You can be sure that somebody somewhere
  • 00:10:21
    is willing to pay for these cheap,
  • 00:10:23
    plastic toys.
  • 00:10:25
    Otherwise they simply wouldn't be made.
  • 00:10:32
    Competition from places like
  • 00:10:34
    South Korea and Taiwan
  • 00:10:35
    has made cheap products less profitable,
  • 00:10:41
    so Hong Kong businessmen
  • 00:10:43
    have been adapting.
  • 00:10:50
    They have been developing
  • 00:10:51
    more sophisticated products
  • 00:10:52
    and new technology that can match
  • 00:10:54
    anything in the West or East,
  • 00:10:56
    and their employees have been
  • 00:10:58
    developing new skills.
  • 00:10:59
    (high-tech machinery sounds)
  • 00:11:05
    Hong Kong never stops.
  • 00:11:07
    There's always some business to be done,
  • 00:11:09
    some opportunity to be seized.
  • 00:11:11
    It’s long been a tourist center
  • 00:11:13
    and a shopper’s paradise,
  • 00:11:14
    and it's now one of the business centers
  • 00:11:16
    of the East.
  • 00:11:21
    It's the ordinary people of Hong Kong
  • 00:11:23
    who benefit from all this
  • 00:11:24
    effort and enterprise.
  • 00:11:26
    (bustling street sounds)
  • 00:11:34
    This thriving, bustling, dynamic city
  • 00:11:37
    has been made possible by the free market-
  • 00:11:40
    indeed, the freest market in the world.
  • 00:11:42
    The free market enables people
  • 00:11:44
    to go into any industry they want,
  • 00:11:46
    to trade with whomever they want,
  • 00:11:47
    to buy in the cheapest market
  • 00:11:49
    around the world,
  • 00:11:50
    to sell in the dearest market
  • 00:11:51
    around the world.
  • 00:11:52
    But most important of all,
  • 00:11:54
    if they fail, they bear the cost.
  • 00:11:57
    If they succeed, they get the benefit.
  • 00:12:01
    And it's that atmosphere of incentive
  • 00:12:05
    that has induced them to work,
  • 00:12:07
    to adjust, to save, to produce a miracle.
  • 00:12:14
    This miracle hasn't been achieved
  • 00:12:16
    by government action,
  • 00:12:17
    by someone sitting in one
  • 00:12:18
    of those tall buildings
  • 00:12:19
    telling people what to do.
  • 00:12:21
    It's been achieved by allowing
  • 00:12:23
    the market to work.
  • 00:12:32
    Walk down any street in Hong Kong
  • 00:12:34
    and you will see the impersonal forces
  • 00:12:36
    of the market in operation.
  • 00:12:40
    Mr. Cheung makes metal containers.
  • 00:12:42
    Nobody has ordered him to.
  • 00:12:43
    He does it because he has found
  • 00:12:45
    that he can do better for himself that way
  • 00:12:47
    than by making anything else.
  • 00:12:49
    But if demand for metal containers
  • 00:12:51
    went down,
  • 00:12:52
    or somebody found a way
  • 00:12:53
    of making them cheaper,
  • 00:12:55
    Mr. Cheung would soon get that message.
  • 00:13:01
    A few doors away,
  • 00:13:02
    Mr. Yu's firm has been making traditional
  • 00:13:04
    Cantonese wedding gowns for 42 years.
  • 00:13:07
    But the demand
  • 00:13:08
    for these elaborate garments is falling.
  • 00:13:10
    The firm has already gotten that message
  • 00:13:13
    and is now looking for another product.
  • 00:13:16
    The market tells producers
  • 00:13:18
    not only what to produce,
  • 00:13:19
    but how best to produce it,
  • 00:13:20
    through another set of prices:
  • 00:13:22
    the cost of materials,
  • 00:13:23
    the wages of labor, and so on.
  • 00:13:29
    For example,
  • 00:13:30
    if these workers could earn more
  • 00:13:31
    doing something else,
  • 00:13:32
    Mr. Ho would soon find a way
  • 00:13:35
    to mechanize his picture frame production.
  • 00:13:40
    Inside this Chinese medicine shop,
  • 00:13:42
    a market transaction is going on.
  • 00:13:45
    The customer's confidence
  • 00:13:47
    that this painful-looking ordeal
  • 00:13:49
    will help him doesn't rest
  • 00:13:50
    on any official certification
  • 00:13:52
    of the bone doctor's qualifications.
  • 00:13:54
    It comes from experience,
  • 00:13:55
    his own or his friends’.
  • 00:13:57
    In his turn,
  • 00:13:58
    the doctor treats him not because
  • 00:14:00
    he has been ordered to,
  • 00:14:01
    but because he gets paid.
  • 00:14:03
    The transaction is voluntary,
  • 00:14:05
    so both parties must expect to benefit
  • 00:14:08
    or it will not take place.
  • 00:14:17
    Believe it or not, this backyard
  • 00:14:19
    is the entrance to a factory.
  • 00:14:26
    (factory noise)
  • 00:14:27
    The workers here are some of the
  • 00:14:28
    best paid in Hong Kong.
  • 00:14:34
    It's hot, sticky, and extremely noisy.
  • 00:14:38
    The workers are highly skilled,
  • 00:14:40
    so they can command high wages.
  • 00:14:44
    They could induce their employer to improve
  • 00:14:47
    working conditions by offering to work for
  • 00:14:49
    less, but they would rather accept the
  • 00:14:51
    conditions, take the high wages,
  • 00:14:53
    and spend them as they wish.
  • 00:14:55
    That's their choice.
  • 00:15:00
    The best-known statement of the principles
  • 00:15:02
    of a free market, the kind of free market
  • 00:15:04
    that operates in Hong Kong,
  • 00:15:05
    was written on the other side of the world.
  • 00:15:11
    (river running)
  • 00:15:18
    (bagpipes playing)
  • 00:15:25
    Two-hundred years ago, in Scotland,
  • 00:15:27
    Adam Smith taught at
  • 00:15:28
    the University of Glasgow.
  • 00:15:34
    His brilliant book, The Wealth of Nations,
  • 00:15:36
    was based on the lectures he gave here.
  • 00:15:40
    (birds singing)
  • 00:15:43
    The basic principles underlying the
  • 00:15:45
    free market, as Adam Smith taught
  • 00:15:47
    them to his students in this university,
  • 00:15:50
    are really very simple.
  • 00:15:54
    Look at this lead pencil.
  • 00:15:56
    There is not a single person in the world
  • 00:15:58
    who could make this pencil.
  • 00:16:00
    Remarkable statement? Not at all.
  • 00:16:03
    The wood from which it's made,
  • 00:16:05
    for all I know, comes from a tree that
  • 00:16:07
    was cut down in the State of Washington.
  • 00:16:09
    To cut down that tree, it took a saw.
  • 00:16:12
    To make the saw, it took steel.
  • 00:16:15
    To make the steel, it took iron ore.
  • 00:16:18
    This black center, we call it lead but it's
  • 00:16:21
    really graphite, compressed graphite,
  • 00:16:24
    I'm not sure
  • 00:16:25
    where it comes from, but I think it comes
  • 00:16:27
    from some mines in South America.
  • 00:16:30
    This red top up here, the eraser,
  • 00:16:33
    a bit of rubber, probably comes from Malaya,
  • 00:16:36
    where the rubber tree isn't even native.
  • 00:16:39
    It was imported from South America
  • 00:16:40
    by some businessmen with the
  • 00:16:43
    help of the British government.
  • 00:16:45
    This brass feral--I haven't the slightest idea
  • 00:16:48
    where it came from, or the yellow paint,
  • 00:16:52
    or the paint that made the black lines,
  • 00:16:54
    or the glue that holds it together.
  • 00:16:57
    Literally thousands of people cooperated
  • 00:17:00
    to make this pencil, people who don't
  • 00:17:03
    speak the same language, who practice
  • 00:17:05
    different religions, who might hate
  • 00:17:08
    one another if they ever met.
  • 00:17:10
    When you go down to the store and
  • 00:17:12
    buy this pencil, you are in effect,
  • 00:17:15
    trading a few minutes of your time for
  • 00:17:18
    a few seconds of the time of
  • 00:17:21
    all of those thousands of people.
