« Web Assignment 7: Ben Peacock: Milton Friedman's Challenge | Main | Due Moments for Web Assignments »

September 18, 2007

Comments

Danielle Mahan

Most everyone addressing Friedman's work disagrees with the very fundamentals of his philosophy. However, few try to defend Friedman's free market liberalism. I have to advocate Friedman's rationale regarding government's role in the economy, not necessarily as an enemy, but as burden on the individual. I believe that free markets are usually sufficent to meet general demand. Friedman identifies some instances where governmental interference and action is appropriate and called for: national defence, regulation of monopolies, monetary policy, city parks, etc. Some people talk about how he doesn't consider the toll this would take on the average worker or the environment.
However, I believe that through perfect information, people will choose to support which ever corportations are following generally accepted values. Instead of regulating wages and pollution, providing subsidies, etc, the government should require that firms disclose this information to the public. If people really do not want to buy a product from a company polluting the earth, they will not. They will find a company that pollutes less. While this product may be more expensive, the consumer will wiegh the benefits of the product against its higher cost. If no one is willing to pay this higher price, doesn't it mean that no one is willing to stop high levels of pollution? Isn't this more democratic than a bureaucratic decision made among technocrats in Washington?
As far as I can see, this example can be applied to almost any social concern.
Therefore, Friedman's largest flaw is in assuming perfect information. In order to ensure rational decision among the masses, government should require disclosure of any information regarding the factors of production at the point of sale. While this is a burden on firms (and therefore, the economy), it is a much more justified burden than regulation of factors of production (wages, pollution).

Brenda Castillo

Milton Friedman believed thought the government should not control the market based on what he saw during the Great Depression. He believed that the government was at fault for the Great Depression because it failed to intervene, monetize the debt, print money and to allow bank runs. Basically, the market economy could not be controlled by the government in order to always be in economic stability. However, we cannot have a completely free market because, as it has even been stated by people in this discussion, the well-being of all society is not the number one interest of every individual which creates the need of a regulating force to ensures society’s well being. Friedman is aware of this situation where people are focused on their own well being and he begins to create what I think contradicting statements because even though he did not supported the mingling of government in the market he was a supporter of the New Deal which provided relief for the unemployed and motivated the economy to expand which had to be done through some sort of government intervention. He sought it beneficial for the government to have control of the Federal Reserve because it would be the solution to the free market. This sounds contradicting because how is the solution to the free market achieved through government intervention? Even some people in this discussion quote Friedman’s contradicting statements that are found in his book when Friedman states that the private sector would “[protect] freedom of speech, religion, and thought” (3) and yet the intervention of government would “preserve our freedom, [which] it is an instrument through which we can exercise our freedom” (12). These contradicting arguments are the ones that cause a major flaw in Friedman’s overall views.
Another flaw that I see in Friedman’s argument, which I also agree with Jessica, is in regard to education. I think Friedman is not very realistic when he thinks that parents will have the funds necessary for their children to obtain a higher education without the aid of government. Friedman believes that more children will attend institutions of higher education if parents were completely responsible financially for their education. But what happens when families have more than one child in college? As Ashley stated earlier, what happens to those families who were not able to save for their children’s education since they are part of the lower middle class? Today with the aid of government, families are still struggling financially with the education of their children and I can only imagine millions of children without an education if government aid was not available.

Anthony Yates

Of public housing, Friedman writes:

“If funds are being used to help the poor, would they not be used more effectively by being given in cash rather than in kind? Surely, the families being helped would rather have been given the sum in cash than in the form of housing. They could themselves spend the money on housing if they so desired. Hence, they would never be worse off if given cash; if they regarded other needs as more important, they would be better off.”

This is very much in the theme of the rest of his book. As a proponent of a pure market economy, in his opinion, only the people are capable of best assessing their needs. The counter-arguments to this proposal he treats are concerns of social democrats who justify their objections based on the well-being of the children. He writes that there is only one effective argument (scornfully adding “if at all”) for public housing, and that is based on paternalism, a position which “the liberal will be inclined to reject…for responsible adults.” Clearly from his tone, it is one he rejects flat out. The innate problem is that Friedman assumes that every single adult in the general population is one of these “responsible adults” possessing the rationality and economic logic to carefully and critically analyze complex market schema and make the best possible decision. This strikes me as more than slightly ludicrous. As a member of a miniscule set of the vast population (college educated, UC Berkeley educated, student in an economics class), I do not feel qualified to be able to in all situations, even having researched and absorbed an incredible amount of available market data, to make the best choice. The belief, then, that the uneducated urban poor, having weighed its choices and strategically reached a decision, will consistently prioritize housing instead of another “need” that seems more pressing is very overly idealistic.

