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1/10 FULL "Free to Choose" - Volume 1 The Power of the Market - Milton Friedman (1980) — Transcript

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0:00hello I'm Robert McKenzie you join me
0:02here in this fine old library on the
0:04campus of the University of Chicago
0:06we're about to see the first of 10 films
0:08by Milton fredman an economist of
0:10international repute winner of the Nobel
0:12Prize one of the most controversial and
0:14stimulating Americans of our time in the
0:17weeks that lie ahead as fredman's first
0:19major television series unfolds the
0:21famous and influential men and women who
0:23will occupy those seats are going to
0:25have a lot to say about fredman's view
0:27of the society in which we live today
0:29and his solution for the ills of our
0:31time for that's what the series is about
0:33Milton Friedman's view of the way we
0:34live now and where we're headed now like
0:37some people here you may be appalled by
0:38his ideas like others extremely
0:41enthusiastic about them whichever way it
0:43goes I think you'll be fascinated by
0:45what Milton Friedman has to say
0:48[Music]
1:17it's a gorgeous morning around the New
1:19York metropolitan area skies are Sunny
1:21now a little bit of cloudiness over the
1:23Eastern end of Long Island and pachy fog
1:25out there boy we've got some lovely
1:26weather to talk about and I think I
1:27promised you this back at the beginning
1:29of the week all this was a swamp covered
1:32with
1:33Forest the canari Indians who lived here
1:36traded the 22 square miles of soggy
1:38Manhattan Island to the Dutch for $24
1:41worth of cloth and trinkets the
1:44newcomers founded a city New Amsterdam
1:46at the edge of an empty continent in the
1:49years that followed it proved a magnet
1:51for millions of people from across the
1:53Atlantic people who were driven by fear
1:55and poverty who were attracted by the
1:57promise of freedom and plenty they
2:00fanned out over the continent and built
2:01a new nation with their sweat their
2:04Enterprise and their vision of a better
2:07future for the first time in their lives
2:10many were truly free to pursue their own
2:12objectives that freedom released the
2:14human energies which created the United
2:18States for the immigrants who were
2:20welcomed by this statue America was
2:22truly a land of opportunity
2:26[Music]
2:35they poured ashore in their best clothes
2:37eager and expectant carrying what little
2:39they owned they were poor but they all
2:42had a great deal of
2:44[Music]
2:48Hope once they arrived they found as my
2:51parents did not an easy life but a very
2:53hard life but for many there were
2:56friends and relatives to help them get
2:57started to help them make a home got a
3:00job settle down in the new
3:06country there were many rewards for hard
3:09work Enterprise and ability life was
3:12hard but opportunity was
3:17real there were few government programs
3:19to turn to and nobody expected them but
3:22also there were few rules and
3:24regulations there were no licenses no
3:27permits no red tape to restrict them
3:29they found in fact a free market and
3:32most of them thrived on
3:36it many people still come to the United
3:38States driven by the same pressures and
3:40attracted by the same promise you can
3:43find them in places like this it's
3:45Chinatown in New York one of the centers
3:47of the Garment industry a place where
3:49hundreds of thousands of newcomers have
3:51had their first taste of life in the new
3:54[Music]
3:55country the people who live and work
3:57here are like the early settlers they
3:59want to better their lot and they're
4:01prepared to work hard to do
4:04so although I haven't often been in
4:07factories like this it's all very
4:09familiar to me because this is exactly
4:12the same kind of a factory that my
4:14mother worked in when she came to this
4:16country for the first time at the age of
4:1914 almost 90 years ago and if there had
4:23not been factories like this here then
4:25at which she could have started to work
4:27and earned a little money she she
4:29wouldn't have been able to come and if I
4:31existed at all I'd be a Russian or a
4:33Hungarian today instead of
4:35American of course she didn't stay here
4:38a long time she stayed here while she
4:39learned the language while she developed
4:42some feeling for the country and
4:44gradually she was able to make a better
4:46life for herself similarly the people
4:49who are here now they are like my mother
4:52mostly immigrants from a distant country
4:54they came here because they liked it
4:56here better and had more opportunities a
4:59place like this gives them a chance to
5:01get started they're not going to stay
5:02here very long or forever on the
5:05contrary they and their children will
5:07make a better life for themselves as
5:09they take advantage of the opportunities
5:11that a free market provides to
5:15them the irony is that this place
5:18violates many of the standards that we
5:20now regard as every worker's right it's
5:22poorly ventilated it's overcrowded the
5:24workers accept less than the union rate
5:26it breaks every rule in the book but if
5:29it were closed down who would benefit
5:31certainly not the people here their life
5:34may seem pretty tough compared to our
5:36own but that's only because our parents
5:38or grandparents went through that stage
5:40for us we've been able to start at a
5:42higher
5:48Point Frank vel's father was 12 years
5:52old when he arrived all alone in the
5:54United States he'd come from Sicily that
5:56was 53 years ago you must to be filled
5:58in
6:01where's the crystal Frank is a
6:02successful dentist with a wife and
6:04family they live in Lexington
6:11Massachusetts fine one bottle fills the
6:13whole
6:14DEC there's no doubt in Frank's mind
6:17what Freedom combined with opportunity
6:19meant to his father and then to him or
6:21what his Italian grandparents would
6:23think if they could see how he lives now
6:27they would not believe what they would
6:29see that a person could immigrate from a
6:32small island and make such success out
6:34of their life because to them they were
6:37mostly uh related to the uh the fields
6:41working in the field as a peasant my
6:43father came over it was he made
6:46something for himself and then he tried
6:48to build a family structure whatever he
6:51did was for his family it was for a
6:54better life for his family and I can
6:56always remember him telling me that you
6:58know one thing in life is you should get
7:01an education to become a professional
7:03person please
7:10don't the Vali family like all of us who
7:13live in the United States today owe much
7:15to the climate of Freedom We inherited
7:17from the founders of our country a
7:19climate that gave full scope to the poor
7:21from other lands who came here and were
7:23able to make better lives for themselves
7:25and their
7:26children you girls going to have this
7:30you Chris I know you don't want the ri
7:32but in the past 50 years we've been
7:34squandering that inheritance by allowing
