Thursday, March 12, 2009
Milton Friedman takes on Donahue
Enjoy this short two and a half minute video of Milton Friedman on the Donahue show explaining the virtues of Greed.
Subscribe to:
Post Comments (Atom)
About Me
Enjoy this short two and a half minute video of Milton Friedman on the Donahue show explaining the virtues of Greed.
10 comments:
Hey Len,
No one has a problem with what Milton is selling there with Donahue. It's common since.
Wouldn't you agree that there is a vast difference between the type of healthy greed Milton is talking about and the Economy Killing greed manifested by companies like Enron and powerful individuals like Bernie Madoff?
I think the greed you are describing needs a different word to represent it, like motivation or drive. "Greed" will automatically evoke negativity, and I don't think it accurately describes what you are promoting.
Greed run rampant and unchecked is what we are looking at right now. A giant house of cards built by greedy cheaters.
You're right J Man, I am not using "Greed" in a traditional way here.
What I'm really talking about, and what I think Milton is talking about, is "Self Interest." I try to stay away from absolutes, but I think that self interest is really about the only thing you can count on from other people.
Sure, you may get some selfless generosity here or there, but you can always count on self interest.
I think what Milton is saying is that self interest makes the world go round. It's what creates prosperity and wealth. And, I think that Milton would also say that the government's only proper role is preserving a free and open exchange between parties.
Prosperity increases when individuals are allowed to enter into open and free exchanges with each other. In such exchanges, both parties satisfy thier self interest. For instance, I pay you $1000 for your time as an SEO consultant. You want my $1000 more than your time, and I want your time more than I want my $1000. We both know what is being exchanged, and we both want to participate.
With Enron and Madoff, the exchange is not free and open. There is deception, concealment and lies. One party to the exchange is being duped. This is where the government should step in.
Trouble occurs when the government becomes more than a preserver of free and open exchanges between parties. The proper role of government is to provide an equallity of opportunity for all citizens, not to provide an equallity of outcome.
When the government gets into the business of equalizing outcomes, then it has to make valuations and judgments. And I think this is Milton's final point, people forget that the governement is just people, and people are self interested. Therefore, the politician's own self interest and greed always gets in the way of thier good intentions.
Self interest is definitely a better word/phrase for it.
I really don't know anyone that would disagree with how you and Milton feel about how the free market should work.
What I am confused about is, you agree Government should play a role in regulating. So, how you would choose to go about hunting down Madoff and Enron types and correcting the wide spread corruption without the government making judgments and valuations?
You're right that this stuff is easier to talk about at 30,000 feet than it is at groung level.
I think there is an important distinction between regulation and law enforcement. Putting people in jail when they are convicted of stealing is a proper role of government. On the other hand, establishing a regulatory agency that artificially sets the price of sugar to be three times the actual market value is not the proper role of government.
Those two examples are obviously at the extremes. I'll admit that in my mind it gets a little fuzzy when you get closer to where those ideas meet.
From 30,000 feet, I would argue that the government's proper role is to police rather than regulate.
Regulation is best done by the market itself. When a bank makes bad decisions and fails, it should file bankruptcy, and its assets should be sold off the highest bidder. Same with auto manufacturers, etc. The market rewards or punishes for all to see.
When it is discovered that bad actors have broken the law, i.e. Madoff, the force of law should come down on them with a hammer.
In the example with the bank and Madoff, other banks and other players will look at the consequence of "bad actions" and adjust their behavior accordingly.
When the government gets into the business of regulating, it cannot help but make judgments and valuations. In doing this, it cannot do so without its self interest getting in the way.
Yo Len, Good Mownin' - I see what you're trying to say now, and I do get the philosophy behind it.
And you're right that at 30,000 feet it all looks manageable. Not sure if you saw any of the feud between The Daily Show's Jon Stewart and CNBC Mad Money's Jim Cramer last week. Basically Jon Stewart destroyed the guy with video tapes he knew existed and video tapes he didn't know existed. In the videos that Cramer knew of, it shows Cramer shouting at people to buy stocks such as Behr Sterns and Lehman Brothers just prior to total and complete collapse. In the videos Cramer didn't know of, Jim details dirty little tricks that are status quot among CEO's and other businessmen at the top, not the traders. The question is how do you stop a company (That everyone thinks is legitimate) from inflating stock and jumping out of the window with a Golden Parachute? The stock holders, whom you would think would have a better handle on it than the government, as it's their money at risk, had no idea what was coming.
I guess what Im rambling on about is, at the point is was time to police, and they definitely policed Madoff, hes off to jail for 175 years, the money is gone and the people's retirements are F'd in the A, and all the different charities money is gone (most likely, at least most of it)
It seems we need an even more transparent system that everyone, including the government has access to. Like Obama's Google for Government or something similar.
But, I have to also say after the rambling, what the hell do I know about the economy. It's such a broad topic. But interesting for sure.
I see your point J that we need to be more proactive in catching the cheaters and crooks. You said by the time we catch them it's too late, people's life savings are wiped out and their lives are ruined. I heard that one of Madoff's 75 year old victims is going back to work bagging groceries, or something like that, because he can't make ends meet, and that's horrible.
But how is that any diferent than having to wait for the murderer or bank robber to commit his crime before you can arrest him? I think you make laws, then if people break them you go after them. Over regulating invites more corruption not less.
I'm just about finished with Friedman's book, "Free to Choose". I'll have some questions for you then Lenny. All in all I think he is right 90% of the time, but...
Dad
Thats logical for sure, and i dont disagree about waiting to prosecute until after a law has been broken. (my problem has always been with a few of the laws they have written)
But i think what you said about being more proactive about hunting them down is the most important thing.
J, I did see all the daily show stuff. Honestly, some really top notch reporting. Somebody needed to highlight that CNBC stuff. Stewart is vicious.
Dad, great to hear about your progress on your journey into free market capitalism. After some more study, you might find that Milt is 100% right. LoL.
I guess that I will need to sharpen up on my Friedman. I will try to be ready to discuss the issues when you are.
Post a Comment