So while there is validity to many of Friedman’s arguments that government control over human choice has led to negative consequences, the answer cannot be allowing complete freedom to make decisions which are not in personal or public interest, but rather a more efficient mechanism for distribution of aid and guidance in decision-making.

Brendan Gluck

As many people have mentioned before, the main aspect of Friedman’s argument is the lack of any social consideration. Unregulated markets would undoubtedly lead to the most economic freedoms and efficiency. Yet, at the same time, there would be an exorbitant amount of inequality and what would develop is a Malthusian state of misery, vice, and distress for the poor. Friedman fails to comprehend that humans should be above the economy, since they created it in order to obtain better efficiency and profits. Yet, by refusing to regulate the economy, Friedman puts humans at the mercy of the market, which only deals with maximizing efficiency and profits rather than equality and social welfare.

Seeing as how Milton Friedman lived through both World Wars, the Great Depression, and the multiple threat of communist revolutions that occurred after World War I, it would seem to me that he would be very hesitant to advocate for a completely unregulated market. The Great Depression and multiple worker uprisings, to me, highlighted the negative social aspect of an unregulated market and the need for government intervention to protect the poor and establish social works projects in order to help the economy recover. It would not have been humane to simply allow the Great Depression to continue to devastate peoples lives and the governments of Britain and France were able to avoid social catastrophe as a result of their intervention in creating workers reforms and social welfare programs. Friedman’s argument is not only idealistic but too simplistic, in his complete disregard in considering the effects of an unregulated market on the lower classes.

John Keh

Milton Friedman proposes an interesting argument. He would like the market to be set completely free. He believes this will allow nature to take its course. Without the interference of the government, he believes market forces will tear the market apart and eventually establish a stable, free market that works. He believes that the government hinders the market from achieving its true potential with all of its economic policies. He wants to regain all the dead weight loss that occurs under the economic policy of the government. This all sounds very helpful, but the large flaw in his argument is that if his policies were enacted, then the market will literally start tearing things apart. Powerful companies would be left to only grow more powerful and would stomp out the competition. Millions of jobs could be lost in the process of creating the most efficient and effective companies. Small businesses would have a significantly decreased chance of lasting with gigantic corporate conglomerates as their competition.
There would also be heavy losses in government subsidized industries, such as agriculture. Many agricultural producers would leave the market because unsubsidized agriculture would simply not be able to sustain itself. Only major farming companies would be able to sustain production. With all the loss of jobs, there would be a significant decrease in demand, which would cause revenues to decrease and a further loss of jobs due to layoffs. The economy could be sent into a perpetual recession with no tools, such as government action, to stop it.
Another effect could be that without government subsidies, gas and electric companies could raise their prices, leaving the poor without water, gas, and electricity. Poor families in cold areas would be without heat. This could create social turmoil and eventually lead to a revolution. There are just too many possibilities of disaster with Milton Friedman’s argument with little hope of success, therefore it is too risky for such a system to be enacted.