  • 00:17:24
    What brought them together and induced
  • 00:17:26
    them to cooperate to make this pencil?
  • 00:17:28
    There was no commissar sending out offices,
  • 00:17:30
    sending out orders from some central office.
  • 00:17:34
    It was the magic of the price system,
  • 00:17:37
    the impersonal operation of prices that
  • 00:17:41
    brought them together, and got them to
  • 00:17:43
    cooperate to make this pencil so that
  • 00:17:45
    you could have it for a trifling sum.
  • 00:17:48
    That is why the operation of the free market
  • 00:17:53
    is so essential, not only to promote
  • 00:17:57
    productive efficiency, but, even more,
  • 00:18:00
    to foster harmony and peace among
  • 00:18:02
    the peoples of the world.
  • 00:18:05
    These people are crossing between
  • 00:18:07
    two very different societies.
  • 00:18:12
    This is Lo Wu, the official border crossing
  • 00:18:14
    point between China and Hong Kong.
  • 00:18:17
    Nowadays there's a considerable amount
  • 00:18:18
    of traffic at this border.
  • 00:18:20
    People cross a little more freely
  • 00:18:21
    than they used to.
  • 00:18:28
    Many people from Hong Kong trade in China,
  • 00:18:30
    and the market has helped bring the two
  • 00:18:33
    countries closer together,
  • 00:18:36
    (train sounds)
  • 00:18:39
    but the barriers between them
  • 00:18:41
    are still very real.
  • 00:18:45
    On this side of the border,
  • 00:18:47
    people are free not only in the marketplace,
  • 00:18:50
    but in all their lives.
  • 00:18:51
    They are free to say what they want,
  • 00:18:53
    to write what they want,
  • 00:18:54
    to do pretty much as they please.
  • 00:18:57
    Not so over there.
  • 00:18:59
    That is why people in China who
  • 00:19:01
    cannot get permission to leave,
  • 00:19:04
    go to desperate lengths to escape.
  • 00:19:07
    They risk their lives in the process.
  • 00:19:09
    Many lose their lives, but that
  • 00:19:11
    doesn't keep others from following.
  • 00:19:13
    Some are attracted by the higher material
  • 00:19:15
    standard of life in Hong Kong, but more
  • 00:19:18
    by the natural human desire to be free.
  • 00:19:23
    The people who get official permission
  • 00:19:25
    to leave China are fortunate.
  • 00:19:27
    They are going to be able to enjoy
  • 00:19:28
    the benefits of the economic freedom
  • 00:19:30
    they will find in Hong Kong.
  • 00:19:33
    But more important, that will
  • 00:19:35
    give them a much wider freedom.
  • 00:19:40
    Human and political freedom has never
  • 00:19:43
    existed, and cannot exist, without a
  • 00:19:46
    large measure of economic freedom.
  • 00:19:49
    Those of us who have been so fortunate
  • 00:19:51
    as to have been born in a free society tend
  • 00:19:54
    to take freedom for granted, to regard it
  • 00:19:56
    as the natural state of mankind, it is not.
  • 00:19:59
    It is a rare and precious thing.
  • 00:20:02
    Most people throughout history,
  • 00:20:03
    most people today,
  • 00:20:05
    have lived in conditions of tyranny
  • 00:20:08
    and misery, not of freedom and prosperity.
  • 00:20:12
    The clearest demonstration of how
  • 00:20:14
    much people value freedom is the way
  • 00:20:17
    they vote with their feet, when they
  • 00:20:18
    have no other way to vote.
  • 00:20:28
    Of course, many of the people who pour into
  • 00:20:30
    Hong Kong will end up in conditions that
  • 00:20:32
    most of us in the West would find appalling.
  • 00:20:36
    Hong Kong is very far from utopia.
  • 00:20:39
    It has its slums, its crime,
  • 00:20:42
    its desperately poor people.
  • 00:20:46
    (boat engines)
  • 00:20:55
    But the people are free.
  • 00:20:57
    That's, after all, why so many of them
  • 00:20:59
    have come here, despite having to
  • 00:21:01
    live in leaky house boats in one of
  • 00:21:03
    Hong Kong's many small harbors.
  • 00:21:05
    Here they have the freedom and the
  • 00:21:06
    opportunity to better themselves,
  • 00:21:08
    to improve their lot, and many succeed.
  • 00:21:17
    There's appalling poverty in Hong Kong,
  • 00:21:19
    it's true, but the conditions of the people
  • 00:21:21
    have been getting better over time.
  • 00:21:24
    They're far better off now
  • 00:21:26
    than they were when they first
  • 00:21:27
    came across the border from China.
  • 00:21:29
    And that poverty, appalling to us,
  • 00:21:31
    because we're accustomed to much
  • 00:21:33
    higher standards of life, is not poverty as
  • 00:21:36
    viewed by most of the people in the world.
  • 00:21:39
    It's a poverty to which they would aspire.
  • 00:21:41
    A state of affairs they would like to achieve.
  • 00:21:49
    There is an enormous amount of poverty
  • 00:21:51
    in the world everywhere.
  • 00:21:52
    There is no system that's perfect.
  • 00:21:54
    There is no system that's going to eliminate
  • 00:21:56
    completely poverty, in whatever sense.
  • 00:21:59
    The question is:
  • 00:21:59
    Which system has the greatest chance?
  • 00:22:03
    Which is the best arrangement for
  • 00:22:06
    enabling poor people to improve
  • 00:22:08
    their life, and on that, the evidence of
  • 00:22:11
    history speaks with a single voice.
  • 00:22:13
    I do not know any exception to the
  • 00:22:15
    to the proposition that, if you compare like
  • 00:22:19
    with like, the freer the system, the better
  • 00:22:21
    off the ordinary poor people have been.
  • 00:22:27
    Ask yourself what it is that assures these
  • 00:22:29
    garment workers in Hong Kong a good
  • 00:22:31
    wage-- not high by Western standards,
  • 00:22:33
    but high enough to enable them to live
  • 00:22:35
    far better than most people in the world.
  • 00:22:40
    It’s not government or trade unions that
  • 00:22:43
    do it. These workers do well because there
  • 00:22:45
    is competition for their labor and skills.
  • 00:22:54
    When a businessman faces trouble,
  • 00:22:57
    a market threatens to disappear, or a new
  • 00:22:59
    competitor arises, there are
  • 00:23:01
    two things he can do.
  • 00:23:02
    He can turn to the government for a tariff
  • 00:23:04
    or a quota or some other restriction on
  • 00:23:06
    competition, or he can adjust and adapt.
  • 00:23:11
    In Hong Kong, the first option is closed.
  • 00:23:14
    Hong Kong is too dependent on
  • 00:23:16
    foreign trade, so that the government
  • 00:23:18
    has simply had to adopt a policy of
  • 00:23:20
    complete non-interference.
  • 00:23:23
    That's tough on some individuals, but it’s
  • 00:23:25
    extremely healthy for the society as a whole.
  • 00:23:28
    Only the businessmen who can adapt,
  • 00:23:31
    who are flexible and adjustable, survive,
  • 00:23:35
    and they create good employment
  • 00:23:36
    opportunities for the rest.
  • 00:23:39
    The complete absence of tariffs or any
  • 00:23:41
    other restrictions on trade is one of
  • 00:23:43
    the main reasons why Hong Kong has
  • 00:23:46
    been able to provide such a rapidly
  • 00:23:48
    rising standard of life for its people.
  • 00:23:52
    Even Communist China recognizes
  • 00:23:54
    Hong Kong's success.
  • 00:23:56
    It set up shop here and now accepts
  • 00:23:59
    the universal symbol of capitalism.
  • 00:24:04
    The Bank of China, the official bank
  • 00:24:06
    of Communist China,
  • 00:24:07
    is the largest bank in Hong Kong.
  • 00:24:10
    There's no doubt that Communist China
  • 00:24:12
    recognizes the power of the market.
  • 00:24:16
    In all this, the government of Hong Kong
  • 00:24:18
    has played an important part;
  • 00:24:21
    not only by what it has done, but as much
  • 00:24:23
    by what it has refrained from doing.
  • 00:24:25
    It has made sure that laws are
  • 00:24:27
    enforced and contracts honored.
  • 00:24:29
    It has provided the conditions in which
  • 00:24:32
    a free market can work.
