1970s Milton Friedman Thoughts on Business

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This is an off topic post seeing as it isn’t election season yet, but I found these videos and thought it was really good stuff. They are a couple of videos of Milton Friedman back in the 1970s, (he was a very famous economist a few decades back). I watched them and found that he said some things that I found to be enormously true. One was:

“When you have more government, industrialists take it over.”

I think that couldn’t be more true. I don’t think big government has ill intentions. It is meant to help. Yet the more responsibilities you give it and
the more power, the more means big business has to effect its agenda by leaning on congress. Congress is often influenced, I might even say steered, by big business. Super pacs enable businesses to greatly affect who is elected. In the house, every sector of big business has lobbyists watching everything congress does. Lobbyists use their weight to stare congress. They support the bills that increase barriers to entry and they campaign against those that increase their taxes or regulation.

I am not saying do not regulate businesses. I know that corporations are often evil in nature, probably due to the dilution of responsibility. You can expect corporations to:

  • Pollute our skies, rivers, oceans, and soil to no end
  • They will not, on their own accord, pay for damages they do to normal people who are otherwise, helpless to damage the company back
  • They will market their products in deceptive ways
  • They might sell potentially harmful products if left unchecked by the FDA

But corporations are also an important part of society. They provide products that we want, fund R&D that progresses society, generally pay higher salaries than small businesses, and their large scale allows them to offer services that couldn’t otherwise be offered. Yet every piece of regulation actually helps them and hurts the little guys. Large corporations can afford:

  • Extensive product testing
  • Lengthy permit processes
  • Pay permit fees
  • Hire experts for consultation on permit proposals
  • And to renovate their business to meet extensive state and town codes

However, a small business often cannot afford those things. The result is that you have to have a lot of money to start a business. As the amount of town, state, and national regulation grows it takes more and more money and legal expertise to start a business. The idea of starting a mom and pop restaurant becomes extremely difficult. Starting a business is no longer something a person can do if they are poor and trying to escape poverty, instead it is a way for wealthy people to get wealthier.

Watch the discussion:

Friedman

The speech below is also interesting. It is a 1970s speech he gave at Stanford. He talks about government’s responsibility to the poor. My favorite thing that he touches on is what an enormous failure the education system is in preparing poor people for the job market. I was so interested to hear Friedman, an economic heavy weight, talking about this almost 40 years ago! It is just as much a problem today. We lag behind the rest of the world in education. I think it is likely especially bad in poor neighborhoods. He also touches on how minimum wage disincentives on the job training. I’m not against minimum wage, but I thought that was an interesting point. You only have two types of experience, education and ‘on the job’ experience. When you make demand a minimum wage and healthcare, it really becomes unlikely that a firm will hire anyone but skilled workers.

Friedman2

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