7:36government to control more and more of
7:39Our Lives instead of relying on
7:40ourselves we need to ReDiscover the old
7:43truths that the immigrants knew in their
7:45bones what economic freedom is and the
7:48role it plays in preserving personal
7:50freedom
7:54[Music]
7:56[Applause]
7:57[Music]
8:02that's why I came here to the South
8:04China Sea it's a place where there's an
8:06almost laboratory experiment in what
8:09happens when government is limited to
8:11its proper function and leaves people
8:13free to pursue their own
8:19objectives if you want to see how the
8:21free market really works this is a place
8:23to
8:25come Hong Kong a place with hardly any
8:28natural resources
8:30about the only one you can name is a
8:31great Harbor yet the absence of Natural
8:34Resources hasn't prevented rapid
8:36Economic
8:41Development ships from All Nations come
8:44here to trade because there are no
8:45duties no tariffs on Imports or
8:50exports the power of the free market has
8:53enabl the industrious people of Hong
8:55Kong to transform what was once Barron
8:57rock into one of the most thriving and
9:00successful places in
9:04Asia aside from its harbor the only
9:06other important resource of Hong Kong is
9:08people over 4 and a half million of
9:14them like America a century ago Hong
9:17Kong in the past few decades has been a
9:19Haven for people who sought the freedom
9:21to make the most of their own
9:27abilities many of them are refugees from
9:29countries that don't allow the economic
9:31and political Freedom that's taken for
9:33granted in Hong Kong despite rapid
9:36population growth despite the lack of
9:37Natural Resources the standard of living
9:40is one of the highest in all of
9:46Asia people work hard but Hong Kong's
9:50Success is Not based on the exploitation
9:52of workers wages in Hong Kong have gone
9:55up fourfold since the war and that's
9:57after allowing for inflation
10:03the workers are free free to work what
10:05hours they choose free to move to other
10:08jobs if they wish the market gives them
10:10that choice it also determines what they
10:13make you can be sure that somebody
10:16somewhere is willing to pay for these
10:18cheap plastic toys otherwise they simply
10:21wouldn't be
10:26made competition from places like South
10:29Korea and Taiwan has made cheap products
10:32less
10:35profitable so Hong Kong businessmen have
10:38been
10:44adapting they've been developing more
10:46sophisticated products and new
10:48technology that can match anything in
10:50the west or east and their employees
10:52have been developing new skills
11:00Hong Kong never stops there's always
11:03some business to be done some
11:05opportunity to be seized it's long been
11:07a tourist center in a Shopper's Paradise
11:09and it's now one of the business centers
11:11of the
11:15East it's the Ordinary People of Hong
11:18Kong who benefit from all this effort
11:20and Enterprise
11:23[Music]
11:29this thriving bustling dynamic city has
11:33been made possible by the free market
11:35indeed the freest Market in the world
11:37the free market enables people to go
11:39into any industry they want to trade
11:41with whomever they want to buy in the
11:43cheapest market around the world to sell
11:45in the dearest market around the world
11:47but most important of all if they fail
11:51they bear the cost if they succeed they
11:55get the benefit and it's that atmosphere
11:59of incentive that has induced him to
12:02work to adjust to save to produce a
12:08miracle this miracle hasn't been
12:10achieved by government action by someone
12:13sitting in one of those tall buildings
12:14telling people what to do it's been
12:17achieved by allowing the market to
12:26work walk down any Street in hunger Kong
12:29and you'll see the impersonal forces of
12:31the market in
12:34operation Mr Chung makes metal
12:36containers nobody's ordered him to he
12:39does it because he's found that he can
12:40do better for himself that way than by
12:43making anything else but if demand for
12:45metal containers went down or somebody
12:48found a way of making them cheaper Mr
12:50Chung would soon get that
12:55message a few doors away Mr U's firm has
12:58been making traditional cantones wedding
13:00gowns for 42 years but the demand for
13:03these elaborate garments is falling the
13:05firm has already gotten that message and
13:08is now looking for another
13:10product the market tells producers not
13:13only what to produce but how best to
13:15produce it through another set of prices
13:17the cost of materials the wages of Labor
13:20and so
13:23on for example if these workers could
13:25earn more doing something else Mr hoe
13:28would soon find a way to mechanize his
13:31picture frame
13:34production inside this Chinese medicine
13:37shop a market transaction's going on the
13:40customer's confidence that this painful
13:42looking ordeal will help him doesn't
13:45rest on any official certification of
13:47the bone doctor's qualifications it
13:49comes from experience his own or his
13:51friends in his turn the doctor treats
13:54him not because he's been ordered to but
13:56because he gets paid the train
13:59transaction is voluntary so both parties
14:01must expect to benefit or it will not
14:03take
14:10place believe it or not this backyard is
14:13the entrance to a
14:21factory the workers here are some of the
14:23best paid in Hong Kong
14:29it's hot sticky and extremely noisy the
14:32workers are highly skilled so they can
14:35command High
14:39wages they could induce their employer
14:41to improve working conditions by
14:43offering to work for less but they would
14:45rather accept the conditions take the
14:47high wages and spend them as they wish
14:50that's their
14:54choice the best known statement of the
14:56principles of a free market the kind of
14:58free market Market that operates in Hong
15:00Kong was written on the other side of
15:02the
15:16[Music]
15:19world 200 years ago in Scotland Adam
15:22Smith taught at the University of
15:24Glasgow
15:26[Music]
15:29His Brilliant book The Wealth of Nations
15:31was based on the lectures he gave
15:37here the basic principles underlying the
15:40free market as Adam Smith taught them to
15:42his students in this University are
15:45really very
15:48simple look at this lead pencil there's
15:51not a single person in the world who
15:53could make this pencil remarkable
15:56statement not at all the wood from which
15:59it's made for all I know comes from a
16:02tree that was cut down in the state of
16:03Washington to cut down that tree it took
16:06a saw to make the saw it took steel to
16:09make the steel it took iron
16:12ore this black center we call it lead
16:16but it's really graphite compressed
16:18graphite I'm not sure where it comes
16:20from but I think it comes from some
16:22mines in South
16:24America this red top up here the Eraser
16:28bit of rubber
16:29probably comes from Malaya where the
16:31rubber tree isn't even native it was
16:34imported from South America by some
16:36businessmen with the help of the British
16:39government this brass feral I haven't