  • 00:24:34
    Most importantly, it has not tried to direct
  • 00:24:37
    the economic activities of the colony.
  • 00:24:45
    No government official is telling
  • 00:24:46
    these people what to do.
  • 00:24:48
    They are free to buy from whom they want,
  • 00:24:49
    to sell to whom they want,
  • 00:24:50
    to work for whom they want.
  • 00:24:52
    Sometimes it looks like chaos and so it is,
  • 00:24:54
    but underneath it's highly organized by
  • 00:24:57
    the impersonal forces of a free marketplace.
  • 00:25:03
    (outdoor marketplace sounds)
  • 00:25:18
    The impersonal forces of a free marketplace
  • 00:25:21
    at work back here in the United States.
  • 00:25:27
    Prices are the key.
  • 00:25:29
    The prices that people are willing to pay
  • 00:25:31
    for products determines what's produced.
  • 00:25:34
    The prices that have to be paid for raw
  • 00:25:36
    materials, for the wages of labor,
  • 00:25:38
    and so on, determine the cheapest
  • 00:25:39
    way to produce these things.
  • 00:25:42
    And in addition, these self same prices,
  • 00:25:44
    the wages of labor, the interest on capital,
  • 00:25:47
    and so on, determine how much each
  • 00:25:50
    person has to spend on the market.
  • 00:25:53
    It's tempting to try to separate this final
  • 00:25:56
    function of prices from the other two,
  • 00:25:58
    to think that some how or other you can use
  • 00:26:01
    prices to transmit the information about
  • 00:26:03
    what should be produced and how it should
  • 00:26:05
    be produced, without using those prices to
  • 00:26:08
    determine how much each person gets.
  • 00:26:10
    Indeed, government activity over the past
  • 00:26:13
    few decades has been devoted to little else.
  • 00:26:16
    But that's a very serious mistake.
  • 00:26:18
    If what people get is not going to be
  • 00:26:20
    determined on what they produce,
  • 00:26:22
    on how they produce it,
  • 00:26:23
    on how successfully they work,
  • 00:26:25
    what incentive is there for them
  • 00:26:27
    to act in accordance with the
  • 00:26:28
    information that is transmitted?
  • 00:26:30
    There is only one alternative:
  • 00:26:32
    Force, some people telling
  • 00:26:35
    other people what to do.
  • 00:26:40
    (vendors selling, people shopping)
  • 00:27:15
    The fundamental principle of the
  • 00:27:17
    free society is voluntary cooperation.
  • 00:27:20
    The economic market,
  • 00:27:21
    buying and selling, is one example.
  • 00:27:24
    But it's only one example.
  • 00:27:25
    Voluntary cooperation is
  • 00:27:27
    far broader than that.
  • 00:27:29
    To take an example that at first sight
  • 00:27:31
    seems about as far away as you can get,
  • 00:27:33
    the language we speak, the words we use,
  • 00:27:36
    the complex structure of our grammar.
  • 00:27:39
    No government bureau designed that.
  • 00:27:41
    It arose out of the voluntary
  • 00:27:43
    interactions of people seeking to
  • 00:27:45
    communicate with one another.
  • 00:27:47
    Or consider some of the great
  • 00:27:48
    scientific achievements of our time:
  • 00:27:51
    the discoveries of an Einstein or a Newton,
  • 00:27:55
    the inventions of a Thomas Alva Edison
  • 00:27:59
    or an Alexander Graham Bell.
  • 00:28:00
    Or even consider the great charitable
  • 00:28:02
    activities of a Florence Nightingale
  • 00:28:04
    or an Andrew Carnegie.
  • 00:28:06
    These weren't done under orders from
  • 00:28:08
    a government office.
  • 00:28:09
    They were done by individuals deeply
  • 00:28:12
    interested in what they were doing,
  • 00:28:13
    pursuing their own interests,
  • 00:28:14
    and cooperating with one another.
  • 00:28:17
    This kind of voluntary cooperation is built
  • 00:28:20
    so deeply into the structure of our society
  • 00:28:22
    that we tend to take it for granted.
  • 00:28:24
    Yet the whole of our Western civilization
  • 00:28:27
    is the unintended consequence of
  • 00:28:29
    that kind of a voluntary cooperation,
  • 00:28:32
    of people cooperating with one another
  • 00:28:35
    to pursue their own interests,
  • 00:28:36
    yet in the process building a great society.
  • 00:28:40
    (music)
  • 00:28:43
    McKenzie: We are here at the Harper Library
  • 00:28:44
    at the University of Chicago to
  • 00:28:46
    Our distinguished guests have
  • 00:28:47
    their own ideas, too.
  • 00:28:48
    So, let's join them now.
  • 00:28:50
    It seemed to me he was saying that
  • 00:28:51
    the golden age for America,
  • 00:28:53
    when it was truly a land of opportunity,
  • 00:28:55
    was the late 19th, early 20th century,
  • 00:28:57
    no regulations, no permits, no red tape.
  • 00:29:00
    I would argue that the government
  • 00:29:02
    played a decisive role in an enormous
  • 00:29:04
    grant to the railroads in creating
  • 00:29:05
    an America capitalist economy.
  • 00:29:07
    And secondly,
  • 00:29:08
    if you go back to that golden age,
  • 00:29:09
    you find that the government constantly
  • 00:29:11
    intervened in a rather characteristic way,
  • 00:29:13
    it used troops against strikers.
  • 00:29:16
    American labor history has been the most
  • 00:29:17
    violent, bloody class struggle anywhere
  • 00:29:20
    in the world, and the government,
  • 00:29:22
    up until 1932, the law, the courts,
  • 00:29:24
    the society, always sided with business,
  • 00:29:28
    always sided against working people.
  • 00:29:30
    Therefore I would argue that both
  • 00:29:32
    economically and in terms of repressing the
  • 00:29:34
    attempts of people to assert their freedom,
  • 00:29:37
    our government prior to the rise of
  • 00:29:38
    the welfare state in this country was
  • 00:29:40
    more or less owned by business.
  • 00:29:42
    Milton Friedman.
  • 00:29:43
    Michael Harrington is seeing the
  • 00:29:45
    hole in the barn door and he's
  • 00:29:46
    not looking at the barn door itself.
  • 00:29:48
    The plain fact is during the whole of
  • 00:29:50
    that period, while government did intervene
  • 00:29:52
    from time to time, and mostly to do harm,
  • 00:29:54
    I agree with him that government
  • 00:29:56
    intervention was, in the main,
  • 00:29:57
    not a good thing, tariffs for example.
  • 00:30:00
    On the other hand, throughout
  • 00:30:02
    that whole period government spending,
  • 00:30:04
    federal government spending,
  • 00:30:06
    central government spending, never was
  • 00:30:07
    more than 3 percent of the national income.
  • 00:30:09
    It was trivial.
  • 00:30:10
    The land grants to the railroads
  • 00:30:13
    were a minor factor.
  • 00:30:14
    I'm not--I don't approve of them.
  • 00:30:16
    I'm not saying they were a good thing,
  • 00:30:17
    but they were a very minor factor.
  • 00:30:19
    One has to have a sense of proportion
  • 00:30:21
    and that goes to the whole discussion.
  • 00:30:23
    I am not an anarchist.
  • 00:30:25
    I am not in favor of eliminating government.
  • 00:30:27
    I believe we need a government,
  • 00:30:28
    but we need a government that
  • 00:30:30
    sets a framework, and rules within which
  • 00:30:33
    individuals, pursuing their own objectives,
  • 00:30:36
    can work together and cooperate together,
  • 00:30:38
    and they work together and cooperate
  • 00:30:39
    together not only in economic areas.
  • 00:30:41
    I want to hold you for a moment,
  • 00:30:42
    though, to that golden age theory,
  • 00:30:44
    that we were best when we were regulated
  • 00:30:46
    least in the late 19th and early 20th century,
  • 00:30:48
    because remember the sweatshop analogy
  • 00:30:50
    comes out of there, when there was no
  • 00:30:51
    attempt to restrict hours of work or to
  • 00:30:53
    regulate working conditions.
  • 00:30:55
    Now, is that a view you accept
  • 00:30:57
    of that period?
  • 00:30:59
    Well I think it's necessary to contrast
  • 00:31:00
    what's happened in the interim.
