hello.

i'm mackenzie. welcome again to the university of chicago where a distinguished group of guests met together to watch a film and to discuss a film by milton friedman in series free to choose. in it, he examines the consumer movement, the whole development of high powered government agencies. in recent recent decades in this country, which have set out to protect the interest of the consumer. now, does this consumerism really work.

or are there better ways of protecting the interest of the consumer? that's the question, milton friedman asks in this film. the 1960s corvair condemned ralph nader as unsafe at any speed speed. since nader's attack, it's being increasingly that we need

government in the marketplace today. there are agencies all over washington where bureaucrats decide what's good for us. agencies to control the prices we pay, the quality goods we can buy, the choice of products available. it's costing us more than $5 billion a year. since the attack. the corvair. government has been more and more money in the name of protecting the consumer consumer. this is hardly what the third president of the united states, thomas jefferson, whose monument this is had in mind when he defined a wise, frugal government as one which

restrained men from injuring each other and them otherwise free to, regulate their own pursuits of industry and improvement. ever since the corvair affair, the us government increasingly been muscling in between buyer and seller. in the marketplaces of america. by thomas jefferson's standards, what we have today is not a wise and frugal government, but a spendthrift and snooping government. the federal regulations that govern our lives are available in many places. one set is here in the library of congress in, washington, d.c. in 1936, the federal government established the federal register to record all of the regulations, hearings and other matters connected with the agencies in washington. this is volume one. number one, in 1936, it took three volumes like this to record these matters. in 1937, it took.

and then it grew and grew. and. at first, rather slowly. and gradually. but even so, by year, it took a bigger and bigger pile to hold all the regulations and hearings for that year. then around 1970 came a veritable explosion. so that one pile is no longer enough to hold the regulations for that, it takes two and then three piles until. on one day in 1977, september 28, the federal register had no fewer than. 1754 pages. and these aren't exactly you would call small pages either. many of those regulations come from this building consumer product safety outlines the best of what you will. please. thank. the consumer product safety commission is one of the newest

agencies set up in our behalf. coil. they help you? one of its jobs is to give advice to consumers and. q that came in ways that those are involved and what has been done about the flammability of children's. but its main function is produce rules and regulations, hundreds and hundreds of them designed to assure the safety of products on the market. it's hard to escape the invisible hand of the consumer product commission, except for food and drugs, ammunition and which are covered by other agencies. it has power to regulate just about anything you can imagine. i. already it costs $41 million a year to test and regulate all these products on our behalf. and that's just the beginning. i think the commission employs highly trained to carry out tests like checking the brakes

on, a bike. but the fact is that 80% of bike accidents are caused by human error. these tests may one day lead to safer brakes, but even that isn't sure. the one thing that is sure is that the regulations that come out of will make bikes more expensive and will reduce the variety available. yes, they really are testing how much a strike. and the tests are very precise. the pressure must be exactly pound the match exactly and right angles. consumer product safety. no matter how many tests are done, children swings are never to be totally safe. you cannot outlaw accidents.

if you try you end up with ludicrous results. it hardly seems possible. but they really do use highly skilled people to devise regular machines. and what? prevent toy guns from making too big a bang. but the consumer product safety of the commission, in effect, is deciding they think is good for us. they are taking away our freedom to choose. okay. consumer is don't have to be hemmed in by rules and regulations. they're protected by the market itself. they want the best possible products at the lowest and the

self-interest of the producer leads him to provide products in order to keep customers satisfied. after all, if they bring goods of low quality, you're not going to keep coming back. buy them if they bring goods that don't serve your needs. you're not going to buy them. and therefore they search out all over the world. the products that might meet your and might appeal to you. and stand in back of them. because if they they're going to go out of business. you see the difference between the market and political action. the governmental here nobody forces you're free. you do what you want. there's no policeman to take money out of your pocket or to make sure that you do what you're told. over a quarter of a century ago, i bought. second hand a desk calculator for which i paid $300. one of these little calculators today which can buy for $10 or so, will do everything did and

more beside what produced this tremendous in technology. it was self-interest or if you prefer greed the greed of producers who wanted to produce something that they can make a dollar on the greed of consumers who wanted to buy things as cheaply as they could. did government play a role this? very little. only by the road. clear for human greed and self-interest. to promote welfare of the consumer. when governments do in business, innovation is stifled. railroads have been regulated for nearly a century, and they are one of our most backward industries. the railroad story shows what so often results from the good intentions of protection groups. in the 1860s, railroad rates lower in the united states than anywhere else in the world, and many customers thought that they were too high. they complained bitterly about the profits of the railroads.