16:42the slightest idea where it came from or
16:45the yellow paint or the paint that made
16:48the black lines or the glue that holds
16:50it together literally thousands of
16:53people cooperated to make this pencil
16:57people who don't speak the same langu
16:58language who practice different
17:01religions who might hate one another if
17:03they ever
17:04met when you go down to the store and
17:07buy this pencil you are in effect
17:10trading a few minutes of your time for a
17:13few seconds of the time of all those
17:17thousands of people what brought them
17:20together and induced them to cooperate
17:21to make this pencil there was no
17:23commissar sending out offices from
17:26sending out orders from Some central
17:27office it was a magic of the price
17:31system the impersonal operation of
17:34prices that brought them together and
17:37got them to cooperate to make this
17:39pencil so that you could have it for a
17:41trifling sum that is
17:44why the operation of the free market is
17:47so essential not
17:50only to promote productive efficiency
17:53but even more to Foster Harmony and
17:56peace among the peoples of the world
18:00these people are crossing between two
18:02very different
18:05societies this is low wo the official
18:08border crossing point between China and
18:10Hong Kong nowadays there's a
18:12considerable amount of traffic at this
18:14border people cross a little more freely
18:16than they used
18:21to many people from Hong Kong trade in
18:24China and the market has helped bring
18:27the two countries closer together
18:30[Music]
18:34but the barriers between them are still
18:36very
18:39real on this side of the Border people
18:42are free not only in the marketplace but
18:44in all their lives they are free to say
18:47what they want to write what they want
18:49to do pretty much as they please not so
18:52over there that is why people in China
18:55who cannot get permission to leave
18:59go to desperate lengths to escape they
19:02risk their lives in the process many
19:04lose their lives but that doesn't keep
19:06others from following some are attracted
19:08by the higher material standard of life
19:10in Hong
19:11Kong but more by the natural human
19:15desire to be
19:17free the people who get official
19:19permission to leave China are fortunate
19:21they're going to be able to enjoy the
19:23benefits of the economic freedom they'll
19:25find in Hong
19:26Kong but more important
19:29that will give them a much wider
19:33Freedom human and political Freedom has
19:37never existed and cannot exist without a
19:40large measure of economic freedom those
19:44of us who have been so fortunate as to
19:46have been born in a free Society tend to
19:48take freedom for granted to regard it as
19:50a natural state of mankind it is not it
19:53is a rare and precious thing most people
19:57throughout history most people today
20:00have lived in conditions of tyranny and
20:03misery not of freedom and
20:06prosperity the clearest demonstration of
20:08how much people value freedom is the way
20:11they vote with their feet when they have
20:13no other way to
20:21vote of course many of the people who
20:24pour into Hong Kong will end up in
20:26conditions that most of us in the West
20:28would find
20:30appalling Hong Kong is very far from
20:32Utopia it has its slums its crime its
20:36desperately poor
20:48people but the people are afraid that's
20:51after all why so many of them have come
20:53here despite having to live in leaky
20:56houseboats in one of Hong Kong's many
20:58small all Harbors here they have the
21:00freedom and the opportunity to better
21:02themselves to improve their lot and many
21:08[Music]
21:10succeed there's appalling poverty in
21:12Hong Kong it's true but the conditions
21:15of the people have been getting better
21:17over time they're far better off now
21:20than they were when they first came
21:21across the border from China and that
21:24poverty appalling to us because we're
21:26accustomed to much higher standards of
21:28life is not poverty as viewed by most of
21:31the people in the world it's a poverty
21:33to which they would Aspire a state of
21:35affairs that they would like to
21:42achieve there is an enormous amount of
21:44poverty in the world everywhere there is
21:46no system that's perfect there's no
21:48system that's going to eliminate
21:50completely poverty in whatever sense the
21:53question is which
21:55system has the greatest chance which is
21:57the best
21:59arrangement for enabling poor people to
22:02improve their lot and on that the
22:05evidence of history speaks with a single
22:07voice I do not know any exception to the
22:10proposition that if you compare like
22:13with like the Freer the system the
22:15better off the ordinary poor people have
22:20been ask yourself what it is that
22:22assures these garment workers in Hong
22:24Kong a good way not high by Western
22:27standards but High high enough to enable
22:29them to live far better than most people
22:31in the
22:34world it's not government or trade
22:36unions do it these workers do well
22:39because there's competition for their
22:41labor and
22:47skills when a businessman faces trouble
22:51a market threatens to disappear or a new
22:53competitor arises there are two things
22:55he can do he can turn to the government
22:58for a tariff or a quota or some other
23:00restriction on competition or he can
23:02adjust and
23:04adapt in Hong Kong the first option is
23:07closed Hong Kong is too dependent on
23:10foreign trade so that the government has
23:12simply had to adopt a policy of complete
23:16non-interference that's tough on some
23:18individuals but it's extremely healthy
23:20for the society as a whole only the
23:23businessmen who can adapt who are
23:26flexible and and adjustable survive and
23:29they create good employment
23:30opportunities for the rest the complete
23:34absence of tariffs or any other
23:36restrictions on trade is one of the main
23:38reasons why Hong Kong has been able to
23:41provide such a rapidly Rising standard
23:43of life for its
23:46people even communist China recognizes
23:48Hong Kong's success it set up shop Here
23:52and Now accepts the universal symbol of
23:54capitalism
23:58the Bank of China the official Bank of
24:01communist China is the largest bank in
24:03Hong Kong there's no doubt that
24:06communist China recognizes a power of
24:08the
24:09market in all this the government of
24:12Hong Kong has played an important part
24:15not only by what it has done but as much
24:17by what it has refrained from doing it
24:20has made sure that laws are enforced and
24:22contracts honored it has provided the
24:25conditions in which a free market can
24:27work most most importantly it has not
24:30tried to direct the economic activities
24:32of the
24:38colony no government official is telling
24:40these people what to do they're free to
24:42buy from whom they want to sell to whom
24:44they want to work for whom they want
24:46sometimes it looks like chaos and so it
24:48is but underneath it's highly organized