  • 00:31:02
    I don't see how we can talk about that
  • 00:31:04
    without comparing it with the interim period.
  • 00:31:06
    Now you talked earlier about the fact that
  • 00:31:10
    during the last fifty years
  • 00:31:11
    we had squandered some
  • 00:31:13
    of our inheritance of freedom.
  • 00:31:15
    FRIEDMAN: Absolutely
  • 00:31:16
    And I believe during the last fifty years
  • 00:31:18
    we really have improved our freedom.
  • 00:31:21
    I spent over half that time working for one
  • 00:31:23
    of the world's largest industrial companies,
  • 00:31:25
    the Dupont Company, deeply involved with
  • 00:31:28
    the launching of new ventures, and got to
  • 00:31:29
    know the free enterprise system well,
  • 00:31:31
    and have a very healthy respect for it.
  • 00:31:33
    But during that interval,
  • 00:31:35
    and particularly during the last few years
  • 00:31:37
    when I have been more involved with
  • 00:31:38
    government and with environmental matters,
  • 00:31:40
    I have become convinced that our freedom
  • 00:31:44
    was improved when the people are allowed
  • 00:31:46
    to add to their freedom in the marketplace.
  • 00:31:49
    The freedom for voting with their dollars in
  • 00:31:51
    the market place, the freedom to vote
  • 00:31:53
    with their ballots in the polling place,
  • 00:31:56
    to put some restraints on the excesses
  • 00:31:58
    of the marketplace, particularly when
  • 00:32:00
    you're concerned with such things as the
  • 00:32:03
    long-term impact on our health from the
  • 00:32:06
    pollution of our environment, the
  • 00:32:07
    introduction of carcinogenic materials,
  • 00:32:10
    or the radiation of our
  • 00:32:11
    of our people with nuclear products.
  • 00:32:13
    What about putting some restraints on
  • 00:32:15
    the excesses of government?
  • 00:32:17
    Hasn't that become an ever
  • 00:32:18
    more serious problem?
  • 00:32:19
    How is it that a government of the people,
  • 00:32:21
    supposedly, does things which a very large
  • 00:32:24
    fraction of the people would really prefer not
  • 00:32:26
    to have done, such as over-tax them,
  • 00:32:29
    over-govern them, over-regulate them?
  • 00:32:31
    I think you're looking, again,
  • 00:32:33
    at one side and not the other.
  • 00:32:35
    And of course I agree we have to look
  • 00:32:37
    at what's happened in the interim.
  • 00:32:38
    We're better off than
  • 00:32:39
    we were fifty years ago.
  • 00:32:41
    Never would deny that.
  • 00:32:42
    But we stand on the shoulders of
  • 00:32:44
    the people that went before us.
  • 00:32:46
    We have to look at how much they achieved
  • 00:32:48
    from where they started, and that was
  • 00:32:50
    the period in which you had the tremendous
  • 00:32:52
    influx of immigrants from abroad,
  • 00:32:55
    millions and millions and millions of them,
  • 00:32:57
    when you opened up a new continent,
  • 00:32:59
    when you had achievements.
  • 00:33:00
    Milton, are you saying, though,
  • 00:33:02
    that there's any sense, in which you'd rather
  • 00:33:03
    go back to those circumstances where
  • 00:33:05
    there are no regulations of factory work,
  • 00:33:07
    no hours, limitations of hours worked?
  • 00:33:09
    Do you want to return to that
  • 00:33:10
    or do you just say that was a
  • 00:33:12
    stepping-stone to where we are now?
  • 00:33:13
    It depends on what you mean
  • 00:33:14
    by circumstances.
  • 00:33:16
    I don't want to have to go back to using a
  • 00:33:17
    horse and buggy instead of an automobile,
  • 00:33:19
    but I would prefer to go back to the
  • 00:33:22
    kinds of governmental regulations,
  • 00:33:23
    or absence of regulations,
  • 00:33:25
    the greater degree of freedom which was
  • 00:33:27
    given to individuals to pursue one activity
  • 00:33:29
    or another, which prevailed then,
  • 00:33:32
    than which prevails now.
  • 00:33:34
    I think that, really,
  • 00:33:35
    our industrial leaders have been
  • 00:33:37
    dragged into the future screaming.
  • 00:33:40
    They resisted the Child Labor laws;
  • 00:33:41
    they resisted Social Security, labor unions,
  • 00:33:44
    and now the environmental movement.
  • 00:33:46
    Once the government forced them to pay
  • 00:33:48
    attention to those, by the voting of the
  • 00:33:50
    people in the ballot box and in the polling
  • 00:33:52
    place, then the industrial leaders,
  • 00:33:55
    business leaders, paid attention to those
  • 00:33:57
    rules and have done a good job in
  • 00:33:59
    most cases of abiding by them.
  • 00:34:00
    FRIEDMAN: Excuse me.
  • 00:34:01
    Now Bob Galvin is an industrialist,
  • 00:34:03
    now come on, is that a fair statement?
  • 00:34:04
    Maybe the industrialists have a clearer
  • 00:34:08
    view of history and its prospects.
  • 00:34:11
    The most precious asset we possess is
  • 00:34:14
    freedom. The easiest way to lose one's
  • 00:34:16
    freedom is to go into receivership,
  • 00:34:18
    and I mean economic receivership.
  • 00:34:21
    Because a receiver is a dictator.
  • 00:34:23
    And to the degree that we employ
  • 00:34:26
    the costs and the burdens of government
  • 00:34:29
    that lead us in the direction of further debt,
  • 00:34:32
    ultimate receivership,
  • 00:34:34
    and then the political consequence of the
  • 00:34:37
    imposition of the political dictator over
  • 00:34:41
    the economic and the job and the living
  • 00:34:44
    rights of the individual, maybe the
  • 00:34:46
    industrialists can see farther down the pike
  • 00:34:48
    as to the consequence of all this.
  • 00:34:49
    Michael Harrington.
  • 00:34:51
    I just think that -- two things.
  • 00:34:53
    One, to view freedom positively:
  • 00:34:55
    I think people over 65 years of age
  • 00:34:58
    in the United States today are freer
  • 00:34:59
    now because of Medicare.
  • 00:35:02
    I do not think that the freedom to die from
  • 00:35:04
    the lack of medicine was a very good thing.
  • 00:35:07
    Secondly, related to industrialists,
  • 00:35:09
    I think that one of the startling things about
  • 00:35:13
    American history is that when Franklin
  • 00:35:15
    Roosevelt was saving the system from itself,
  • 00:35:17
    the main beneficiaries were screaming
  • 00:35:19
    bloody murder at him for being a traitor
  • 00:35:21
    to his class, when he was in fact
  • 00:35:23
    the salvation of that class.
  • 00:35:25
    And I think if you, therefore,
  • 00:35:27
    if you look at our history,
  • 00:35:27
    I do think you find a tremendous myopia on
  • 00:35:30
    the part of industrialists, and you find that
  • 00:35:33
    the positive increments to our freedom,
  • 00:35:36
    interestingly enough, have not come from
  • 00:35:37
    the college graduates, but often from
  • 00:35:39
    people with -- not from the best people.
  • 00:35:42
    It's come from working people,
  • 00:35:43
    it's come from poor people, it's come from
  • 00:35:44
    blacks and Hispanics and the like.
  • 00:35:47
    Milton, would you reply,
  • 00:35:48
    but then tell us why you took us to
  • 00:35:49
    Hong Kong to prove something.
  • 00:35:51
    Sure.
  • 00:35:51
    Unaccustomed as I am to agreeing with
  • 00:35:53
    Michael Harrington, I will agree in part
  • 00:35:55
    with what he's just said. I do not believe
  • 00:35:58
    it's proper to put the situation in terms
  • 00:36:01
    of industrialist versus government.
  • 00:36:03
    On the contrary, one of the reasons why
  • 00:36:06
    I am in favor of less government is:
  • 00:36:09
    because when you have more government
  • 00:36:10
    industrialists take it over, and the two
  • 00:36:12
    together form a coalition against the
  • 00:36:15
    ordinary worker and the ordinary consumer.
  • 00:36:18
    I think business is a wonderful institution
  • 00:36:20
    provided it has to face competition in
  • 00:36:22
    the marketplace and it can't get away
  • 00:36:24
    with something except by producing a
  • 00:36:26
    better product at a lower cost,
  • 00:36:27
    and that's why I don't want government to
  • 00:36:29
    step in and help the business community.
