Carpe Diem

Quotation of the day: Milton Friedman

“So long as effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities. The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because of other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on. And the market does this impersonally and without centralized authority.”

“Indeed, a major source of objection to a free economy is precisely that it does this task so well. It gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.”

From Capitalism and Freedom, 1962.

26 thoughts on “Quotation of the day: Milton Friedman

  1. That is precisely the objections to freedom that the “elites” in Washington and New York have. They know exactly what people ought to want and they’re going to make sure that they get it. This is essentially the same position a parent takes with his children. Based on the last election, I’d say that much of the “adult” population of the US is quite happy to be treated as children as long as they keep getting their allowances every month.

    • same:

      but it’s for your own good/public safety/in the general interest/protects individuals from evil corporations!

      /sarc

      mostly, this seems to be a coalition of the incompetent who cannot make their own choices and the industries that seek to avoid competition by preventing choice by claiming it’s a safety issue.

      alas, this seems to be quite a potent alliance. get the stupid and the greedy together and it’s a tough embrace to break.

      i fear Dostoevsky may have had far more of a point in his “grand inquisitor” missive than one might hope.

      • I don’t think it’s so much a coalition of the incompetent as much as a coalition among those who seek to trade their freedom for a provision of security. This is what has always attracted people to government work. It isn’t generally very rewarding or stimulating, but you never wondered whether there would be a job for you next week or whether your boss would ask you to work harder. And there would always be a nice pension when you stopped working. For some of us, the phrase “there is no limit to what you can achieve here” is exciting. For others it is threatening.

        • sam-

          this sounds like po-tay-toe/po-tah-to to me.

          those who seek to trade freedom for security generally do so because they are incompetent.

          if you have faith in your ability to create value and solid professional skills, you do not seek the sort of government jobs you describe.

          perhaps we are just using a different definition of competent.

          i see this issue as mostly being the industry incumbents (like a cab company) creating bugbear with which to scare the credulous and incompetent into approving rules that prevent competition (from firms like uber) due to “safety concerns”.

          it seems to me that inherent in and intrinsic to that attitude is the presumption that individuals are not competent to gauge risks on their own and must be protected from choice lest they make a bad one and freedom lest it prove too much for them.

          i’m not sure how else you could structure such arguments.

          if one believes that individuals ARE competent to assess such risk/reward trade offs, then there is no need for such regulation. this makes it seem to me that this whole edifice of “consumer protection” is built upon presumptions of incompetence.

          you cannot pick your own cab company nor pajamas nor hairdresser. you need us to certify them and keep you from harming yourself/safe.

          how else would you describe that than a presumption of incompetence?

          even if we try to frame it as a mere convenience (eg, you are competent but may not want to waste the time) the argument fails. if this is about convenience, then there is no need for regulations, merely voluntary certification like iso 9000 or the good housekeeping seal.

          if such matters to you as a consumer, chose a company that has it, but if it does not, why ought is be required if you are presumed competent to make choices?

          • Regulators reason in reverse. When regulators use the word “incompetent”, they don’t mean that consumers are unable to choose among competing alternatives. They mean that consumers don’t arrive at the “right” conclusion. Anyone who doesn’t arrive at the right conclusion is “incompetent” by their definition. It is the same reasoning that compels them to call a President with degrees from Yale and Harvard “dumb”. After all, he didn’t reach the “right” conclusions. What other explanation could there be?

  2. “Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility” — Sigmund Freud

  3. This is complete horse manure. There is very little choice left in most markets. What you get is dictated by the giants that distribute it, for the most part.

    It is a race to the lowest price mediocrity, for the most part.

    Support Warren Buffets Congreessional Reform Act, and we might eventually see some of what Friedman says we have.

  4. So the free economy is great because it is best at supporting those corporations that pander to the immediate interests of the masses, regardless of future events.

    Gover

  5. Ok. So we have a situation in which a majority of political consumers expended their energy and resources to elect Obama. Ac ording to Friedman, did the system work, or did the market incumbent have an overwhelming advantage in manipulating what gets sold?

    • The “overwhelming advantage” is that the incumbent can force some to pay for whatever the majority has chosen.

      It would, no doubt, go over very well if Safeway offered $100 of free food every week to those with last names A-M. It would only work if they have the power of government to force everyone N-Z to spend increasing amounts of their disposable income at Safeway.

  6. Protection from evil corporations? More people were killed in industrial accidents during WWII than were killed in action. By a factor of eight.