24:51by the impersonal forces of a free
24:53Marketplace
24:58a fresh egg there chicken chicken wing
25:01chicken leg you know these eggs are from
25:04right from the chicken's ass me no
25:06question tell you no
25:11lie the impersonal forces of a free
25:14Marketplace at work back here in the
25:16United States hey two
25:20brol prices are the key the prices that
25:24people are willing to pay for products
25:26determines what's produced the the
25:28prices that have to be paid for raw
25:30materials for the wages of Labor and so
25:32on determine the cheapest way to produce
25:35these things and in addition these
25:37self-same prices the wages of Labor the
25:40interest on Capital and so on determine
25:43how much each person has to spend on the
25:46market it's tempting to try to separate
25:49this final function of prices from the
25:52other two to think that somehow or other
25:55you can use prices to transmit the
25:57information about what should be
25:58produced and how it should be produced
26:00without using those prices to determine
26:02how much each person gets indeed
26:05government activity over the past few
26:07decades has been devoted to little else
26:10but that's a very serious mistake if
26:13what people get is not going to be
26:14determined on what they produce on how
26:16they produce it on how successfully they
26:19work what incentive is there for them to
26:21act in accordance with the information
26:23that's transmitted there's only one
26:25alternative Force some people telling
26:29other people what to do we got them
26:32folks let's go here we got Posley here
26:4130 hey two broccoli
26:46[Music]
26:48ad ahead
26:50try nice oh boy look what I got real
26:54good tomato real nice hey come on try
26:57one of those Tomatoes here don't eat
26:59home anymore have free lunch over here
27:02you eat for nothing over here go ahead e
27:04we don't charge you I have a free lunch
27:06I'm
27:09going the fundamental principle of a
27:11free Society is voluntary cooperation
27:14the economic Market buying and selling
27:17is one example but it's only one example
27:20voluntary cooperation is far broader
27:22than that to take an example that at
27:25first sight seems about as far away as
27:26you can get the language we speak the
27:29words we use the complex structure of
27:32our grammar no government Bureau
27:34designed that it arose out of the
27:36voluntary interactions of people seeking
27:39to communicate with one another or
27:41consider some of the great scientific
27:43achievements of our time the discoveries
27:46of an Einstein or a Newton the
27:49inventions of a Thomas Alva Edison or an
27:53Alexander Graham Bell or even consider
27:55the great charitable activities of a
27:57Florence nting G or an Andrew carnegi
28:00these weren't done under orders from a
28:02government office they were done by
28:04individuals deeply interested in what
28:06they were doing pursuing their own
28:08interests and cooperating with one
28:10another this kind of voluntary
28:12cooperation is built so deeply into the
28:15structure of our society that we tend to
28:17take it for granted yet the whole of our
28:19Western Civilization is the unintended
28:22consequence of that kind of a voluntary
28:25cooperation of people cooperating in
28:28with one another to pursue their own
28:30interests yet in the process building a
28:32great
28:33[Music]
28:48society and here at the Harper library
28:50and the University of Chicago our
28:52distinguished guests have their own
28:53ideas too so let's join them now it
28:56seemed to me he was saying that the gold
28:58age for America when it was truly a land
29:00of opportunity was the late 19th early
29:0220th century No regulations no permits
29:05no red tape I would argue that the
29:07government played a decisive role in an
29:09enormous Grant to the railroads in
29:11creating an American capitalist economy
29:13and secondly if you go back to that
29:15Golden Age you find that the government
29:17constantly intervened in a rather
29:18characteristic way it used troops
29:20against Strikers uh American labor
29:22history has been the most violent bloody
29:24class struggle anywhere in the world and
29:27the government up until 1932 the law the
29:30courts the society always sided with
29:34business always sided against working
29:35people therefore I would argue that both
29:38economically and in terms of repressing
29:40the attempts of people to assert their
29:41freedom a government prior to the rise
29:44of the welfare state in this country was
29:46more or less owned by business M fean
29:49Michael Harrington is seeing the hole in
29:51the barn door and he's not looking at
29:52the barn door itself the plain fact is
29:55during the whole of that period while
29:57government did intervene from time to
29:59time and mostly to do harm I agree with
30:01him that government intervention was in
30:03the main not a good thing tariffs for
30:05example on the other hand throughout
30:08that whole period government spending
30:10federal government spending central
30:12government spending never was more than
30:143% of the national income it was trivial
30:16the land grants to the railroads were a
30:19minor Factor I'm not I don't approve of
30:22them I'm not saying they were a good
30:23thing but they were a very minor Factor
30:25one has to have a sense of proportion
30:27and that goes to the
30:28discussion I am not an anarchist I am
30:31not in favor of eliminating government I
30:33believe we need a government but we need
30:35a government that sets a framework and
30:38rules within which individuals pursuing
30:41their own objectives can work together
30:43and cooperate together and they work
30:44together and cooperate together not only
30:46in economic areas I want you to hold you
30:48for a moment though to that Golden Age
30:49theory that we were best when we were
30:51regulated least in the late 19th and
30:53early 20th century because remember the
30:55sweatsh shot analogy comes out of there
30:57when there was no attempt restrict hours
30:58of work or to regulate working
31:00conditions now is that a view you accept
31:03of that period Well I think it's
31:05necessary to contrast with what's
31:07happened in the interim I don't see how
31:09we can talk about that without comparing
31:10it with the interim period now you
31:12talked earlier about
31:14the fact that during the last 50 years
31:17we had squandered some of our
31:20inheritance of Freedom absolutely and I
31:22believe during the last 50 years we
31:24really have improved our freedom I spent
31:27over half that time working for one of
31:29the world's largest industrial companies
31:31the the Pont company deeply involved
31:33with the launching of new Ventures and
31:35got to know the free enterprise system
31:36well and have a very healthy respect for
31:39it but during that interval and
31:41particularly during the last few years
31:42and I've been more involved with
31:44government and with environmental
31:45matters I have become convinced that our
31:49freedom was improved when the people are