  • 00:36:32
    Now I want to go to your
  • 00:36:33
    question about Medicare.
  • 00:36:36
    There are many people who have
  • 00:36:37
    benefited from Medicare,
  • 00:36:38
    but you're not looking at the cost side.
  • 00:36:40
    What has happened to the people who are
  • 00:36:41
    paying for it? It isn't -- we don't have a free
  • 00:36:44
    good, it isn't coming from nowhere.
  • 00:36:46
    And are they benefiting from it in a cost
  • 00:36:49
    effective way? Those are the questions.
  • 00:36:51
    It's demagoguery, if you'll pardon
  • 00:36:52
    me, Michael Harrington, to say the people
  • 00:36:56
    who have Medicare are freer.
  • 00:36:58
    Of course, in one dimension.
  • 00:37:01
    But they themselves have been paying all
  • 00:37:02
    their lives, and have they gotten a good
  • 00:37:05
    bargain? At the moment they have.
  • 00:37:07
    The young men, the young working people
  • 00:37:09
    who are going into Social Security now,
  • 00:37:11
    they're going to get a very raw deal indeed.
  • 00:37:13
    Milton, interestingly on that point,
  • 00:37:16
    people over 65 are paying more of their
  • 00:37:18
    spendable income for medical care now,
  • 00:37:21
    than they were before Medicare was enacted.
  • 00:37:23
    It's been not a very successful program.
  • 00:37:25
    Government doesn't do things well.
  • 00:37:27
    It doesn't do things well if it hasn't
  • 00:37:28
    done things well in Britain, in Canada,
  • 00:37:30
    in the United States.
  • 00:37:31
    Now, Milton, then you took us to Hong Kong
  • 00:37:33
    on exactly that point. That here you said
  • 00:37:36
    was a true model of the market operating.
  • 00:37:40
    Now is that really the fair
  • 00:37:42
    description of Hong Kong?
  • 00:37:44
    At the moment, yes. It's not -- again,
  • 00:37:47
    there aren't any such things as a hundred
  • 00:37:48
    percent one way and a hundred percent
  • 00:37:50
    the other. Everything is mixed, of course.
  • 00:37:52
    Hong Kong has a government, and it
  • 00:37:55
    happens to be a government in this case --
  • 00:37:57
    there's no democracy in Hong Kong.
  • 00:37:58
    It's run from Britain. It's a Crown Colony of
  • 00:38:01
    Britain, and the British governor general
  • 00:38:04
    and so on, and financial secretary run it.
  • 00:38:07
    But the situation in Hong Kong is:
  • 00:38:10
    That there is very little
  • 00:38:12
    government regulation of industry.
  • 00:38:13
    There's complete free trade.
  • 00:38:14
    There are no tariffs,
  • 00:38:16
    there are no export subsidies,
  • 00:38:18
    there are no restrictions on
  • 00:38:19
    the purchase and sale of monies,
  • 00:38:24
    so that it is,
  • 00:38:25
    comes about as close to
  • 00:38:26
    a complete free market
  • 00:38:28
    as you can find in the world today.
  • 00:38:30
    And there is no doubt
  • 00:38:31
    that the main beneficiaries
  • 00:38:33
    have been the low-income people,
  • 00:38:37
    the poor people who have poured
  • 00:38:38
    into Hong Kong by the hundreds
  • 00:38:39
    of thousands and millions,
  • 00:38:41
    out of Red China and who keep on trying
  • 00:38:43
    to get in there.
  • 00:38:44
    This goes to Michael Harrington's question,
  • 00:38:46
    if an industrial system,
  • 00:38:47
    if a free enterprise system
  • 00:38:49
    is a system in which the poor are ground
  • 00:38:51
    beneath the heels
  • 00:38:53
    of the rapacious industrialists
  • 00:38:56
    he's worried about,
  • 00:38:57
    how would he explain the success
  • 00:38:59
    in Hong Kong,
  • 00:39:00
    the extent to which people continue to vote
  • 00:39:02
    with their feet to go there?
  • 00:39:03
    You're not asking us to make
  • 00:39:05
    of the United States one gigantic
  • 00:39:07
    Hong Kong, or a sweatshop,
  • 00:39:09
    or whatever you want to call it.
  • 00:39:10
    You would acknowledge that there is
  • 00:39:13
    a historical development of an economy,
  • 00:39:17
    and what may be right for one stage
  • 00:39:20
    in the development of an economy
  • 00:39:21
    may not be right for another stage.
  • 00:39:23
    Isn't the issue, where do we go from here?
  • 00:39:26
    What pragmatic decisions do we make
  • 00:39:30
    about the direction
  • 00:39:30
    of the American economy?
  • 00:39:32
    Should it be toward
  • 00:39:33
    more and more government,
  • 00:39:34
    or should it be trying to preserve
  • 00:39:36
    an adequate balance between
  • 00:39:37
    freedom of choice
  • 00:39:39
    and government intervention?
  • 00:39:40
    Again, the problem is
  • 00:39:42
    to distinguish two things.
  • 00:39:44
    This comes back to an earlier comment.
  • 00:39:47
    The circumstances in terms of
  • 00:39:48
    the physical arrangements,
  • 00:39:50
    and the circumstances in terms of the rules
  • 00:39:53
    that guide the society.
  • 00:39:55
    Now in the case of Hong Kong,
  • 00:39:57
    of course I'm not asking that we crowd
  • 00:39:59
    our people to a density of population
  • 00:40:02
    such as Hong Kong has.
  • 00:40:03
    Hong Kong is a marvelous example
  • 00:40:05
    just because its circumstances
  • 00:40:06
    are so terrible,
  • 00:40:07
    it's physical circumstances.
  • 00:40:09
    And the people in Hong Kong would love
  • 00:40:10
    to get elsewhere,
  • 00:40:11
    into less crowded circumstances,
  • 00:40:13
    if other people would let them in.
  • 00:40:15
    This is the problem of immigration,
  • 00:40:16
    which is a very important restriction
  • 00:40:18
    on human freedom.
  • 00:40:19
    In the period before 1913 we had complete,
  • 00:40:22
    a hundred percent freedom of immigration
  • 00:40:24
    into the United States.
  • 00:40:24
    We don't now, but go back to your question.
  • 00:40:27
    Do you think Hong Kong would exist
  • 00:40:28
    if it weren't in close juxtaposition
  • 00:40:30
    to Communist China?
  • 00:40:32
    Hong Kong would exist.
  • 00:40:33
    It is very dubious that it would have
  • 00:40:36
    the policies it has now if it weren't
  • 00:40:38
    in close juxtaposition
  • 00:40:40
    to Communist China.
  • 00:40:41
    Well, now, but to answer
  • 00:40:42
    your question directly:
  • 00:40:43
    Yes, I am in favor of the United States
  • 00:40:47
    having not the circumstances,
  • 00:40:50
    not the physical circumstances,
  • 00:40:51
    but the policies that Hong Kong
  • 00:40:54
    has had of zero tariffs,
  • 00:40:55
    of complete free trade,
  • 00:40:58
    of no restrictions on exports,
  • 00:41:00
    no restrictions on monetary transactions,
  • 00:41:04
    of a far greater degree of...far
  • 00:41:06
    lesser degree of governmental regulation.
  • 00:41:09
    I agree with what Russell Peterson
  • 00:41:11
    said before,
  • 00:41:12
    that there are third-party effects.
  • 00:41:13
    There are things like pollution.
  • 00:41:14
    The question is whether we're handling them
  • 00:41:16
    in the right way,
  • 00:41:17
    and I think we're not.
  • 00:41:18
    I want to bring Bob Galvin in here.
  • 00:41:19
    Bob, the beginning of Milton's agenda there,
  • 00:41:21
    no tariffs, for example,
  • 00:41:23
    no restrictions, no quotas.
  • 00:41:25
    Now, will business, big business,
  • 00:41:27
    wear that kind of policy?
  • 00:41:28
    I think big business and all business
  • 00:41:31
    could wear that kind of policy
  • 00:41:33
    if we could find the appropriate balancing
  • 00:41:36
    factor that in the rest of world trade,
  • 00:41:39
    where we trade outside our border,
  • 00:41:41
    and as others come in,
  • 00:41:42
    we are required to trade against
  • 00:41:45
    socialized institutions.
