Friday, February 27, 2009

Milton Friedman on Greed

Milton Friedman was an American Nobel Laureate economist and public intellectual. An advocate of economic freedom and personal liberty, Friedman made major contributions to the fields of macroeconomics, microeconomics, economic history and statistics. In 1976, he was awarded the Nobel Prize in Economics for his achievements in the fields of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy. (This summary taken from here.) Amazingly, he was originally a a Keynesian supporter of the New Deal and advocate of high taxes. His own work lead him away from those theories.

This is from a 1979 interview with Phil Donahue. I've provided a transcript below.

[Note: Rephrasing was not transcribed]

Phil Donahue: "When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have nots, when you see the greed and the concentration of power within, did you ever have a moment of doubt about capitalism and whether greed's a good idea to run on?"

Milton Friedman: "Well, first of all, tell me, is there some society you know that doesn't run on greed? You think Russia [then the U.S.S.R.] doesn't run on greed? You think China doesn't run on greed? What is greed? Of course none of us are geedy. It's only the other fellow who's greedy. [Audience laughter]

"The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.

"In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history, are where they've had capitalism and largely free trade. If you want to know where the masses worst off, it's exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: That there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."

Phil Donahue: "But it seems to reward not virtue as much as ability to manipulate the system."

Milton Friedman: "And what does reward virtue? You think the communist commissar rewards virtue? You think a Hitler rewards virtue? You think, excuse me, if you'll pardon me, do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed, or on the basis of their political clout? Is it really true that political self interest is nobler somehow than economic self interest? You know I think you're taking a lot of things for granted. And just tell me where in the world you find these angels who are going to organize society for us."

Phil Donahue: "Well..."

Milton Friedman: "I don't even trust you to do that." [Audience laughter]

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