31:52allowed to add to their freedom in the
31:54marketplace the freedom for voting with
31:56their dollars in the marketplace
31:58the freedom to vote with their ballots
32:00in the polling place to put some
32:02restraints on the excesses of the
32:04marketplace particularly when you're
32:06concerned with such things as the
32:09long-term impact on our health from the
32:12pollution of our environment the
32:13introduction of carcinogenic materials
32:16or the radiation of our people with
32:18nuclear products what about putting some
32:20restraints on the excesses of government
32:23hasn't that become an Ever more serious
32:25problem how is it that a government of
32:27the people supposedly does things which
32:29a very large fraction of the people
32:31would really prefer not to have done
32:33such as overtax them overover them over
32:36regulate them I think you're looking
32:38again at one side and not the other and
32:41of course I agree we have to look at
32:43what's happened in the inter room we're
32:44better off than we were 50 years ago
32:46never would deny that but we stand on
32:49the shoulders of the people who went
32:51before we have to look at how much they
32:53achieved from where they started and
32:56that was a period in which you had the
32:57tremendous influx of immigrants from
33:00abroad millions and millions and
33:02millions of them when you opened up a
33:04new continent when you had achievements
33:06Milton are you saying though there's any
33:08sense in which you'd rather go back to
33:09those circumstances where there are no
33:11regulations of factory work no hours
33:14limitations hour to work do you want to
33:16return to that or do you just say that
33:17was a stepping stone to where we are now
33:19it depends on what you mean by
33:20circumstances I don't want to have to go
33:22back to using a horse and buggy instead
33:24of an automobile but I would prefer to
33:26go back to the kinds of governmental
33:29regulations or absence of regulations
33:31the greater degree of Freedom which was
33:33given to individuals to pursue one
33:35activity or another which prevailed be
33:37then then which prevails now I think
33:41that really our industrial leaders have
33:43been dragged into the future screaming
33:46they resisted the child labor laws they
33:48resisted Social Security labor unions
33:50and now the environmental movement once
33:52the government forced them to pay
33:54attention to those by the voting of the
33:56people on The Ballot Box and the polling
33:58place then the industrial leaders
34:01Business Leaders paid attention to those
34:03rules and have done a good job in most
34:05cases of abiding by Bob Galvin is an
34:08industrialist now come on is that a fair
34:09statement maybe the industrialists have
34:12a a a clearer view of history and its
34:15Pro Prospects the most precious asset we
34:19possess is freedom the easiest way to
34:21lose one's freedom is to go into
34:23receivership and I mean economic
34:26receivership because a receiver is a
34:28dictator and to the degree that we
34:32employ the costs and the burdens of
34:34government that lead us in the direction
34:37of further debt ultimate receivership
34:40and then the political consequence of
34:43the imposition of the political dictator
34:47over the economic and the job and the
34:49living rights of the individual but
34:51maybe the industrialist can see farther
34:53down the pike as to the consequence of
34:55all this m Harington I I just think that
34:57that two things one uh to view Freedom
35:01positively I think people over 65 years
35:03of age in the United States today are
35:05Freer now because of Medicare I do not
35:08think that the freedom to die from the
35:10lack of medicine was a very good thing
35:13secondly related to industrialists uh I
35:16uh think that uh one of one of the
35:18startling things about American history
35:20is that when Franklin Roosevelt was
35:21saving the system from itself the main
35:24beneficiaries were screaming bloody
35:26murder at him for being a Traer to his
35:28class when he was in fact the salvation
35:30of that class and I think if you
35:32therefore if you look at our history I
35:34do think you find a tremendous mopia on
35:36the part of industrialists and you find
35:39that the positive increments to our
35:41freedom interestingly enough have not
35:43come from the college graduates but
35:44often from people with not from the best
35:47people it's come from working people
35:49it's come from poor people it's come
35:50from blacks and uh Hispanics and the
35:53like Milton would you reply but then
35:55tell us why you took us to Hong Kong to
35:56prove something sure accustomed as I am
35:58to agreeing with Michael Harrington I
36:00will agree in part with what he's just
36:02said I do not believe it's proper to put
36:06the situation in terms of industrialist
36:08versus government on the
36:10contrary one of the reasons why I am in
36:13favor of less government is because when
36:15you have more government industrialists
36:17take it over and the two together form a
36:20coalition against the ordinary worker
36:22and the ordinary consumer I think
36:24business is a wonderful institution
36:26provided it has to face competition in
36:28the marketplace and it can't get away
36:30with something except by producing a
36:32better product at a lower cost and
36:33that's why I don't want government to
36:35step in and and help the business
36:38Community now I want to go to your
36:39question about
36:40Medicare there are many people who have
36:42benefited from Medicare but you're not
36:45looking at the cost side what has
36:47happened to the people who are paying
36:48for it it isn't we don't have a free
36:50good it isn't coming from nowhere and
36:52are they benefiting from it in a cost
36:55effective way those are the questions
36:56it's it's demog ay if you'll pardon me
36:59Michael Michael Harrington to say the
37:01people who have Medicare are Freer of
37:04course in one dimension but they
37:07themselves have been paying all their
37:09lives and have they gotten a good
37:11bargain at the moment they have the
37:13young men the young working people who
37:15are going into Social Security now
37:17they're going to get a very raw deal
37:19indeed Milton interestingly on that
37:21point uh uh people over 65 are paying
37:24more of their spendable income for
37:26medical care now than they were before
37:28Medicare was enacted it's been not a
37:30very successful program government
37:32doesn't do things well it doesn't do
37:33things well it hasn't done things well
37:35in Britain in Canada in the United
37:37States now Milton then you took us to
37:38Hong Kong on exactly that point uh that
37:41here you said was a true model of the
37:45Market operating now is that really the
37:48fair description of Hong Kong at the
37:50moment yes it's not a again there aren't
37:53any such things as 100% one way and 100%
37:56the other everything is mixed of course
37:58Hong Kong has a government it happens to
38:01be a government in this case there's no
38:03democracy in Hong Kong it's run from
