Milton Friedman on Self-Interest and the Profit Motive 2of2

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
• Ralph
• Nader
• Socialism
• Subsidies
• Documentary
• Politics
• Ford
• Pinto

[graw81]

Milton was a tremendous speaker. There are times when I agree with him and there are other times I do not agree with him. But always, he is a pleasure to listen to.

[EriPages]

Milton just K.O'd the student at 5:25

[mrgarlicbread100]

@samsamm77 it's exactly the same with me

[asdflive]

@loschrisos2 The student was understandable unprepared to argue those principles because he only saw what lied on the surface.

[asdflive]

@loschrisos2 Of course he is as fallible as any other human being, and you don't need to agree with his conclusions to recognise and admire his methodology for analysing economic problems. It would of been the easiest thing to join the student in condemning what happened as evil and unjust, it was certainly tragic. What Friedman's analysis reveals is the underlying principles that are involved.

[loschrisos2]

rofling hard at all those Friedman cock-hoppers atm. Yeah, apparently he was a pretty smart guy, but that doesn't mean you have to beliefe or defend everything he says. There is a whole bunch of other "geniuses" who thought Friedman was wrong with most of his oeuvre.

All i can see is from here, that he dodges the question very sophistically - so he is rhetorically very skilled, but didn't answer the student's question.

[KnowledgeKEMET]

@tehatemachine There is no need to!

[tehatemachine]

@KnowledgeKEMET Watch it again . He showed them the mechanism of how IT WORKS.

[KnowledgeKEMET]

Wow, Milton was great at Dodging the Actual Question!!!!!

[samsamm77]

I've only just discovered these clips and those of Christopher Hitchens I must have been living in a cave not to have heard about these earlier! I want to coin a new word, The Miltslap!

[gman2013]

Debating Milton Friedman...one big assed mistake

[koala8]

@arseniyonline1234555

yes it IS in the realm of business because providing misleading info or omitting crucial info is fraudulent...& destroys the legitimacy of a business...the information should have been disclosed for ppl to make the best decision...

Ford was wrong for not providing the correct information, but there's nothing wrong with making cars for profit as long as consumers are not misled. the boy just says it was "wrong" without analyzing the real issue imo.