  • 00:41:48
    That's a very different kind of an institution
  • 00:41:51
    than the private institution.
  • 00:41:53
    The private institution can clearly operate
  • 00:41:56
    more efficiently if it is not imposed upon
  • 00:42:00
    by an artificial price
  • 00:42:02
    from the socialized institution
  • 00:42:04
    across the seas.
  • 00:42:05
    So I think there has to be,
  • 00:42:07
    not protectionism,
  • 00:42:09
    but there has to be an international rule
  • 00:42:12
    of the road that prevents
  • 00:42:14
    the socialized institution
  • 00:42:16
    from subsidizing and taking advantage
  • 00:42:19
    of the private institution.
  • 00:42:21
    Do you include the nine countries
  • 00:42:22
    to the Common Market,
  • 00:42:23
    though, as socialist countries,
  • 00:42:24
    or are you prepared to open competition
  • 00:42:26
    from all the nine countries
  • 00:42:27
    in the Common Market?
  • 00:42:28
    The nine countries
  • 00:42:30
    of the European Common Market
  • 00:42:31
    engage in the most dramatic
  • 00:42:34
    of the socialized institutions.
  • 00:42:36
    I don't agree with him at all.
  • 00:42:38
    We are hurting ourselves
  • 00:42:39
    by restricting trade from abroad.
  • 00:42:41
    Other countries are hurting
  • 00:42:42
    themselves and us
  • 00:42:43
    by the measures you describe,
  • 00:42:45
    but we're only hurting ourselves
  • 00:42:47
    even the more if we imitate them.
  • 00:42:49
    I don't think, Dr. Friedman,
  • 00:42:51
    that your mother would get a job
  • 00:42:53
    sewing today in America
  • 00:42:56
    if we had no tariffs at all.
  • 00:42:58
    What would happen is:
  • 00:42:59
    there wouldn't be any sewing jobs
  • 00:43:01
    in America,
  • 00:43:01
    we'd be making nothing but computers.
  • 00:43:03
    But then there would be
  • 00:43:04
    some other kinds of jobs.
  • 00:43:06
    Then she would get a job
  • 00:43:07
    at a very low level in making computers.
  • 00:43:09
    Yeah. Although you face the problem
  • 00:43:10
    that you've had both a leading businessman
  • 00:43:13
    and a leading conservative congressman,
  • 00:43:16
    not accepting your prescription
  • 00:43:18
    of sweeping away-
  • 00:43:19
    But, of course, the two greatest enemies --
  • 00:43:21
    I would say the greatest enemies
  • 00:43:24
    of free enterprise and of freedom
  • 00:43:26
    in the world
  • 00:43:26
    have been on the one hand the
  • 00:43:28
    industrialists, and on the other hand
  • 00:43:30
    most of my academic colleagues,
  • 00:43:31
    who end up in government.
  • 00:43:32
    For opposite reasons.
  • 00:43:34
    For opposite reasons.
  • 00:43:36
    Michael Harrington, I guess,
  • 00:43:36
    would agree with this.
  • 00:43:37
    People like Michael Harrington
  • 00:43:38
    and my academic colleagues
  • 00:43:39
    want freedom for themselves.
  • 00:43:41
    They want free speech,
  • 00:43:42
    they want freedom to write,
  • 00:43:43
    they want freedom to publish,
  • 00:43:45
    to do research,
  • 00:43:45
    but they don't want freedom
  • 00:43:46
    for any of those awful businessmen.
  • 00:43:48
    Now the businessmen are very different.
  • 00:43:50
    Every businessman wants freedom
  • 00:43:51
    for somebody else,
  • 00:43:52
    but he wants special privilege for himself.
  • 00:43:55
    He wants a tariff from congress,
  • 00:43:57
    and the congressmen --
  • 00:43:59
    well the way in which congressmen
  • 00:44:01
    get elected is by performing favors
  • 00:44:03
    to constituents.
  • 00:44:04
    And if indeed you were to wipe out
  • 00:44:07
    completely all tariffs,
  • 00:44:08
    if you were to reduce government controls
  • 00:44:10
    in this country to what they are now,
  • 00:44:12
    I do not think that would be
  • 00:44:13
    in the self-interest of --
  • 00:44:14
    Well, then -
  • 00:44:15
    -- even Barber Conable,
  • 00:44:16
    for whom I have the very greatest respect,
  • 00:44:18
    or Bob Galvin,
  • 00:44:20
    for whom I have the respect.
  • 00:44:21
    I think it would be in the self-interest
  • 00:44:22
    of Michael Harrington.
  • 00:44:23
    Now let's ask what the American people
  • 00:44:25
    want and will wear,
  • 00:44:26
    because you're saying, in effect,
  • 00:44:28
    that to get elected
  • 00:44:28
    the congressman is giving the people
  • 00:44:30
    what they want.
  • 00:44:31
    Now, aren't you saying in the end, then,
  • 00:44:33
    the people don't want this
  • 00:44:34
    or don't understand the advantage of it?
  • 00:44:36
    I'm saying that my whole function
  • 00:44:37
    and purpose is to try to persuade the people
  • 00:44:40
    to make a different thing
  • 00:44:42
    politically profitable.
  • 00:44:43
    I'm trying to persuade the people
  • 00:44:45
    to make it clear that congressmen
  • 00:44:48
    who pursue these policies
  • 00:44:49
    are gonna lose their jobs.
  • 00:44:50
    And if we do that,
  • 00:44:51
    congressmen are pursuing
  • 00:44:53
    their self-interests.
  • 00:44:54
    They're in a market,
  • 00:44:55
    there's a political market.
  • 00:44:56
    They've got a product to sell, and they've
  • 00:44:58
    got to appeal to their customers.
  • 00:45:00
    And I am just engaging
  • 00:45:01
    in the kind of advertising Mr. Galvin
  • 00:45:04
    and other companies use.
  • 00:45:05
    ...very experienced politician,
  • 00:45:06
    Governor Peterson.
  • 00:45:07
    Well, let me ask you how
  • 00:45:08
    you would cope with this problem,
  • 00:45:10
    Dr. Friedman.
  • 00:45:10
    The people decided that they wanted cool air,
  • 00:45:13
    and there was tremendous need,
  • 00:45:15
    and so we built a huge industry,
  • 00:45:17
    the air conditioning industry,
  • 00:45:19
    hundreds of thousands of jobs,
  • 00:45:21
    tremendous earnings opportunities
  • 00:45:22
    and nearly all of us now have air conditioned
  • 00:45:24
    homes and cars and offices.
  • 00:45:26
    Then the people decided
  • 00:45:27
    they wanted clean air,
  • 00:45:28
    and they couldn't buy it in the marketplace,
  • 00:45:31
    so they voted at the polling place.
  • 00:45:33
    They got elected representatives
  • 00:45:35
    to go to the congress and say,
  • 00:45:37
    we are going to have clean air.
  • 00:45:39
    Now overnight there was a new market,
  • 00:45:41
    and the free enterprise system
  • 00:45:42
    responded to that, and now
  • 00:45:43
    there's a big environmental industry
  • 00:45:45
    making earnings,
  • 00:45:46
    providing jobs,
  • 00:45:47
    but also serving this public need
  • 00:45:50
    to have the freedom to breathe clean air.
  • 00:45:54
    You grossly underestimate the extent
  • 00:45:56
    to which the private market is able to do it.
  • 00:45:58
    It's not an accident that the air,
  • 00:46:01
    before you had any of this legislation,
  • 00:46:03
    air and water were cleaner
  • 00:46:05
    in the United States today
  • 00:46:06
    than they were in the United States
  • 00:46:08
    a hundred years ago.
  • 00:46:09
    You know the automobile added
  • 00:46:11
    one kind of pollution,
  • 00:46:12
    but it eliminated a far worse
  • 00:46:14
    kind of pollution.
  • 00:46:15
    If you consider what the streets of New York
  • 00:46:17
    would look like today
  • 00:46:18
    if you were still transporting people
  • 00:46:21
    by horse-drawn vehicles,
  • 00:46:22
    you would have pollution on a scale
  • 00:46:24
    that would stagger you.