38:05Britain it's a Crown Colony of Britain
38:09and the British governor general and so
38:10on financial secretary run it but the
38:14situation in Hong Kong is that there is
38:17very little government regulation of
38:19Industry there's complete free trade
38:21there are no tariffs there are no export
38:23subsidies there are no restrictions on
38:25the purchase and sale of uh
38:28uh of uh uh monies so that it is comes
38:31about as close as to a complete free
38:34market as you can find in the world
38:35today and there is no doubt that the
38:37main
38:38beneficiaries have been
38:40the lowincome people the poor people who
38:43poured into Hong Kong by the hundreds of
38:45thousands and millions out of red China
38:48and who keep on trying to get in there
38:50this goes to Michael Harrington's
38:51question if a industrial system of a
38:54free enterprise system is a system in
38:55which the poor are ground beneath the
38:58heels of these rapacious industrialists
39:02he's worried about how would he explain
39:04the success in Hong Kong the extent to
39:07which people continue to vote with their
39:08feet to go there you're not asking us to
39:11make of the United States one gigantic
39:14Hong Kong or sweat shop or whatever you
39:16want to call it you're you'd acknowledge
39:18that uh that there is a historical
39:21development of of an economy and uh what
39:24may be right for one stage in the
39:26development of an economy may not be
39:27right for another stage uh isn't the
39:30issue Where Do We Go From Here what what
39:33pragmatic uh decisions do we make about
39:36the direction of the American economy
39:38should it be toward more and more
39:39government or should it be trying to
39:41preserve an adequate balance between
39:43freedom of choice and government
39:45intervention again the problem is to
39:48distinguish two things this comes back
39:50to an earlier uh comment the
39:53circumstances in terms of the physical
39:55arrangements and the circum ances in
39:58terms of the rules that guide the
40:00society now in the case of Hong Kong of
40:03course I'm not asking that we crowd uh
40:06our people to a density of population
40:08such as Hong Kong as Hong Kong is a
40:10marvelous example just because its
40:12circumstances are so terrible its
40:13physical circumstances and the people in
40:15Hong Kong would love to get elsewhere
40:17into less crowded circumstances if other
40:20people would let them in this is a
40:21problem of immigration which is a very
40:23important restriction on human freedom
40:25in the period before 1913 we had
40:27complete 100% freedom of immigration
40:29into the United States we don't know but
40:31go back to your question do you think
40:33Hong Kong would exist if it weren't in
40:35close ju position to to communist China
40:38Hong Kong would exist it is very dubious
40:41that it would have the policies it has
40:43now if it weren't in close just Jos to
40:46communist China well now but to answer
40:48your question directly yes I am in favor
40:51of the United States having not the
40:55circumstances not the physical
40:56circumstan s is but the policies that
40:59Hong Kong has had of zero
41:01tariffs of complete free trade of no
41:05restrictions on exports no restrictions
41:07on monetary transactions of a far
41:10greater degree of government a far
41:12lesser degree of governmental regulation
41:15I agree with what Russell Peterson said
41:17before that there are third- partyy
41:18effects there are things like pollution
41:20the question is whether we're handling
41:22him in the right way and I think we're
41:23not I want to bring Bob Galvin in here
41:25you got the beginning of Milton's agenda
41:27there no tariffs for example no
41:29restrictions no quotas now will business
41:32big business wear that kind of policy I
41:35think big business and all business
41:37could wear that kind of policy if we
41:39could find the appropriate balancing
41:42factor that in the rest of World Trade
41:45where we trade outside our border and as
41:47others come in we are required to trade
41:50against socialized
41:53institutions that's a very different
41:55kind of an institution than the private
41:58institution the private institution can
42:01clearly operate more efficiently if it
42:04is not imposed upon by an artificial
42:08price from the socialized institution
42:10across the seas so I think there has to
42:13be not protectionism but there has to be
42:16an international rule of the road that
42:19prevents the socialized institution from
42:23subsidizing and taking advantage of the
42:25private Institution include the nine
42:27countries of the Common Market though as
42:29socialist countries or are you prepared
42:31to have open competition from all the
42:32nine countries of the Common Market the
42:34nine countries of the European common
42:36market engage in the most dramatic of
42:40the socialized institutions I don't
42:42agree with them at all we are hurting
42:44ourselves by restricting trade from
42:46abroad other countries are hurting
42:48themselves and Us by the measures you
42:50described but we're only hurting
42:52ourselves even the more if we imitate
42:55them I don't think uh fredman that your
42:58mother would get a job sewing today in
43:01America if we had no tariffs at all what
43:04would happen is there wouldn't be any
43:06sewing jobs in America we'd be making
43:08nothing but computers but then there
43:10would be some other kinds of jobs and
43:12she would get a job as at a very low
43:13level in making computers yeah although
43:15although you do face the problem that
43:17you've had both a leading businessman
43:19and a leading conservative Congressman
43:22not accepting your prescription of
43:24sweeping away of course the two greatest
43:27enemies of uh the I would say the
43:29greatest enemies of free enterprise and
43:31of freedom in the world have been on the
43:33oneand the industrialists and on the
43:35other hand most of my academic
43:37colleagues who land up in government for
43:39opposite re for opposite
43:41reasons people like Michael Harrington
43:44and my academic colleagues want freedom
43:46for themselves they want free speech
43:48they want freedom to write they want
43:50freedom to publish to do research but
43:51they don't want freedom for any of those
43:53awful businessmen now the businessmen
43:55are very different every businessman
43:57wants freedom for somebody else but he
43:59wants special privilege for himself he
44:01wants a tariff from Congress and the
44:04congressman well the way in which
44:06congressmen get elected is by performing
44:08favors to
44:10constituents and if indeed you were to
44:12wipe out completely all tariffs if you
44:14were to reduce government controls in
44:16this country to what they are now I do
44:18not think that would be in the
44:19self-interest of even even Barbara
44:22conable for whom I have the very
44:23greatest respect or Bob galin for whom I
44:26have the respect I think it would be in
44:27the self-interest of Michael Harry now
44:29let's ask what the American people want
