Milton Friedman - Crony Capitalism and the Free Market — Transcript

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1. 0:01we don't have a free
2. 0:03kid yourself
3. 0:09the two biggest enemies of the free
4. 0:12market are two separate groups my
5. 0:14academic colleagues and business people
6. 0:16their business people are enemies of
7. 0:19free markets not friends they the the
8. 0:23academic people are all in favor of
9. 0:26freedom for themselves except even now
10. 0:29there aren't even in favor of that was
11. 0:31this politically correct nonsense that's
12. 0:33going around but historically academic
13. 0:36people have always been in favor of
14. 0:37freedom for themselves they want to be
15. 0:39able to say what they want write what
16. 0:40they want do whatever research they want
17. 0:42but they're all against freedom for
18. 0:44everybody else they think that they know
19. 0:47better what's good for this is poor
20. 0:49people and the poor people do they think
21. 0:51they can run the economy better than the
22. 0:52businesses can the businesspeople are
23. 0:56just the opposite they're all in favor
24. 0:58of freedom for everybody else and at the
25. 1:02drop of a hat you can get any leading
26. 1:03businessman to give you an L it man to
27. 1:05give you an elephant speech on the
28. 1:06virtues of free market but when it comes
29. 1:09to their own business they want to go
30. 1:12down to Washington and get a special
31. 1:13tariff to protect their business they
32. 1:16want a special tax deduction they want
33. 1:18to tax subsidy when Chrysler is on the
34. 1:21verge of failing which it should have
35. 1:24done it should have been allowed to fail
36. 1:26Chrysler goes down and and exercises
37. 1:30political influence to try to get the
38. 1:32government to lending money to subsidize
39. 1:34so businessmen in general not all there
40. 1:37have been some notable exceptions and I
41. 1:39don't want to include everybody just as
42. 1:41not all intellectuals are not correct
43. 1:45but in the main most businessmen are
44. 1:48enemies of free markets the real
45. 1:51beneficiaries of free markets are the
46. 1:57Invisible Man that smoke small consider
47. 2:00the consumer the what nerdy worker those
48. 2:05are the real people who benefit from
49. 2:07free markets but unfortunately they
50. 2:10don't have the kind of political clout
51. 2:12that a pack political action committee
52. 2:17from big business has
53. 2:20one of the great economists of the 19th
54. 2:22century was alfred marshall and he has
55. 2:28as a sort of motto for one of his books
56. 2:31the seen and the unseen and it's a
57. 2:35marvelous motto for this the most that
58. 2:38what happens in economics over and over
59. 2:40again is that there are two sets of
60. 2:43effects of anything action the
61. 2:45immediately visible effects and the
62. 2:49widespread invisible effects and the
63. 2:52widespread invisible effects are often
64. 2:54much more important than the visible
65. 2:56ones but people don't see them let me
66. 2:59give you very simple examples we have a
67. 3:03quota on the amount of sugar that can be
68. 3:06imported from various countries there's
69. 3:08a the visible effect of that is that
70. 3:11there are about a couple hundred
71. 3:12thousand growers of beet sugar who
72. 3:15benefit greatly from it who are able to
73. 3:18keep on growing beet sugar they don't
74. 3:19benefit so greatly because most of the
75. 3:21money goes into paying the expenses of
76. 3:23growing the beets and indeed if there
77. 3:25were no such quota they would find
78. 3:26something else to do but who believe in
79. 3:28the short run appear the visible effect
80. 3:32is that they are able to have a market
81. 3:34they would otherwise not have the
82. 3:36invisible effect is that every consumer
83. 3:39in the United States pays twice as much
84. 3:42for the sugar he or she buys as a world
85. 3:45price now your consumer how much
86. 3:52attention to the fact do you pay to the
87. 3:54fact that you pay twice as much for
88. 3:55sugar as you ought to is the fact that
89. 3:58you pay twice as much for sugar as you
90. 4:00ought to going to lead you to go down to
91. 4:01Washington to testify against the sugar
92. 4:04quota but are the beet sugar farmers
93. 4:07going to go down to Washington to
94. 4:10testify in favor of the sugar corn it's
95. 4:13a typical example of the scene versus
96. 4:16the unseen the concentrated visible
97. 4:19versus the dispersed
98. 4:21invisible and the major reason why
99. 4:26roughly half the income of this country
100. 4:28is controlled by governmental agencies
101. 4:29instead of by the people who earn it is
102. 4:32because
103. 4:34this contrast between the visible and
104. 4:35the invisible we talk about this or whip
105. 4:38about that majority government it is a
106. 4:42majority government but it's a very
107. 4:44funny kind of a majority it's a majority
108. 4:46made up of a whole bunch of minorities
109. 4:49you've got 1/10 of 1% of the people who
110. 4:52are beet sugar growers they're part of
111. 4:54this majority you've got another
112. 4:56two-tenths of a percent of the tuple
113. 4:58maybe 1 or 2% of the people who are in
114. 5:01the textile industry and they make us
115. 5:03pay twice the world price for shirts and
116. 5:06for other things because of textile
117. 5:08tariffs and textile agreement around the
118. 5:10world and so down the line you got all
119. 5:13these specialists you got labor unions
120. 5:15you got these and those each one
121. 5:17separately is a little minority but they
122. 5:20all get together each minority is more
123. 5:23interested in its own little problem
124. 5:25then what happens for the rest of the
125. 5:28country and so it's willing to give its
126. 5:29vote to the other thing if they'll give
127. 5:31it to it's a case of log-rolling so what
128. 5:34we have is a long rolling majority in
129. 5:37which the majority of the people are not
130. 5:40in fact represented is there any doubt
131. 5:42in your mind suppose you were able to
132. 5:44get an effective poll from the people at
133. 5:46large on this question the government
134. 5:49imposes quotas on the import of sugar
135. 5:52the result of that is at X thousand
136. 5:56farmers are able to grow beet sugar
137. 5:59otherwise would no and that you are
138. 6:01paying twice the world price for sugar
139. 6:03are you in favor of this is there any
140. 6:05doubt in your mind that a majority would
141. 6:07say they're opposed to if a private
142. 6:11organization makes a mistake does things
143. 6:16badly it will lose money and it will
144. 6:18have to go out of business if a public
145. 6:21organization does things badly and
146. 6:25governmental organization does sing
147. 6:27variedly and makes bad mistakes it will
148. 6:30be expanded it will be expanded because
149. 6:34they'll say well it's all because we
150. 6:35just didn't have enough resources to it
151. 6:37or else it will be left to stand and
152. 6:40another organization will be set up to
153. 6:42do what it was supposed to do
154. 6:44the problem with government is not in
155. 6:46the things that tries but in the absence
156. 6:50of any mechanism for recognizing error
157. 6:56the what you need what the private
158. 6:58system of bounds in it's a survival of
159. 7:02the fittest what the governmental system
160. 7:05abounds in is expansion of the mistakes
161. 7:08and there's no mechanism for eliminating
162. 7:14governmental agencies which either have
163. 7:16no longer are needed or have behaved
164. 7:20perversely