  • 00:46:25
    In the same way,
  • 00:46:26
    it's not an accident that the air is cleaner
  • 00:46:29
    and the water purer in those countries today
  • 00:46:32
    that are the most advanced,
  • 00:46:33
    than they are in the backwards country.
  • 00:46:35
    It's not been in Afghanistan
  • 00:46:37
    that you find clean air and water.
  • 00:46:38
    It's in the advanced countries.
  • 00:46:40
    So the market is a very much more
  • 00:46:42
    subtle mechanism than people
  • 00:46:45
    give it credit for being.
  • 00:46:46
    I would like to get this back to the
  • 00:46:47
    real world, because in the real world
  • 00:46:49
    there is no possibility
  • 00:46:51
    that American business,
  • 00:46:52
    which is a welfare-dependent
  • 00:46:54
    business system,
  • 00:46:55
    is going to adopt these ideas.
  • 00:46:57
    What these ideas function as
  • 00:46:58
    in the real world
  • 00:46:59
    is a rationalization for the myth
  • 00:47:02
    of free enterprise,
  • 00:47:03
    which disguises the fact
  • 00:47:04
    of state capitalism as an argument
  • 00:47:07
    against social intervention,
  • 00:47:09
    in a society that does intervene
  • 00:47:11
    on behalf of the steel industry very quickly.
  • 00:47:13
    Finally in terms of
  • 00:47:15
    the American political process,
  • 00:47:17
    I don't believe that the political process
  • 00:47:19
    is so simple as having the people
  • 00:47:20
    elect the government.
  • 00:47:22
    The fact is:
  • 00:47:23
    that when a Jimmy Carter
  • 00:47:24
    is elected president
  • 00:47:25
    on a relatively liberal platform,
  • 00:47:28
    he then has to win business confidence,
  • 00:47:31
    because of the control
  • 00:47:33
    of the investment process
  • 00:47:34
    by corporate power.
  • 00:47:35
    And I think that fact,
  • 00:47:37
    corporate power,
  • 00:47:38
    rationalized by free enterprise myths,
  • 00:47:41
    is the central problem of freedom
  • 00:47:43
    in our time,
  • 00:47:44
    and that's what has to be attacked.
  • 00:47:45
    Before we come to Milton again -
  • 00:47:46
    No, no.
  • 00:47:47
    I've got to comment on this,
  • 00:47:49
    because I think we mustn't let words
  • 00:47:50
    get in the way of what really is the case.
  • 00:47:53
    I take it you think we don't have socialism.
  • 00:47:56
    I would say to you that 46 percent
  • 00:47:59
    of every corporation in this country
  • 00:48:01
    is owned by the U.S. Government.
  • 00:48:02
    That's the corporate income tax,
  • 00:48:05
    that means out of every dollar
  • 00:48:06
    of profits the corporation makes,
  • 00:48:08
    46 cents goes to the U.S. Government.
  • 00:48:10
    The actual tax is far higher than that
  • 00:48:13
    because you tax that doubly
  • 00:48:14
    when it comes to the individual.
  • 00:48:15
    The extent to which corporations control
  • 00:48:19
    their investment decisions
  • 00:48:20
    has been increasingly reduced.
  • 00:48:22
    The government is dictating what they
  • 00:48:24
    spend their investment funds on
  • 00:48:25
    in the name of pollution control,
  • 00:48:27
    in the name of other things.
  • 00:48:29
    It's a myth to suppose
  • 00:48:30
    that there is some kind of
  • 00:48:32
    a big corporate power over here.
  • 00:48:34
    There was a time when corporations
  • 00:48:35
    were more influential than they are now,
  • 00:48:37
    but at the moment I think they're
  • 00:48:39
    a beleaguered minority
  • 00:48:41
    rather than the dominant majority.
  • 00:48:44
    I'd like to take the others
  • 00:48:45
    into this for a moment.
  • 00:48:46
    What is the process,
  • 00:48:47
    for those of you who want to
  • 00:48:49
    roll back the state,
  • 00:48:50
    or to push back governmental influence,
  • 00:48:53
    on the operation of the economy?
  • 00:48:54
    Before we let Milton in on that,
  • 00:48:56
    what would you do as an active politician,
  • 00:48:59
    as another politician, and a businessman?
  • 00:49:02
    Well, I personally think we ought to restrain
  • 00:49:04
    the growth of government in the future.
  • 00:49:05
    How?
  • 00:49:06
    By putting some sort of limit
  • 00:49:07
    on government expenditures.
  • 00:49:09
    I would like to see
  • 00:49:11
    a constitutional amendment doing that,
  • 00:49:12
    otherwise we're going to continue
  • 00:49:14
    to have the government growing faster
  • 00:49:16
    than the economy and thus pushing more
  • 00:49:17
    and more of the gross national product
  • 00:49:19
    through the tin horn of government.
  • 00:49:20
    I think that would be a mistake.
  • 00:49:22
    It's a difficult thing to do.
  • 00:49:24
    I hope we can find some way
  • 00:49:26
    to do it without making ourselves
  • 00:49:28
    less free in some way.
  • 00:49:29
    Governor Peterson, can it be done?
  • 00:49:31
    Yes, I think we can make
  • 00:49:32
    substantial headway by furthering
  • 00:49:35
    our pluralistic society,
  • 00:49:36
    by encouraging,
  • 00:49:39
    educating more people
  • 00:49:40
    to think comprehensively.
  • 00:49:42
    I think one of the big problems in our world
  • 00:49:45
    is that leaders in government
  • 00:49:46
    and in industry are shortsighted.
  • 00:49:48
    They don't look at the long-term impacts
  • 00:49:50
    of their decisions.
  • 00:49:51
    And in a democracy such as ours
  • 00:49:54
    the power is with the people,
  • 00:49:55
    just like the textbooks say.
  • 00:49:57
    And if they get this more
  • 00:49:58
    comprehensive understanding
  • 00:50:00
    and knowledge,
  • 00:50:00
    they're gonna see to it
  • 00:50:01
    that the special interests
  • 00:50:03
    of the elected officials
  • 00:50:04
    will be in tune with getting reelected,
  • 00:50:07
    and they will look at the long-term views
  • 00:50:09
    just like the citizenry is.
  • 00:50:11
    So I am all in favor
  • 00:50:12
    of an all-out push
  • 00:50:13
    to get this freedom to vote
  • 00:50:15
    in the polling place,
  • 00:50:17
    added to the freedom of the marketplace,
  • 00:50:19
    because that's a potent combination.
  • 00:50:21
    But voting in the polling place
  • 00:50:22
    is a very different kind of freedom
  • 00:50:24
    than voting in the marketplace.
  • 00:50:25
    When you vote in the polling place,
  • 00:50:27
    it is important,
  • 00:50:28
    but it's very different.
  • 00:50:29
    When you vote, you vote for a package.
  • 00:50:31
    And, if you are in the minority, you lose.
  • 00:50:35
    you don't get what you want.
  • 00:50:36
    When you vote in the marketplace
  • 00:50:38
    everybody gets what he votes for.
  • 00:50:39
    If you vote for a --
  • 00:50:42
    I vote for a green tie, I get a green tie.
  • 00:50:45
    You vote for a blue tie, you get a blue tie.
  • 00:50:47
    If we do that in the polling booth,
  • 00:50:49
    if 60 percent of us vote for a green tie,
  • 00:50:52
    you have to wear a green tie.
  • 00:50:53
    Oh, but the 40 percent don't just shut up.
  • 00:50:55
    They can try to influence
  • 00:50:56
    decision-making to their own.
  • 00:50:57
    Of course they can try to influence
  • 00:50:57
    but it's a very different
  • 00:50:59
    and less efficient mechanism
  • 00:51:00
    for matching performance, matching results,
  • 00:51:03
    to individual taste and preference.
  • 00:51:05
    Whatever kind of car I buy,
  • 00:51:06
    I still get dirty air.
  • 00:51:08
    There are good people running this society,
  • 00:51:10
    and most of the people
  • 00:51:11
    that we're talking about work someplace,
  • 00:51:14
    and they know that their company
  • 00:51:15
    is doing something pretty good,
  • 00:51:17
    or trying to do something pretty good.