44:31and will wear because you're saying in
44:33effect that to get elected the
44:34congressman is giving the people what
44:36they want now aren't you saying in the
44:38end then the people don't want this or
44:40don't understand the advantage of it I'm
44:42saying that my whole function and
44:43purpose is to try to persuade the people
44:46to make a different thing politically
44:49profitable I'm trying to persuade the
44:50people to make it clear that congressmen
44:54who pursue these policies are going to
44:55lose their jobs and if we do that
44:58congressmen are pursuing their
44:59self-interest they're in a market
45:00there's a political Market they've got a
45:02product to sell and they've got to
45:04appeal to their customers and I am just
45:07engaging in the kind of advertising Mr G
45:10other compan very experienced politician
45:12Governor Peterson the people decided
45:14that they wanted cool air there was a
45:16tremendous need and so we built a huge
45:18industry the air conditioning industry
45:21hundreds of thousands of jobs tremendous
45:23earnings opportunities and only all of
45:24us now have air conditioned homes and
45:26cars and
45:28then the people decided they wanted
45:29clean air and they couldn't buy it in
45:31the marketplace so they voted at the
45:34polling place they got their elected
45:36representatives to go to the Congress
45:38and say we are going to have clean air
45:40now overnight there was a new market and
45:42the free enterprise system responded to
45:44that now there's a big environmental
45:46industry making earnings providing jobs
45:49but also serving this public need to
45:53have the freedom to breathe clean air
45:55you grossly underestimate the extent
45:57which to which the private Market is
45:59able to do it it's not an accident that
46:02the air before you had any of this
46:04legislation air and water was were
46:06cleaner in the United States today than
46:09they were in the United States 100 years
46:10ago you know the uh automobile added one
46:13kind of pollution but it eliminated a
46:15far worse kind of pollution if you
46:17consider what the streets of New York
46:18would look like today if you were still
46:21transporting people by horsedrawn
46:23Vehicles you would have pollution on a
46:25scale that would stagger you in the same
46:27way it's not an accident that the air is
46:30cleaner and the water purer in those
46:33countries today that are the most
46:34advanced than they are in the backward
46:36country it's not in Afghanistan that you
46:38find clean air and water it's in the
46:40advanced countries so the market is a
46:43very much more subtle mechanism than
46:46people give it credit for being I would
46:48like to get this back to the to the real
46:49world because in the real world there is
46:51no possibility that American Business
46:54which is a welfare dependent business
46:56system is going to adopt these ideas
46:58what these ideas function as in the real
47:00world is a rationalization for the myth
47:03of free enterprise which disguises the
47:06fact of State capitalism as an argument
47:08against social intervention in a society
47:11that does intervene on behalf of the
47:13steel industry very quickly finally in
47:16terms of of the American political
47:18process I don't believe that the
47:19political process is so simple as having
47:21the people elect the government the fact
47:24is that when a Jimmy Carter is elected
47:26president on a relatively liberal
47:28platform he then has to win business
47:32confidence because of the control of the
47:34investment process by corporate power
47:37and I think that fact corporate Power
47:40rationalized by free enterprise myths is
47:44the central problem of freedom in our
47:45time and that's what has to be attacked
47:47before we come to Milton again no no but
47:48I've got I've got to comment on this
47:50because I think we mustn't let words get
47:52in the way of what really is the case I
47:55take it you think we don't have
47:56socialism I would say to you that that
47:5946% of every corporation in this country
48:02is owned by the US government that's the
48:05corporate income tax that means out of
48:07every dollar of profits that a
48:09corporation makes 46 cents goes to the
48:11US government the actual tax is far
48:13higher than that because you tax that
48:15doubly when it comes to the individual
48:17the uh the extent to which corporations
48:20control their investment decisions has
48:22been increasingly reduced the government
48:24is dictating what they spend their
48:25investment funds on in the name of
48:27pollution control in the name of other
48:30things it's a myth to suppose that there
48:32is some kind of a big corporate power
48:34over here there was a time when
48:36corporations were more influential than
48:38they are now but at the moment I think
48:40they're a bored minority rather than the
48:44dominant majority well now I'd like to
48:45take the others into this for a moment
48:47what is the process for those of you who
48:49want to roll back the state or to push
48:52back governmental influence on the
48:55operation of the economy before we let
48:56Milton in on that what would you do as a
48:59active politician as another politician
49:02and a businessman well I personally
49:04think we ought to restrain the growth of
49:05government in the future uh by putting
49:08some sort of limit on government
49:10expenditures I uh would like to see a
49:12constitutional amendment doing that
49:14otherwise we're going to continue to
49:16have the government growing faster than
49:17the economy and thus pushing more and
49:19more of the gross national product
49:20through the tin horn government I I
49:22think that would be it's mistake it's a
49:24difficult thing to do I hope we can find
49:27some way to do it uh without making
49:29ourselves less free in some way can it
49:32be done yes I think we can make
49:34substantial Headway by furthering our
49:36pluralistic society by encouraging
49:40educating more people to think
49:42comprehensively I think one of the big
49:44problems in our world is that leaders in
49:47government and in Industry are
49:49shortsighted they don't look at the
49:51long-term impacts of the decisions and
49:54in a democracy such as ours the power is
49:56with people just like the textbooks say
49:59and if they get this more comprehensive
50:01understanding and knowledge they're
50:02going to see to it that the special
50:04interest of elected officials will be in
50:07tune with getting reelected and they
50:09will look at the long-term views just
50:11like the citizenry is so I'm all in
50:13favor of an allout push to get this
50:16freedom to vote in the polling place
50:19added to the freedom of the market place
50:21because that's a potent combination but
50:22voting in the polling place is a very
50:24different kind of freedom than voting in
50:26the marketplace
50:27when you vote in the polling place it is
50:29important but it's a very different when
50:31you vote you vote for a
50:32package and if you are in the minority
50:36you lose you don't get what you want