Michael Pimentel

While I am in no way a staunch supporter of Mr. Friedman's policy proposals, I find them difficult to denounce without a great deal of examination. His arguments on the inadequacies of government are well-taken, and many recent real world examples reveal the logic behind his work. To state an example, the failure of the No Child Left Behind Act, among others, shows how supposed good intentions can have disastrous effects when the government takes a one size fits all approach to domestic affairs. In the case of NCLB, its goal of addressing the shortcomings of public education and eliminating the achievement gap, has led to an unfortunate redefinition of education in which true erudition has been replaced by standardization. It has, as Friedman wrote, "substitute[d] uniform mediocrity for the variety essential for that experimentation which can bring tomorrow's laggards above today's means." Given that Friedman’s doctrine has held true time and time again, it is not so much that his logic is incorrect or entirely immoral, for there are myriad examples of the tribulations of government programs, but rather, that his suggestions for fixing these inadequacies are simply impractical in a real world setting. Milton, like a multitude of thinkers before him, falls victim to his own assumptions - the assumption that people are rational, just, economic entities. In trying to protect freedom, Milton puts too much responsibility on the individual to carry out a just existence and seems to ignore entirely, the tendency for people to be discriminatory beings. While our current system may be, in many ways, flawed, to deregulate to the extent desired by Mr. Friedman would surely result in a degeneration of our system of civil liberties. Friedman believes strongly in the efficiency of competitiveness of market systems and champions that actors in the market will learn to overcome their prejudices for the sake of efficiency and profit. However, in presenting this argument he assumes that people are much more knowledgeable and rational than they may really be. In a perfect society, I do not doubt that Friedman’s system could ultimately be more efficient than our current system, but because people hold reservations about various groups of people, a free market will serve only to justify and foster discrimination in various aspects of our daily life.

Michael Pimentel

While I am in no way a staunch supporter of Mr. Friedman's policy proposals, I find them difficult to denounce without a great deal of examination. His arguments on the inadequacies of government are well-taken, and many recent real world examples reveal the logic behind his work. To state an example, the failure of the No Child Left Behind Act, among others, shows how supposed good intentions can have disastrous effects when the government takes a one size fits all approach to domestic affairs. In the case of NCLB, its goal of addressing the shortcomings of public education and eliminating the achievement gap, has led to an unfortunate redefinition of education in which true erudition has been replaced by standardization. It has, as Friedman wrote, "substitute[d] uniform mediocrity for the variety essential for that experimentation which can bring tomorrow's laggards above today's means." Given that Friedman’s doctrine has held true time and time again, it is not so much that his logic is incorrect or entirely immoral, for there are myriad examples of the tribulations of government programs, but rather, that his suggestions for fixing these inadequacies are simply impractical in a real world setting. Milton, like a multitude of thinkers before him, falls victim to his own assumptions - the assumption that people are rational, just, economic entities. In trying to protect freedom, Milton puts too much responsibility on the individual to carry out a just existence and seems to ignore entirely, the tendency for people to be discriminatory beings. While our current system may be, in many ways, flawed, to deregulate to the extent desired by Mr. Friedman would surely result in a degeneration of our system of civil liberties. Friedman believes strongly in the efficiency of competitiveness of market systems and champions that actors in the market will learn to overcome their prejudices for the sake of efficiency and profit. However, in presenting this argument he assumes that people are much more knowledgeable and rational than they may really be. In a perfect society, I do not doubt that Friedman’s system could ultimately be more efficient than our current system, but because people hold reservations about various groups of people, a free market will serve only to justify and foster discrimination in various aspects of our daily life.

Vaclav Burger

When reading Milton Freidman and understanding his theory of freedom in the market and letting it rip makes me think of the “invisible hand” idea from Adam Smith as Ken has mentioned. Similar to Smith, Freidman seems to be going against many theorists of his time and fighting the control of the government placed on the market.
An allowance of the government to control the economy is seen as a threat to the freedom that Freidman talks about. Similarly to my peers, I agree that the main flaw present in the argument by Freidman lies in his definitions of freedom. In particular, when he talks about the political freedom, which he believes to be sparked by economic freedom is a problem with his theory. In my opinion, there seem to be many aspects of an individuals political freedom that are not really addressed by Freidman, who focuses on the idea of capitalism and the economic benefits through individuals political ideas to benefit them like financial backing.
I still like the way Freidman continues his argument even though he starts to make too many unrealistic assumptions about the growth of economic wealth through this free market. And, how the individual freedoms would really affect a real economy, which I do think can be seen in some forms today.

Ada Tso

Milton Friedman’s ideology of total economic liberalism (in the classical sense) is in many ways as idealistically impractical and improbable as socialism. It’s not surprising to read so many comments that disagree with Friedman’s mode of thinking because what he essentially does is what our major (PEIS) fights against: thinking about everything with a purely economic contextualization. The argument doesn’t center around whether or not Friedman’s preferred economic system would yield better returns than an economy with government interference, but for Friedman, that is the only argument worth considering. How he considers education is a perfect example of this: “Investment should be carried to the point at which the extra return repays the investment and yields the market rate of interest on it. If the investment is a human being, the extra return takes the form of a higher payment for the individual’s services than he could otherwise command” (104).