now the railway men of the time had their problems too. problems that arose out of the fierce competitiveness among them many railroad aides all trying to get their share of the market, all trying to make a name for. if you want see what their problems were as they saw them come and have a look at the the from inside this private car. it may not look as if the people who ran the railroads had any real problems. some, like the owner of this private car, had done very well. this was the equivalent of the private jets of today's business tycoons. but for each one who succeeded many didn't survive the cutthroat competition. what we have here is a railroad map of the united states for the year 1882. it shows every railroad then in existence. the country was literally crisscrossed with railroads. going to every remote hamlet and

covering the nation from coast to coast between points far distant, like, for example, new york, chicago. there might be a a dozen lines that would be running those two points. each of half dozen trying to get business would cut rate and rates would get very low. the people who benefited most from this competition were, the customers shipping goods on a long trip. on the other hand, between some segments that trip say for example, harrisburg and pittsburgh, there might be only a single line that was and that line would tank full advantage of its monopoly position. it would charge all that the traffic would bear. the result was that the sum of the fares for the short hauls was typically larger than the total sum charged. the long haul between the two distant points. of course, none of the consumers complained about the low price for the long haul, but the

consumers certainly did complain about the higher prices for the short hauls, and that was one of the major sources of leading ultimately to the establishment of the interstate commerce commission. the cartoonists the day delighted in pointing out that railroad had had tremendous political influence as indeed they did. they used the consumers complaints to get the government to establish a commission that would protect the railroads interests. it took about a decade to get the commission into full operation. by that time, needless to say the consumer advocates had on to their next crusade. but the railway men were there. they had soon learned how to use a commission to their own. they sold the long haul, short haul problem by raising the long haul rates. the customers ended paying more some protection.

the first commissioner was thomas, a lawyer who represented the railroads for many years. the railroads continued to dominate the commercial. in the 1920s and thirties when trucks emerged as serious competitors long distance hauling. the railroads induced the commission to extend control over trucking truckers in their turn learned how to use a commission, protect themselves from competition competition. this firm carries freight to. and from the dayton, ohio international airport. it's the only one serving some routes and its customers on it. but dayton freight has real problems. its icc license only permitted to carry freight from dayton to detroit to serve other routes. it's had to buy rights from other icc license holders, including one who doesn't own a

single truck. it's paid as much $100,000 a year for the privilege. our company is in the process of trying get rights to go there now. yes, we'll do. and thank you for calling, sir. the owners, the firm have been trying for years to get their license extended to cover routes. now i have no argument with the people who already have icc permits excepting for the fact that this is a big country and since the inception of the icc in 1936, there been very few entrants into the business. they do not allow new entrants to come in and compete with those who are already in. of course, dayton freight suffers, but so do the customers who pay higher freight charges. quite frankly, i don't know why icc is sitting on its hands doing nothing. this is the third time to my knowledge that we've supported the application of dayton air freight to help save money, help

free enterprise help the country save energy, help help. it's all comes down to the consumers going to pay for all of this and they are to blame the icc. it has to be the blame. dayton air freight now has many of its trucks lying on trucks that could be providing a valuable service. far from protecting consumers, the icc has ended up them worse off. as far as i'm concerned, there is no free enterprise and interstate commerce. it no longer exists. this country. you have to pay the price and have to pay the price very dearly. and not only means we have to pay the price, it means that consumer is paying price. the price consumers pay when it comes to medicine could be their lives. in the 19 century, pharmacies contained an impressive array of pills and potions.