50:38when you vote in the marketplace
50:39everybody gets what he votes for if if
50:42you vote for a I vote for a green tie I
50:45get a green tie you vote for a blue tie
50:47you get a blue tie if we do that in the
50:49polling Booth if 60% of us vote for a
50:52green tie you have to wear a green tie
50:54oh but the 40% don't just shut up they
50:56can try to influence they can try to
50:58influence but it's a very different and
51:00less efficient mechanism for matching
51:03performance matching results to
51:05individual tastes and PR whatever kind
51:07of car I buy I still get dirty air there
51:10are good people running this society and
51:12most of the people that we're talking
51:13about work someplace and they know that
51:16their company is doing something pretty
51:18good or trying to do something pretty
51:20good I think the people are going to
51:23start telling the leaders where they've
51:26gone wrong and start to redress it by
51:28the direction of the ballot do people in
51:31general are more conservative and in
51:32particular are more liberal that is to
51:34say if you ask the people in general
51:36what do you think a government get it
51:37off my back less taxes if you ask in
51:39particular what about health National
51:40Health what about full employment
51:42government as the employer of Last
51:43Resort what about pollution do something
51:45about it Everett lad had an article in
51:47Fortune about a year ago which is hardly
51:49a radical left-wing Journal uh showing
51:52this contradiction and I think that
51:54there is in the United States today a
51:56rapid movement to the left right and
51:58Center which I obviously hope will be
52:01resolved not by an across the board's
52:03cut aimed primarily at poor and working
52:06people but at by an increasing
52:09democratization of economic power and an
52:11increasing democratization of the
52:12government I think that in this
52:14complicated Society of huge institutions
52:17and bureaucracies if we talk about
52:18Freedom one of the things I would like
52:20to see would be a law providing funds
52:23for any significant minority to buy the
52:26res search to counter the majority if
52:28you don't have the expertise the
52:30knowledge technology today you're out of
52:32the debate and I think that we have to
52:34to democratize information and
52:36government as well as the economy and
52:38Society I am sorry to say Michael
52:40Harrington solution is not a solution to
52:42it he wants minority rule I don't I want
52:45individual rule I want human beings
52:47separately and individually to have
52:48control of their lives I don't believe
52:50that a minority that differs with me
52:51should have the right to take money out
52:53of my pocket to to research for them
52:56they should go out and try to persuade
52:58people to contribute to them I should be
53:00free to get people to contribute to me
53:01to present my ideas but the idea of
53:05having some kind of an official
53:06government agency that is going to
53:08finance dissidents in the first place
53:11anybody who has any sense of realism
53:14about the way government operates at all
53:15will know that that'll end up in the
53:17hands of the majority and not the
53:18minority but can government in this
53:21extremely interdependent complex World
53:24economy which is developing
53:26can you have a mystical belief in the
53:28Invisible Hand of Adam Smith I happen to
53:30think that Adam Smith was one of the
53:31greatest intellectual figures in the
53:33history of the world and that capitalism
53:35was one of the greatest advances the
53:37humankind has ever made but precisely
53:39because I put this in historical context
53:42capitalism as a friend of mine by the
53:43name of Carl Marx predicted some time
53:45ago has developed tremendous Tendencies
53:47towards Monopoly concentration
53:49multinational
53:51corporations money supplies that uh that
53:54are not controlled by the Federal
53:55Reserve Bank or even even the president
53:56of the United States anymore and to
53:58think that you can respond to this
54:00radically new environment by an 18th
54:02century
54:03solution I think really comes down to an
54:06intellectual exercise whose practical
54:08political effect is to rationalize
54:10conservative power in America this is a
54:13myth a complete myth that the uh
54:17development of an interd developed
54:18country in a more complicated World
54:21necessitates greater government
54:23intervention government intervention has
54:24not grown in those areas
54:27which arise out of the complexity and
54:28interdependence of the world it's grown
54:30where in taking money from some people
54:33and giving it to all I have to say is
54:35that government Dr Freeman has to live
54:37in the 20th century much less the 19th
54:40or the 18th but again and we have we
54:42have to take society as it exists today
54:45and build on that to me the decisive
54:47thing at issue here uh is an essentially
54:51Mythic non-historical presentation of an
54:54abstract solution taken out of time
54:57which does not look to the tremendous
55:01evolution of capitalist Society the
55:02tremendous interdependence of the world
55:04the fact that we now have not only
55:05National Economic planning but at the
55:07Tokyo Summit and we have
55:09institutionalized International economic
55:11planning of the major industrial
55:13capitalist powers and under those
55:15circumstances granted the enormous
55:18achievement of Adam Smith granted the
55:20enormous achievement of capitalist
55:21Society under this radically changed
55:24historical situation to propose those
55:26classic old Solutions I think is to
55:29propose something nonserious which
55:31however does function seriously to
55:33rationalize conservative corporate
55:35economic and political
55:36power the great achievements of the 19th
55:39century came from by departing from the
55:41kind of system you now want to reimpose
55:43you want to take us back to the 18th and
55:4517th century when we had a uh when we
55:49had a corporate society when we had
55:50government controlling things the whole
55:53issue is not is what somebody is
55:56proposing in the 20th and the 19th and
55:58the 18th the whole issue is what is the
56:00right thing to do what is the best way
56:02in which we can widen our opportunities
56:05preserve our freedom maintain our
56:08prosperity and it seems to me the kind
56:10of solutions you would propose involve
56:13more of the same more of the of the
56:16measures that have failed over and over
56:18again to achieve the objectives we leave
56:22the debate for there this week and we
56:23hope you'll join us again the next
56:24edition of free to choose
56:43when governments try to control the
56:44economy what goes wrong Milton Friedman
56:47looks at modern governments in action in
56:50Britain in India and here in the United
56:52States don't miss his Stark and
56:54realistic assessment of the real world
56:56we live in free to choose next week
57:13[Music]
57:41what
57:46[Music]

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