  • 00:51:19
    I think the people are going to
  • 00:51:22
    start telling the leaders
  • 00:51:23
    where they've gone wrong
  • 00:51:25
    and start to redress it
  • 00:51:26
    by the direction of the ballot box.
  • 00:51:29
    The people in general are more conservative
  • 00:51:31
    and in particular are more liberal.
  • 00:51:32
    That is to say,
  • 00:51:33
    if you ask the people in general,
  • 00:51:34
    what do you think of government,
  • 00:51:35
    "Get it off my back, less taxes."
  • 00:51:37
    If you ask in particular what about health,
  • 00:51:38
    national health;
  • 00:51:39
    what about full employment,
  • 00:51:40
    government is the employer of last resort.
  • 00:51:42
    What about pollution, do something about it.
  • 00:51:44
    Everett Ladd had an article
  • 00:51:45
    in Fortune about a year ago,
  • 00:51:47
    which is hardly a radical left-wing journal,
  • 00:51:49
    showing this contradiction.
  • 00:51:51
    And I think that there is
  • 00:51:53
    in the United States today
  • 00:51:54
    a rapid movement to the left,
  • 00:51:56
    right and center, which I, obviously,
  • 00:51:59
    hope will be resolved
  • 00:52:00
    not by an across-the-boards cut
  • 00:52:02
    aimed primarily at poor and working people,
  • 00:52:05
    but by an increasing democratization
  • 00:52:09
    of economic power,
  • 00:52:09
    and an increasing democratization
  • 00:52:11
    of the government.
  • 00:52:11
    I think that in this complicated society
  • 00:52:14
    of huge institutions and bureaucracies,
  • 00:52:16
    if we talk about freedom,
  • 00:52:17
    one of the things I would like to see
  • 00:52:19
    would be a law providing funds
  • 00:52:22
    for any significant minority
  • 00:52:24
    to buy the research to counter the majority.
  • 00:52:26
    If you don't have the expertise,
  • 00:52:28
    the knowledge technology today,
  • 00:52:30
    you're out of the debate.
  • 00:52:31
    And I think that we have to
  • 00:52:33
    democratize information and government
  • 00:52:35
    as well as the economy and society.
  • 00:52:37
    I am sorry to say Michael Harrington's
  • 00:52:39
    solution is not a solution to it.
  • 00:52:41
    He wants minority rule, I don't.
  • 00:52:43
    I want individual rule.
  • 00:52:44
    I want human beings separately
  • 00:52:46
    and individually
  • 00:52:46
    to have control of their lives.
  • 00:52:48
    I don't believe that a minority
  • 00:52:49
    that differs with me should have the right
  • 00:52:51
    to take money out of my pocket
  • 00:52:52
    to do research for them.
  • 00:52:55
    They should go out
  • 00:52:55
    and try to persuade people
  • 00:52:57
    to contribute to them.
  • 00:52:58
    I should be free to get people
  • 00:52:59
    to contribute to me to present my ideas.
  • 00:53:02
    But the idea of having some kind of
  • 00:53:04
    an official government agency
  • 00:53:06
    that is going to finance dissidents--
  • 00:53:08
    in the first place,
  • 00:53:09
    anybody who has any sense of realism
  • 00:53:12
    about the way government operates at all
  • 00:53:14
    will know that will end up
  • 00:53:15
    in the hands of the majority
  • 00:53:16
    and not the minority.
  • 00:53:17
    But can government
  • 00:53:18
    in this extremely interdependent,
  • 00:53:21
    complex world economy which is developing,
  • 00:53:24
    can you have a mystical belief
  • 00:53:27
    in the invisible hand of Adam Smith?
  • 00:53:28
    I happen to think that Adam Smith
  • 00:53:30
    was one of the greatest intellectual figures
  • 00:53:31
    in the history of the world,
  • 00:53:32
    and that capitalism was one
  • 00:53:34
    of the greatest advances
  • 00:53:35
    that humankind has ever made.
  • 00:53:36
    But precisely because I put this
  • 00:53:38
    in historical context; capitalism,
  • 00:53:41
    as a friend of mine by the name of Karl Marx
  • 00:53:43
    predicted some time ago,
  • 00:53:44
    has developed tremendous tendencies
  • 00:53:46
    towards monopoly, concentration,
  • 00:53:48
    multinational corporations,
  • 00:53:50
    money supplies that are not controlled
  • 00:53:53
    by the Federal Reserve Bank
  • 00:53:54
    or even the president
  • 00:53:55
    of the United States anymore.
  • 00:53:56
    And to think that you can respond
  • 00:53:58
    to this radically new environment
  • 00:54:00
    by an 18th century solution,
  • 00:54:02
    I think really comes down to
  • 00:54:05
    an intellectual exercise whose practical,
  • 00:54:07
    political effect is to rationalize
  • 00:54:09
    conservative power in America.
  • 00:54:10
    This is a myth, a complete myth,
  • 00:54:13
    that the development
  • 00:54:16
    of an inter-developed country
  • 00:54:17
    in a more complicated world
  • 00:54:19
    necessitates greater
  • 00:54:21
    government intervention.
  • 00:54:22
    Government intervention has not grown
  • 00:54:24
    in those areas which arise out
  • 00:54:26
    of the complexity and interdependence
  • 00:54:28
    of the world.
  • 00:54:28
    It's grown where?
  • 00:54:29
    In taking money from some people
  • 00:54:32
    and giving it to others.
  • 00:54:32
    All I have to say is that government,
  • 00:54:34
    Dr. Friedman, has to live in the 20th century,
  • 00:54:37
    Of course.
  • 00:54:38
    -- much less the 19th or the 18th.
  • 00:54:40
    And we have to take society
  • 00:54:42
    as it exists today
  • 00:54:44
    and build on that.
  • 00:54:45
    To me, the decisive thing at issue here
  • 00:54:47
    is an essentially mythic,
  • 00:54:50
    nonhistorical presentation
  • 00:54:52
    of an abstract solution,
  • 00:54:54
    taken out of time,
  • 00:54:55
    which does not look to the tremendous
  • 00:54:59
    evolution of capitalist society,
  • 00:55:01
    the tremendous interdependence
  • 00:55:02
    of the world,
  • 00:55:03
    the fact that we now have
  • 00:55:03
    not only national economic planning,
  • 00:55:05
    but at the Tokyo summit we have
  • 00:55:08
    institutionalized international
  • 00:55:09
    economic planning
  • 00:55:10
    of the major industrial capitalist powers.
  • 00:55:13
    And under those circumstances,
  • 00:55:15
    granted the enormous achievement
  • 00:55:17
    of Adam Smith,
  • 00:55:18
    granted the enormous achievement
  • 00:55:19
    of the capitalist society,
  • 00:55:21
    under this radically changed
  • 00:55:23
    historical situation
  • 00:55:24
    to propose those classic old solutions,
  • 00:55:26
    I think is to propose something
  • 00:55:28
    nonserious which, however,
  • 00:55:30
    does function seriously to rationalize
  • 00:55:32
    conservative corporate economic
  • 00:55:34
    and political power.
  • 00:55:36
    The great achievements
  • 00:55:37
    of the 19th century came from --
  • 00:55:39
    by departing from the kind of system
  • 00:55:40
    you now want to reimpose.
  • 00:55:42
    You want to take us back to
  • 00:55:43
    the 18th and 17th century
  • 00:55:45
    when we had a corporate society,
  • 00:55:49
    when we had government controlling things.
  • 00:55:51
    The whole issue is not
  • 00:55:53
    what somebody is proposing
  • 00:55:56
    in the 20th, or the 19th and the 18th,
  • 00:55:57
    the whole issue is
  • 00:55:58
    what is the right thing to do?
  • 00:55:59
    What is the best way
  • 00:56:00
    in which we can widen our opportunities,
  • 00:56:03
    preserve our freedom,
  • 00:56:04
    maintain our prosperity,
  • 00:56:07
    and it seems to me the kind of solutions
  • 00:56:09
    you would propose involve more of the same,
  • 00:56:12
    more of the measures that have failed
  • 00:56:16
    over and over again
  • 00:56:17
    to achieve the objectives.
  • 00:56:20
    Well, we leave the debate there this week
  • 00:56:21
    and we hope you'll join us again
  • 00:56:23
    for the next edition of Free To Choose.
  • 00:56:25
    (closing music)
Tags
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