most were ineffective. and some were deadly. there was an outcry about drugs that maimed or killed the food and drug administration. and in response to consumer pressure succeeded in banning a whole of medicines. the tonics and lotions, their excessive claims disappeared. the market in 1962. the amendment gave the fda power to regulate all drugs for effectiveness, as well as safety. today, every drug in the united states must pass the fda. it's clear that this has protected us from some drugs with horrific side effects like thalidomide. and we all know of people who have benefited modern drugs. what we don't hear much about, however, are the beneficial

drugs that the fda has prohibited prohibited. well, if you examine the therapeutic significance of drugs that haven't arrived in the u.s., but are somewhere in the rest of the world, such in britain, you can come across numerous examples. the patient has suffered. for example, there are one or two drugs called beta blockers, which it now appears can prevent death after a heart attack. we call secondary prevention of coronary death after infarction, which, if available here, could be saving about 10,000 lives a year in the united states in the ten years after the 1962 amendments, no drug was approved for hypertension. that's for the control of blood pressure in the united states. whereas several were approved in

britain in the entire career vascular area. only one drug was approved in the five year period from 67 to 72. and this can be correlated with known problems at fda. these cards are taking to an fda official the documents required to get just one drug approved while high. there must be the new one they call me about. it took six years work by the drug company to get this drug passed here. all 119 viagra? yes. okay. thank you very much. the implications for the patients are that therapeutic decisions? that used to be the preserve of the doctor and the patient are increasingly becoming made at a national level by committees of experts. and these committees and the agency for whom they acting. the fda are highly skewed

towards avoiding risks. so there's a tendency us to have drugs that are safer, but not to have drugs that are effective. now i've heard remarkable statements from some of these committees in considering drugs. one has seen the statement. there are not enough patients with disease of this severity to warrant marketing. this drug for general use. now, that's fine if what you're trying to do is to minimize drug toxicity for the whole population. but if you happen to be one of these, not enough patients and you have a disease that is of high severity or disease, that's very rare, then that's just tough on you. for ten years. mrs. estero dean suffered from severe asthma. the medication she received serious side effects. her condition was getting worse,

but the drug her doctor preferred was prohibited by the fda. so twice a year mrs. usdin had to out on a journey. i had been very sick. i had been in and out of the hospital several times. and they couldn't seem. to find a way to control the asthma. and i had to change lifestyle once i was out, even for short time. mainly because cortisone derivatives were softening the bones, causing a puffiness, the face and other changes in my body. the doctors were pretty anxious to get me off the cortisone. the drug her doctor wanted her to have had available for use for five years in canada.

once across border at niagara falls, mrs. usdin could make use of a prescribed sheen that she'd obtained from a canadian. all she had to do was go to any pharmacy. there could buy the drug that was totally prohibited in her own country. the drug worked immediately. this one made such a difference in my life both because of the shortness of breath being resolved and also because now we didn't have to worry so much about. the softening of the bones. fortunately, once i got that

medicine very everything sort of reverted back to much more of a normal lifestyle and i'm very grateful that i was able to find relief. it was easy for mrs. usdin to get around the fda regulations because she happens to live near the canadian border. not everyone is so lucky. it's no accident that despite the best of intentions, the food and drug administration operates so as to discourage development and prevent the marketing of new and potentially useful drugs. put yourself in the position of a bureaucrat who works over there. suppose you approve a drug that turns to be dangerous. a your name is going to be on the front page of every newspaper. you will be in deep disgrace. on the other hand, suppose you make the mistake of failing to approve a drug that could saved

thousands of lives. who will know the people whose lives might have been saved will not be around there. relatives are unlikely to know, but there was something that could have saved their lives. a few doctors, a few researchers workers. they will be disgruntled. they will know you or i, if we were in the position of that bureaucrat, would behave exactly the same way. our own interest would demand that we take any chance whatsoever. almost every fuzing to approve a good drug in order to be sure that we never approve a bad one. drug companies can no afford to develop new drugs in the united states for patients with rare diseases. increasingly, they must rely on drugs high volume sales for drug firms have already gone of business, and the number new drugs introduced is going down.