There are several things I could take issue with in this statement. Human beings cannot be thought of solely as investments; this isn’t an issue of whether to invest in an extra piece of machinery and what the marginal utility of that piece of machinery would be. Education is something that should be a right for all people (at least through a certain level), but if we only think about it the way Friedman thinks about it, then many people wouldn’t receive something they deserve. Moreover, education has a great number of externalities that would be difficult to definitively quantify. There are plenty of charts that show how much more a college graduate earns than a high school graduate and so on, but besides that, education plays an important role in reducing crime, fostering open-mindedness, etc. None of those directly influence economics, but they are nonetheless vital.

David Guarino

"To deny that the end justifies the means is indirectly to assert that the end in question is not the ultimate end, that the ultimate end is itself the use of the proper means. Desirable or not, any end that can be attained only by the use of bad means must give way to the more basic end of the use of acceptable means." (Ch. 2) For Friedman, the acceptable means is free discussion leading to voluntary cooperation. This is his liberalism, his version of 'freedom', at its core. This is also the root of his fallacy.

Friedman's argument is an appeal to the concept of 'really-existing' capitalism in the same rhetorical vein of much of what we've read (notably Djilas, but also Polanyi and Anderson to some extent). This separates him from the classical writers: Locke, Hume, Smith, Marx, etc. He is not a theoretician, not a moral philosopher as such, but rather a pragmatist and empiricist.

Friedman seeks to weigh neither theoretical abstractions against one another (Hobbes) nor contemporary reality against a theoretical possibility (various strains of Marxism, particularly Leninist thought), nor is he simply critiquing the really-existing form of some theoretical abstraction without much beyond vague intimations of a better system (Djilas and Keynes to a degree).

Rather, Friedman's project is to weigh one really-existing system against another: the umpire-state against the welfare-state: "We now have several decades of experience with governmental intervention. It is no longer necessary to compare the market as it actually operates and government intervention as it ideally might operate. We can compare the actual with the actual."

And he is certainly persuasive in this narrow project, arguing that virtually anything government has been given a mandate to accomplish (beyond the exceptional role of facilitating competitive markets) either has been or can be more effectively accomplished via markets themselves. And he provides a laundry list of scenarios in which we have clearly seen that this is the case.

The strange problem at the core of this argument is that it is so damned intellectually honest. He doesn't claim freedom as true panacea, as the one end in and of itself, even though he really, really wants to. He allows for individual determination of what makes one happy, and freedom as the means of optimizing happiness because free individuals are most capable of achieving happiness. In the key exception he allows in the condemnation of a paternalist state - madmen and children, individuals who are patently not-responsible - lies the real problem.

On paternalism: "There is no formula which can tell us where to stop. We must rely on our ability to persuade our fellow men that it is a correct judgment, or their ability to persuade us to modify our views. We must put our faith, here as elsewhere, in a consensus reached by imperfect and biased men through free discussion and trial and error."

If free individuals can be persuaded to surrender their freedom in pursuit of their own selfish ends, if the hedonistic bliss of Huxley's Brave New World were possible and the responsible consensus decided in its favor, then, Friedman must concede, he could quite easily be labeled a madman for opposing it and, following even his strict libertarian rules of the game, he could be rightfully forced to march in line to the soma dispensary with all the others. That the proper domain of the paternalistic state can only be decided by some sort of political aggregation (some collectivist theft of the individual's right to decisionmaking) is the thorn in Friedman's side.

It is the fate of madmen, the fate of deviants, misfits, and junkies, that measure how truly free a society is.

And for this reason, a true libertarian must oppose on ideological grounds the broadest version of Friedman's argument.

But, again, Friedman himself shouldn't care. The moral man's end does not lie in weighing utopia against utopia, but rather in weighing really-existing systems against one another. And in this way, Friedman cannot be touched.

The comments to this entry are closed.

From Brad DeLong

Brad DeLong's Schedule

Search Brad DeLong's Website

  •  

About Brad DeLong

Pages