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

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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

Channel: News & Politics
Uploaded: December 2, 2007 at 4:44 pm
Author: Sidewinder77

Length: 0:05:25
Rating: 4.72
Views: 32,799

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

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Video Comments:
cheebalover (Monday 1st of December 2008 10:23:31 AM)
nice video! i wish there are more..these videos are quality
Bacchant33rd (Friday 28th of November 2008 12:23:05 PM)
Actually, the roots of the crisis go back to the early 1970s when finance was "liberalized" or freed from the constraints of the post-war period. The constraints of the post-war period (1945-1970) were instituted by the US and UK for a reason: because it was assumed correctly that allowing governments to control capital movements & currencies would provide a basis for rapidly expanding growth in trade, which indeed happened. It's called the GOLDEN AGE OF MODERN CAPITALISM.
Bacchant33rd (Friday 28th of November 2008 12:21:16 PM)
Bush says the government is intervening in the banks, but wants to make sure that we go BACK to the PROFIT MOTIVE not policy motives, or not political motives What are "political motives?" That means participation of the population in making decisions. So they HATE DEMOCRACY. They dont want the public to be involved in decisions about things. We want to go back to "profit motive," meaning a PRIVATE TYRRANY, which is what a corporation is, should look out for itself, NOT FOR PUBLIC INTERESTS
JoshLucas5 (Wednesday 26th of November 2008 10:14:53 PM)
how did the guy who didn't pay his electric bill die?
TimeWarp66 (Thursday 27th of November 2008 08:00:46 PM)
haha. Yeah, I don't exactly see how one thing has to do with the other. But hey, he's a dirty hippie. What can you expect?
knifeofspaghetti (Tuesday 25th of November 2008 10:27:37 AM)
Were the Community Reinvestment Act loans really that significant? Even if it was, like, 10 billion a year, that's not nearly large enough to contribute to the collapse of a >3 trillion dollar system.
dakuduhdit (Monday 24th of November 2008 06:51:17 PM)
wow kid in red shirt. Were all those "rich hippies" that stupid. He always answers the question, LISTEN!!!
OhMymy (Thursday 20th of November 2008 07:07:38 PM)
Friedman believes in the goodness of people being selfish yet he believes charities by private individual
vansfreek (Tuesday 18th of November 2008 01:58:10 AM)
The polar opposite of free market principles are what caused the financial crisis. Government stepped in, pushed for homeownership to be extended to lower income individuals, loans couldn't be paid back, businesses fail, government steps in with a helping hand. Bankruptcy is a good thing sometimes. It's called 'creative destruction.' Read an econ book for once.
dodgersandstorm (Monday 24th of November 2008 05:36:13 AM)
Agreed. Great response. Very succinct.