and where will it all lead? we simply haven't learned from experience. remember prohibition. in a of moral righteousness at the end of the first world war, when many young men were overseas. the nondrinkers imposed on of us prohibition of alcohol. now they did it for our own good. and there is no doubt that alcohol is a dangerous substance. unquestionably, more lives are each year through alcohol and also the smoking a cigaret than through all the dangerous that the fda controls. but where did it lead this place? is today a legitimate? it's the oldest bar in chicago, but during prohibition days it

was a speakeasy. al capone. bugs moran. many of the other gangsters of the day sat this very bar planning exploits that made them so notorious. murder, extortion. hijack. bootlegging. who were the customers who came here? they were. who regarded themselves as respectable individuals who would never have of the activities that al capone moran were engaged in. they wanted a drink, but order to have a drink. they had to break the law. prohibition didn't drinking, but it did convert a lot of otherwise law obedient citizens into law breakers. fortunately we're a very long way from today with the prohibition cyclamate and ddt. but make no mistake it there is already something of a gray market in drugs that are prohibited by the fda. many a conscientious physician

feels himself in a dilemma caught between what he regards as a welfare of his patient and strict obedience to the law. if continue down this path, there is no doubt where it will end. after all, if it is appropriate for government to protect us from using dangerous cat guns and bicycles, the logical laws for prohibiting still more activities such as hang gliding motorcycling, skiing. if the government is to protect from ingesting dangerous substances. the logic calls for prohibiting alcohol and tobacco. even the people who administer regulatory agencies are appalled at this prospect and withdraw from it. as for the rest of us, we want no part of it. let the government give us information, but let us decide for ourselves what chances we want to take with our own lives.

as you can see, all sorts of silly things happen when government starts to regulate our lives. setting up agencies, tell us what we can buy, what we can, what we can do. remember, we started out this program with a corvair, an automobile that was cast gated by ralph nader as unsafe at. any speed? the reaction to his crusade led to the establish of a whole series of agencies to protect us from ourselves. well, some ten years later, one of the agencies that was set up in response to that move finally got around a the corvair that started whole thing off. what do you suppose they found? they spent a year and a half comparing the performance of the corvair with the performance of other comparable vehicles. and they concluded, and i quote, the 19 6063 corvair compared favorable play with the other contemporary used in the tests.

nowadays there are corvair fan clubs throughout the country. corvair ads have become collectors and consumers have given their verdict on ralph nader and the government. as abraham lincoln said, you can't fool all of the people all of the time. it's time of us stop being fooled. those well-meaning bureaucrats who claim to protect us because, they say we can't protect ourselves the men and women who have fostered this movement have been sincere. they believe that we as consumers are not able to protect ourselves, that we need the help of a wise and beneficent government. but has so often happened the result have been very different from the intentions. not only have our pockets been picked of billions of dollars, but also we are left less well protected than we were before.

now, back here at the of chicago, the consumerist themselves get their chance to argue their case. i agree with mr. friedman with respect to those agencies which have had the major of economically propping a certain industry which is why consumer like myself advocate the elimination of the icc the cfpb, the maritime commission. but when you're talking about consumer protection in the marketplace and when you're talking about government watchdog and competition, consumers need, as every poll is showing, they're demanding more more protection. and to give just two examples of how information is simply not enough to protect the consumer, five years ago, i could not have bought a child's crib in this country that would have had the slats sufficiently close together that i did not have to worry about the child strangling. not until government and the consumer product safety commission stepped in to consumers then had the choice to buy that type of a crib. strangulation down 50%. and in 1975, if i had wanted to lease a xerox machine, i could not have done. and not until the federal trade commission antitrust stepped in

and forced competition into that marketplace did i have that. and in one year, the price went from $14,000 down to $5,000. those dollars back in our pocketbooks to say nothing of minimized emotional trauma. well, we asked milton friedman to come back on that. let's establish the viewpoint of our other participants and experts. dr. richard landau, what's your reaction? well, i think the cost is certainly outrageous, certainly large, and the benefits are trivial, if any. i think that perhaps milton overstates it slightly to make his point, but basically i would have to agree with it in the area that i know best, which is the regulation of, new drug development. and joan claybrook. well, in the auto safety field have saved about 55,000 lives and millions of injuries because of auto safety regulations since the mid 1960s. i might also comment that the cost of auto crashes each year the american public is $48 billion a year fairly substantial when you compare it to other things, much less

