The Business Community's Suicidal Impulse by Nobel Prize Friedman

Discussion in 'Economics' started by harrytrader, Nov 20, 2003.

  1. The Business Community's Suicidal Impulse
    by Milton Friedman

    There’s a common misconception that people who are in favor of a free market are also in favor of everything that big business does. Nothing could be further from the truth.

    Milton Friedman: “I have gradually come to the conclusion that antitrust laws do far more harm than good.”
    As a believer in the pursuit of self-interest in a competitive capitalist system, I can’t blame a businessman who goes to Washington and tries to get special privileges for his company. He has been hired by the stockholders to make as much money for them as he can within the rules of the game. And if the rules of the game are that you go to Washington to get a special privilege, I can’t blame him for doing that. Blame the rest of us for being so foolish as to let him get away with it.

    I do blame businessmen when, in their political activities, individual businessmen and their organizations take positions that are not in their own self-interest and that have the effect of undermining support for free private enterprise. In that respect, businessmen tend to be schizophrenic. When it comes to their own businesses, they look a long time ahead, thinking of what the business is going to be like 5 to 10 years from now. But when they get into the public sphere and start going into the problems of politics, they tend to be very shortsighted.

    The most obvious example is protectionism. Can you name any major American industry that has really benefited from tariffs and protection? Alexander Hamilton, in his famous report on manufactures, praised Adam Smith to the sky while at the same time arguing that the United States was a special case in that it had infant industries that needed to be protected, including steel. Steel is still being protected 200 years later.

    Commercial banking is another example. At the end of World War II commercial banking accounted for roughly half of the capital market. Today it accounts for about one-fifth. Why has it deteriorated? Why is the international financial market in London, not in New York?

    The answer is the long-term effect of the of the banking industry’s insistence on special government favors. In the early days, under what was known as Regulation Q, the government set a limit on the interest rates that banks could pay, including a rate of zero on demand deposits. The government-imposed interest rate of zero on demand deposits encouraged the emergence of money market funds and the growth of substitutes for and alternatives to banks. The banking industry consistently supported fixed exchange rates. When the dollar got into trouble, President Johnson introduced restrictions on foreign lending and an interest-equalization tax. The result was to drive the commercial banking industry to London. Both of those measures reduced the commercial banking industry from the predominant supplier of credit to a minor player. Again, a policy that was very shortsighted.

    The easiest shot of all is the way in which corporations make contributions. The oil industry contributes to conservation organizations that are trying to sharply reduce the use of oil. The nuclear industry contributes to organizations that support nonnuclear energy. Recently, Capital Research Center analyzed grants from major corporations to public policy organizations and found that the major corporations made $3 in grants to the nonprofit left for every dollar they gave to the nonprofit right.

    Why hasn’t the corporate world followed the excellent example that was set by Warren Buffett? From his earliest days, in sending a dividend check to his stockholders, he said, “We are prepared to distribute X dollars on your behalf for each share of stock to charity, to some organization. Let us know to whom you would like it sent, and we will send it on your behalf.”

    Why should corporations decide the charitable purposes that should be supported by the income of their stockholders? Why shouldn’t each stockholder decide that? And why is the business community in general so insistent on supporting its own enemies?
  2. jem


    harry the answer is they control who their big enemies are. The grass roots ones that build up on their own are much less powerful when their zealous members are recruited into paying positions at these subsidized lefties.

    I was an environmentalist are heart who believes that it is ok to consume the environment as long as it is priced properly. For instance sure you can pollute in San Diego bay as long as that is worth more than clean water to the swimmers and tourists.

    Some of the first things I did as a lawyers was work for enviromentalists. (I was a surfer.) The organizations I could make a little money from were all paid for by either the City of San Diego or the polluters. That is why the environmental bar is so friendly with each other. They all work for the same people in the long run.

