Milton Friedman on Self-Interest and the Profit Motive 1of2

This clip is from the 15-part lecture series, "Milton Friedman Speaks"
http://www.ideachannel.com/product_info.php?products_id=1137

Transcript available via FreedomChannel: http://freedomchannel.blogspot.com/2007/12/milton-friedman-on-slavery.html


Summary:

A student poses a series of question on based on Friedman's notion that people should pursue their own self-interest. The student points out that he'd read that Friedman had previously come out against disaster aid for victims of a flood in Pennsylvania. Friedman corrected the questioner and noted that he did not come out against private aid for flood victims but instead was against the Federal Government providing discounted flood insurance in advance to home purchasers which motivated people to build houses in areas where they otherwise would not have been able to obtain insurance privately. If not for the discounted insurance, it's likely many of the flooded houses would never have been built in the first place as it wouldn't have been in peoples self-interest.

The student went on to note that it was recently reported that an old man in Ohio died when the electric company turned off his power when he'd failed to pay his electric bill. Was it moral for the company to act in it's own self-interest to do so? Friedman responded by asking what if the electric company never turned off the power for anyone? Who would pay the cost--the people who own or work at the electric company? It would be unjust to impose that responsibility on individuals who are running an honest business of providing electricity. Friedman suggests that the true responsibility lies on the mans neighbors and friends who were not charitable enough to allow him to meet the electric bills.

Finally the student uses the example of Ford deciding not to install a $13 block of plastic which would prevent it's Pinto cars from exploding in a rear-end collision. Ford estimated such a move would cost 200 lives a year at a cost of $200,000 per life lost. They multiplied and found that it wasn't worth it to install the plastic block. He asked if a corporation seeking it's own self-interest was a good thing in this case? Friedman responded by asking, what if it cost $1 billion to save each life, should Ford have put in the block? It's simply not practical to put an infinite value on an individuals life. If it took $1 billion in resources to keep one individual safe, and acquiring those resources meant that a million people must starve, it's a bad deal. Friedman concludes that he doesn't know if the $200,000 number that Ford used was the right number to maximize the overall benefits, but at the end of the day the principle is that we can't simply protect ourselves from everything and impose that cost on others. Friedman posits that the question the student should be raising, is should Ford be required to attach the statement to the car, "we've made this car $13 cheaper, and therefore it is X% more risky for you to buy it".

See also:

Free to Choose - All 15 episodes streaming online for free
http://www.ideachannel.tv

A history of Free to Choose
http://www.freetochoose.com

Category:

News & Politics

Tags:

• Milton
• Friedman
• Capitalism
• Freedom
• Corporations
• Profits
• Communism
• Socialism
• Subsidies
• Documentary
• Politics
• liberty

[ItsDonaldSutherland]

the guy in the orange has a lot of misdirected, buried rage, Friedman becomes his target. (Outrage = I must be in the right) In the face of rage, truth and reason are most often lost. Not here. Friedman is such a zen master to never fall in that pit with the kid and just stay focused and uneffected, ever congenial. He's old school civility - ability to not make everything personal, emotional where there's got to be a villian to crucify, someone to blame and punish to get justice.

[mnypwrrspkt]

whys the guy in orange so fuckin rude? by the way thanks for dressing up.

[heavym3tal]

@mikek241 your quite welcome =)

[mikek241]

@heavym3tal You nailed it, yeah, it wasn't apparently obvious, but that's exactly right. Thanks.

[heavym3tal]

@mikek241 My opinion is that Thoreau quote emphasizes not the homeowner's own morals on what is good (i.e.- donation to charity), but the man who comes to the house with his own design of doing good. That to me seems like the distinction.

[johnsurs22]

@mikek241 I guess there really is not much of a distinction in the quote

[mikek241]

@johnsurs22 So how is the distinction made with regards to charity? If you want to donate, aren't you still acting for the sole interest of others..?

I mean, I agree with Friedman on Thoreau's quote, I just don't see how he distinguishing it form charity...

[johnsurs22]

@mikek241 The Thoreau quote only means that you should be skeptical about the intentions of people who claim to be doing something in the sole interest of others. It mostly refers to how certain lobbyists will try to implement government policies under the guise that it will be best for the nation when in reality it's only best for themselves. I don't really think it's referencing charity in the sense of donating to the Red Cross

[mikek241]

Could somebody explain what the difference is between Thoreau's quote and charity? Is Friedman trying to imply that even charity originates from the desire to fulfill one's self-interest?

[tehatemachine]

@nerfmyaccount To me it really depends which law you violate, Personal liberty Definatly, But many other laws hidden in the books We could be breaking on a daily basis without knowing. but to the whole point like Milton said. You could be reducing your chances of death by simply not walking across the street. Anything really can kill us. An asteroid could smash right through my roof killing me and everyone else in my house. Life isn't fair.

[tehatemachine]

@nerfmyaccount But even before the incident started, There was almost no way to tell if this could of happened or not. the engineers at ford that designed the components where not aware that their faulty design ended up turning cars into fireballs until after the even, In which people within the company have failed to take care of on their own. which is incidentally their loss to in recognition and in it's name.