again, human trauma. bob crandall well, i think it's impossible to disagree with milton friedman on the effects of economic rate regulation of the sort that the railroads and the trucking industry have been through. the intent that legislation was, of course, to protect the railroads and to protect the trucks and the same thing is true for maritime regulation. what sustains regulation is sort of a populist theory that somehow through government, we will redistribute wealth from people who business firms to consumers. in fact, it doesn't work that way. it doesn't work that way in economic regulation. and there's very little evidence that it works, that in any kind of regulation as to whether we get any value from, health and safety regulation. i think much of it is tuned to know to well, now that's where the area i want to start with. remember, that was the first part of his argument, the whole idea of consumer product action by the state. now is that so far working very

close to this, i know what your reaction kathleen really. well and product safety in the state of that the law more industry had said for 20 years they could not design safe lawnmower. only when the consumer product commission forced them with the new standard. suddenly their creative genius was overnight they came up with net whips that were made out plastic and they came up with very innovative forces, which is why with a government presence actually triggered innovation that otherwise would have been left uncovered. it's very easy to see the good results, the bad results. it's very much harder to see. you haven't mentioned the products that aren't there because the extra costs imposed by consumer product safety commission have prevented them from existing. you haven't mentioned the case of the trips problem on the flammable garments. here you had a clear case where the a regulation of cpsc essentially had the effect of requiring all manufacturers of children's sleepwear to impregnate them with trips. but three years five years

later, the regulation the garments to be non-flammable and it happened trist was most regularly readily available chemicals which could do it. kathy riley as well as it goes. but let me finish the story first, because the second half of the story is an important part of it. it turned out the truth was of carcinogen. and five years later or three years later, i'm not sure the exact time, the same agency had to prohibit the use of those sleepwear garments forced to be disposed of at great cost to everybody concerned. all right. let's look at the real interesting history here. 1968, when congress passed the flammable fabric act, they did not tell the cpsc what chemicals would comply with that and what would not. and so initially, when industry said we're going to use tariffs, the consumer product safety commission from initial test, we're disturbed it and had announced informally to industry that they were not going to allow it to be used. industry balked and said, we're going to take you to court because the act only says it has be flame retardant.

you, the government, tell us how to comply. and it was the industry that forced the hand of cpsc away. and they don't even deny. now, you're not trying to defend the industry. go slowly. i am not pro-india. i am pro-consumer. unlike you and i'm not pro industry. of course, the industry will do a lot of bad things. the whole question of the issue is mechanism is more effective in protecting the interests, the consumers, the dispersed and widespread forces of, the market. take the case of the flammable fabrics. suppose you had not had the rather you believe it was right to them, don't you? for a government agency to test? no, not at all. there private consumer testing agencies. there's the consumers research. there's consumers union. you speak about a widespread demand for, more protection. those agencies have those organizations. they have all publications on cars. what they do is they test brakes and steering. they never crash, but the most important thing to know about a car when you buy it is if the car crashes, you going to be killed unnecessarily. you can't get that information.

but the reason they test it's too expensive. that's because why is it too expensive for them? because a number of consumers who are willing to buy their service and take it is very, very small. that is not why. the reason is because it's enormously expensive, of course. but if they had a large enough number of customers, if there were enough customers. enough consumers. yes. but that what's going to make situation which is ridiculous it's not a chicken and egg situation. who believes that technological information is important for consumers to have, which is basis and the thesis of your argument surely that you would say that one of the things that society does is that groups together to provide basic services to the public police traffic services, all sorts of basic kinds of things. the service and the fire service, all the rest of it. why is it that they shouldn't even do testing of technological subjects? the public have no way of knowing and before you reply, i want one or two others who don't. it seems me that professor friedman could could give a little bit on this ground, certainly in the dissemination of information, a free rider problem and of the problems is