    • Protection from evil corporations? More people were killed in industrial accidents during WWII than were killed in action. By a factor of eight.

      Killed? Surely you have a valid source for that remarkable claim, don’t you?

    • hydra says: “More people were killed in industrial accidents during WWII than were killed in action. By a factor of eight“…

      I’d love to see a credible link for that supposed statistic…

  7. Can force some to pay for whatever the majority have chosen.

    Not a true picture since everyone pays for what the majority chooses, and everyone gets to partake.

    Besides, the question was not about the costs subsequent to the election. If you think of the election the way you think of the market making any other choice, did the market work, or not?

    The usual argument is thst the market succeeds in showing what ( or who in this case) the market wants and not what some special interest group thinks it should have.

    Did it succeed in this, or not?

  8. I know some economics. I know some economic theories that do not reconcile with your economic theories. Absent true scientific experiments, theories are all we have.

    As a science, economics is about on the level of descriptive geology, so dont talk to me as if there are only your version of provable truths.

    Look, I believe the msrket does have some beneficial characteristics. It also has many failings, chief among which is the fact that many valuable things are not priced. ONE REASON, and not the only reason they are not priced is that they are not protected and recordef as property.

    • I know some economics. I know some economic theories that do not reconcile with your economic theories. Absent true scientific experiments, theories are all we have.

      Heh! You know some “economic” theories no one else has ever heard of.

      Economics is the study of how individuals and groups of individuals make choices on allocating scarce resources to satisfy their unlimited wants.

      There are some basics that rely on observation and can be used accurately to predict future action. They include –

      1. Incentives matter.

      2. Supply and demand – Prices work to bring supply and demand into equilibrium.

      3. No one will spend your money as carefully as you spend it yourself.

      4. All value is subjective.

      5. It is the difference in ranking of subjective values between individuals that is the basis of all trade.

      5. Almost all goods are scarce, as there isn’t enough of them to satisfy everyone’s wants.

      6. “Demand” means the willingness and ability to buy something. Not just something on your wish list.

      If your “theories” do not include those basics, then the world won’t operate the way you believe it should. There are lots more, but those are some biggies.

      It also has many failings, chief among which is the fact that many valuable things are not priced. ONE REASON, and not the only reason they are not priced is that they are not protected and recordef as property.

      “Protected and recorded as property”? Are these new economic terms no one has ever heard of?

      At least 2 things are wrong with that sentence. First, see rule #4: Value as you use it, can only be subjective. What you consider to be “valuable things” may not be “valuable things” to others.

      Second, a price is an indication of relative scarcity of a good relative to demand, not something arbitrarily stuck on it like a price sticker at the store. If something has no price, it’s because there is no supply, infinite supply, or no demand.

      There is no price for unicorns. There is no price for air. There is no price, as far as I know, for shit sandwiches.

      The “value” YOU place on something is the amount You are willing to spend for it. When you do spend for it you have established a “price”.

      In your world, however, you believe EVERYBODY should pay for things YOU value.

  9. The salary increases of full professors over the last thirty years is considerably less than the salary increases for university presidents. Is this a case of the lazy and uneducated getting what they deserve, or is it a case of the market today offering distinctly less reward for similar relative performance today compared with thirty years ago.

    Take a low wage job from thirty years ago and fnd the percentage of people earning that amount or less. Then inflate that wage to todays level and see what percentage is earning that wage or less. Even though the workers holding those jobs are older on average and have more education, their condition has not improved.

    Unless you count government payments, which then amount to a subsidy to the workers employers.

    • Take a low wage job from thirty years ago and fnd the percentage of people earning that amount or less. Then inflate that wage to todays level and see what percentage is earning that wage or less.

      Yes. Do just that.

      Even though the workers holding those jobs are older on average and have more education, their condition has not improved.

      It is clear that this is non-sense. By any measure Americans, across ALL income brackets, are doing better today that 30 years ago.

      The number of hours needed to work to consume that basics of life has shrunk pretty dramatically. And the quality of products has increased just as dramatically.

      The reality that you pine for, Hydra, is built on greed; that your politicians take from the ones you hate and give to yourself and your favorites. What you ignore is that everyone’s life is substantially better, but all you have to say is: more!! And to try to claim that it’s anything but greed, you lie and say that many people’s lives are worse off today than a few decades ago.

      But any honest look at this will look at consumption a you will see there is very little difference between the average American and the poorest American. And it is clear that the poorest Americans consume far more today than a few decades ago.

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