Sunday, September 21, 2008

Debate on Self Interest: Milton Friedman vs. Student

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Friedman makes valid points in the first two examples, and the student does a good job of standing up to him; however, in the third example, the student allows Friedman to convolute the argument to a completely different, unwarranted concept, where Friedman is able to slyly avoid being pinned down. The weakness of Friedman's points lie in his total committal to a very specific analytic worldview that is a little too black and white (which is the same thing he charges the student with), but it's largely just a fundamental disagreement in philosophies. He sees the issue regarding the exploding gas-tanks as "the consumer should be free to decide how much they want to pay to reduce the chance of their death." To him, it's that cut and dry. If the consumer doesn't know that the gas tank will likely explode upon collision because the corporation deliberately withheld information, then the remedy for this is for the government to hold the corporations accountable in court. Fine. That sounds reasonable1. But what does this have to do with the student's original point: Friedman's concept of "self interest" applied to corporations and business can (and often will) create situations that not only cause people to "run away" but situations that kill them? Did Ford really think fewer people would buy their car if they installed the safety block in front of the gas tank and charged 13$ more? Of course not. The issue is not whether or not the consumer is willing to use their freedom to decide if they want to pay extra for their safety; the issue is that Ford knew they could make more profit if the pieces weren't installed at all which is what Friedman is arguing for: self interest. For this to be true, the truth must be hidden, and deceit is indirectly promoted in the name of self-interest. This is where our worldviews collide. Friedman's view might be valid within a system that isn't monopolized by a handful of corporations controlling what the public knows, but within the system we have now, a corporation doesn't always have to assess certain risks -- losing money due to lawsuits for withholding public information or losing customers because of something that gives their company a bad name -- because the government and corporations are basically the same entity. (Look at the reduction of Exxon's oil spill fees by the Supreme Court. Look at the fact that Monsanto still exists2. Look at the recent bailouts. There is no real accountability.) In a different system the idea of self-interest applied to business makes sense, but in our current reality, those with the most money will always have the most say.

1 I'm no law expert, but it seems like obscuring the information to the realm of nonexistence would be an easy loop-hole here, but that's another issue.
2 "Former Monsanto employees currently hold positions in US government agencies such as the FDA and EPA and even the Supreme Court."

Something Friedman says that I really like: "Don't attribute to me your conventional views of what "a conservative" believes 'cause I'm not a conservative. I'm a believer in freedom." I've talked to my friends about this concept before. So many people you encounter (liberal or conservative) won't actually listen to what you say; they'll just pause until you're finished talking and then respond to the cliche response they assume you used, simplifying everything you said into banalities.


Hectocotylus said...

"As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance." -Dewey

Luc said...

I find it interesting that, at least in the US, conservatives have come to be representatives of the freedom and religious extremism at the same time. It's a rather odd paradox that I think is worth exploring.

American politics seems foreign and strange compared to the French system because of how deeply entrenched religion is in it. Curious.

hyper-sensitiva said...

Listening to the student's arguments I hear a lot of the same "youthful idealism" that my views get criticized for as being inapplicable to the real world decision-making process. As an economist, Friedman's vocation is to analyze and determine how to control the market in financial terms, but it is highly disconcerting when the population at large uses profit margins as the main basis for making moral decisions. Ostentatiously, this mentality is used to justify the ambitions of those in power of the corporations and the government's disinterest in regulation, but what I think is less obvious is the degree in which it stunts the average person's ability to react to that greed. I hear far more people (generally 30+ in age, when youthful ideals have been erased by years of toiling away in mindless office work and see hording away money as their only chance of escape) openly basing their vote on how much they think the candidate will raise their taxes instead of worrying about how exactly those tax dollars are being spent. Instead of being encouraged to act upon good-natured instincts people are conditioned to pause and analyze how much of a personal financial burden it is going to be to do the right thing. This sort of self-interest isolates individuals from one another, dead-locking them in indifference instead of activating them into a community working for the common good, speaking out in the early stages and not waiting until the problem exacerbates to the point of affecting their personal checkbooks.

Hectocotylus said...

What's interesting is that Friedman is the one being idealistic; his argument only makes sense assuming the government will take care of corporate negligence. History tells us that this is not true; therefore, the regulations and fail-safes built into Friedman's "system" are rendered meaningless.

It's a shame that so many people have adopted the worldview of those in charge to the extent that any application of the concepts of "decency" and "justice" becomes an idealistic abstraction. Just a few decades ago the idea of a black Presidential candidate was pure idealism, but it was realized through struggle and perseverance by people who were willing to accept that other realities are possible.

Hectocotylus said...

(My point is that "idealism" is not exclusively the meaningless peace-sign the hippies made it out to be. In the right hands it is a sledge-hammer.)

John Fatur said...

What's extremely interesting is that in modern academia we labor under those who say "Friedman" in reference to Thomas, not Milton.