    Needless to say I got out of that game because it disgusted me.
  3. the illuminati, of course. :D

  4. huh I didn't know that Milton Friedman believed in Conspiracy theory :D

  5. An other interview from him

    An Interview With Milton Friedman
    by John Hawkins
    Yesterday, I did a twenty minute interview by phone with Milton Friedman. Of course, Mr. Friedman has an INCREDIBLE resume. He won the 1976 Nobel Memorial Prize for economic science, won the "Presidential Medal of Freedom in 1988 and received the National Medal of Science the same year".

    He was also an "economic adviser to Senator Barry Goldwater in his unsuccessful campaign for the presidency in 1964, to Richard Nixon in his successful 1968 campaign, to President Nixon subsequently, and to Ronald Reagan in his 1980 campaign."

    There is much, much, more I could add. But I think the fact that Mr. Friedman finished in a tie for the 15 slot when RWN had conservative bloggers select, "The Greatest Figures Of The 20th Century gives you some idea of Mr. Friedman's stature.

    Enjoy the interview!

    John Hawkins: Slate's Chris Suellentrop has pointed out that Howard Dean has said "that he would demand that other countries adopt the exact same labor, environmental, health, and safety standards as the United States" if they wanted trade agreements with us (Dean said something similar to the WAPO). If that policy were ever implemented, what sort of damage do you think it would cause to the US economy?

    Milton Friedman: I think it would cause immense damage, not to the US economy, but to other economies around the world. Much more to the others than to us.

    John Hawkins: Really? So you don't really think it would hurt the US economy that much?

    Milton Friedman: It would hurt the US economy, but it would be disastrous for the countries that are smaller than we are. World trade depends on differences among countries, not similarities. Different countries are in different stages of development. It appropriate for them to have different patterns, different policies for ecology, labor standards, and so forth.

    From my point of view, we in the United States have gone overboard in respect to the extent of regulation and detailed control of labor standards, industry, and the like. It's bad for us, but fortunately we had two hundred years of relatively free development to provide a strong basis to sustain the cost. But to impose this on other countries that are not at that stage would be a disgraceful thing to do.

    John Hawkins: Because it would keep them from ever getting to the point we're at?

    Milton Friedman: That's right.

    John Hawkins: Do you think George Bush, with the economy being as it was, did the right thing by cutting taxes?

    Milton Friedman: I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.

    John Hawkins: Now let me ask you about that. In the Reagan years, we cut taxes and it ended up leading to economic growth which increased the amount of revenue that came into the government.

    Milton Friedman: Well, economic growth will inevitably increase the amount of revenue coming into the government. But so far as the Reagan years were concerned, we have to be careful there. There were initial cuts in 1981-1982 and then there were a very good income tax law in 1986. But inbetween that, there were increases in taxes as well. So it's not an entirely clear picture that you can attribute the growth in revenue entirely to the tax reductions. But it's a hard thing to disentangle the effects of several things happening at the same time. In particular, there's no doubt that growth is very favorable to government revenue.
  6. Finally I have an explanation. It is said in the interview above by rightwingnews that he was "economic adviser to Senator Barry Goldwater " and what the same (republican) Barry Goldwater said :

    "The Trilateral Commission [founded by Rockfeller/Brezinski] is intended to be the vehicle for multinational consolidation of the commercial and banking interests by seizing control of the political government of the United States. The Trilateral Commission represents a skillful, coordinated effort to seize control and consolidate the four centers of power political, monetary, intellectual and ecclesiastical. What the Trilateral Commission intends is to create a worldwide economic power superior to the political governments of the nationstates involved. As managers and creators of the system ,they will rule the future."

    U.S. Senator Barry Goldwater
    in his l964 book: With No Apologies.
  7. I think the majority is disguted. The problem is that the majority is not conscious of its power: they let things go because they think that it has always been like that and that it can continue without consequences but things cannot continue like that because the system will disrupt one day.

    As for environment, yeah, that's my impression that environmentalists at the base are composed by sincere people but at the head they are controlled by the same crooks.

  8. Hey the question is not from me but from Milton Friedman :D