Milton Friedman on Self-Interest and the Profit Motive 2of2
This clip is from the 15-part lecture series, "Milton Friedman Speaks" http://... available via FreedomChannel: http://... student poses a series of question on based on Friedman's notion that people should pursue their own self-interest. The student points out that he'd read that Friedman had previously come out against disaster aid for victims of a flood in Pennsylvania. Friedman corrected the questioner and noted that he did not come out against private aid for flood victims but instead was against the Federal Government providing discounted flood insurance in advance to home purchasers which motivated people to build houses in areas where they otherwise would not have been able to obtain insurance privately. If not for the discounted insurance, it's likely many of the flooded houses would never have been built in the first place as it wouldn't have been in peoples self-interest.The student went on to note that it was recently reported that an old man in Ohio died when the electric company turned off his power when he'd failed to pay his electric bill. Was it moral for the company to act in it's own self-interest to do so? Friedman responded by asking what if the electric company never turned off the power for anyone? Who would pay the cost--the people who own or work at the electric company? It would be unjust to impose that responsibility on individuals who are running an honest business of providing electricity. Friedman suggests that the true responsibility lies on the mans neighbors and friends who were not charitable enough to allow him to meet the electric bills.Finally the student uses the example of Ford deciding not to install a $13 block of plastic which would prevent it's Pinto cars from exploding in a rear-end collision. Ford estimated such a move would cost 200 lives a year at a cost of $200,000 per life lost. They multiplied and found that it wasn't worth it to install the plastic block. He asked if a corporation seeking it's own self-interest was a good thing in this case? Friedman responded by asking, what if it cost $1 billion to save each life, should Ford have put in the block? It's simply not practical to put an infinite value on an individuals life. If it took $1 billion in resources to keep one individual safe, and acquiring those resources meant that a million people must starve, it's a bad deal. Friedman concludes that he doesn't know if the $200,000 number that Ford used was the right number to maximize the overall benefits, but at the end of the day the principle is that we can't simply protect ourselves from everything and impose that cost on others. Friedman posits that the question the student should be raising, is should Ford be required to attach the statement to the car, "we've made this car $13 cheaper, and therefore it is X% more risky for you to buy it".See also:Free to Choose - All 15 episodes streaming online for freehttp://... history of Free to Choosehttp://...
Yes, very true, but what if that numbers game leads to a higher level of morality then any sort of moral reasoning does? An intelligence scale is only as powerful as one's empathy. (similarily, sarcasm isn't the lowest form of wit, and irony is usually wasted)
RoryRidleyDuff(July 12, 2009 at 12:37 am)
You mean you abandoned moral reasoning for a numbers game? Any fool can justify something with numbers - that is what Perry called Level 1 reasoning. Moral reasoning, on the other hand, is the highest level of intelligence we can attain (Perry charts Levels 2 thru 9). In this video, Friedman turns a question of moral reasoning into a discussion of cost. I don't see why we should admire 'rational' argument that descends the intelligence scale.
Wraith23(July 11, 2009 at 11:59 pm)
You have the right to have an abortion because you are free to make that decision.The company is free to make a defective car and you are free to buy it as long as the company gives you all necessary information and you are aware of the cost that defective car may produce to you.To doctor Friedman it was the individual who had all the decision power.
OMikrosIroas(July 10, 2009 at 4:50 am)
If a cost is affordable by the company why would society suffer?
Offatwork(July 10, 2009 at 1:43 am)
So society should suffer so that one man can have happiness? Isn't that exactly what a socialist like you are trying to get rid of?
jaffijoe(July 6, 2009 at 2:18 pm)
In regard to Schiff I highly recommend you search youtube for "Peter Schiff Mortgage Brokers". It is about an hour or so long, but it is him telling a bunch of mortgage brokers what is going to happen in the next few years. It is from 2006 and he was dead on. Almost everything he said that would happen did happen, and with eery detail.
pragmatismnotidealis(July 6, 2009 at 10:03 am)
Thanks Chap. I've already read Human Action, but will definetely be looking into schiff and the like.
jaffijoe(July 6, 2009 at 1:59 am)
Friedman is okay. But, the Chicago School does leave some more to be desired. If you really like economic study then I highly recommend you do some research into the Austrian School. It is a deductive science that also has a broad center rooted in history and human action. F.A. Hayek, Ludwig von Mises, Murray Rothbard, Peter Schiff, Thomas Woods, Carl Menger, Walter Block, etc are extremely great minds from the Austrian School. And, the best part is that Austrian economics isn't boring.
FightDPower(July 5, 2009 at 9:45 pm)
So, this guy says that it's okay to have abortions, but it's not okay to sell a defective car. Now how does that make any damn sense?
all028(July 4, 2009 at 12:36 am)
Another example is the cigarette companies who LIED to the public about the health affects of smoking.Professional wrestling claimed their sport was REAL for many years but later admitted they lied. The fear was to protect jobs and their families.I'm not anti-capitalist nor am I anti-Milton Friedman. I just prefer a more balanced approach to the system. There is room for improvement in the capitalist system.
pragmatismnotidealis(July 1, 2009 at 4:33 pm)
I used to be a socialist, but know I have seen the light. Thankyou Mr Friedman.
OMikrosIroas(July 1, 2009 at 3:32 pm)
If 40 million dollars could save a life AND this was affordable by the car maker then YES they should pay it. They can't though. But in this situation, they could. So the real principle question is: If, a company CAN at an AFFORDABLE cost, save a life, should they be FORCED to do it or should they decide first if its good for the company? for themselves essentially. I think the companies should do in fact what's good for the people. At any cost. But so must EVERYONE else. From the grocery man to
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