that while you and i might value the results from a consumer union rather highly, we don't have to pay for it. we can look over the shoulder of someone else borrow the magazine from the library and so forth. i wouldn't go so far as to say that the government should not at all be in the business of generating information. i am concerned about exactly the same forces this, this, this industry that mr. o'reilly talks about having its influence on how information is prepared. i don't see how we gardasil as against that, but it seems me that there is a case to be made that. the market does not supply enough information. it may not, but the market supply is a great deal. and there is also a free rider problem in the negative sense on government provision of information because people who have no use that information are required, pay it, pay for it. milton i don't quite understand your position on this. are you saying, though, that there's no place for government to test consumer product safety all. i am saying let's separate issues. i'm saying there is no place for

government to prohibit consumers from buying the effect of which be to harm themselves. there is, of course, a place. well, for a moment, i'm trying to separate the issues. there is a place for government to protect third parties. if we to your automobile closed to children. children don't aren't choosers. no. no. right. they don't choices. parents make their choices. but let's go. where has there's a choice? we can only take one issue at a time. where a little difficult to take them all at once. take one at a time. i say there is no place for government to require me to do something to, protect myself. now, if. if government has information, well, if it obtains for a moment suppose it has information, then it should make that publicly available. the next question is, are there circumstance under which it's appropriate for government to collect? there may be some such circumstance as they have to be considered one at a time sometime. there is and sometimes there isn't. but you see, want to get back?

take your your area. and ms. claybrook, you are now involved in the airbag problem. that's right. if i understand the situation. i don't know anything about the technical aspects of it, but the airbag. a car is there to protect me as a driver. it doesn't me from having an accident hurting somebody because it's only activated by accident. right now, why shouldn't i make that decision? who are you to tell me that i have to spend it? is 200 300, $400 on that airbag? well, don't tell you that. what we say is that when a car crashes into a brick wall at 30 miles an hour, the front seat occupants have to have automatic protection built into the car. and it's a very it's very i have to i don't care whether. it's an airbag. the reason seatbelts. but there two reasons why. one, is it the sanctity of life? it's a fairly precious entity in this country. it's more precious to me than it is to you. my life is more to me than to you. well know. do you want your seat to? this is what sometimes i do. and so i say, well then it couldn't be too precious to you. because if it were, you'd it all the time.

i beg your pardon? yes. other things are precious. yes. okay. but wearing your seatbelt is a relatively simple thing to go into. but my question is. but i want an answer. direct answer. there is a very there's a very reason why. and it's because a person does not know when they buy a car what that car is going do when it performs in various and sundry, different ways. that's number one. number two, the there's a basic minimum standard. it's performance standard, not a requirement that you have certain pieces of products in your cars, but it's a basic performance standard built into your car that when you buy it, no one's going to have than that. so that you don't have people injured on the highway. the cost to society. the cost of the individuals, the trauma to their families and so on. you're suggesting, theoretically, that much better to let people go out and kill themselves, even though they really don't know that that's what's going to happen to them when they have that. excuse me. you're evading fundamental issue. if you have information, give it to them. the question, not a question of giving in the information. the question is what your right

to force to spend money, protect his own life, not anybody else, but only himself. and and the next question going to ask you, do you doubt for a moment, that prohibiting alcohol would save far more lives on the highways than an airbag a seatbelts and everything else. and on what grounds are you opposed to prohibition on grounds of principle or because you don't think you can get it by the legislature? i'm opposed to prohibition. i don't think it's going to work. that's reason i'm opposed to it. no, no. i want to get to the. and i want to get the principle. sure. i want to. i suppose you could believe it would work. suppose you could remove the prohibition. it could work. would you be in favor of it? no. what i am in favor of is building products. i am in favor of building products so that at least they service the public. i was fascinated by some of the comments. everybody agrees that the old agencies are bad, but the new agencies that we haven't had a chance to know, you know, are you're trying to sweep it under your net. they didn't agree with that.

but anyway, it was breaking point. it was the talk about it. if the basic principle is give me the information, let me choose for myself. if that's the ultimate goal, why is it that in any hearing that you've ever gone to and i beg anyone to find me an exemption, whether it's airbags or under saccharin, whatever. you never the victims of the injury who lost their arm because a lawnmower standing up and saying, thank god that you gave, me, the right to become incapacitated. never. do you hear a victim thanking, the government for backing off? never. do you hear victim of an anti-competitive action? the justice department for not bringing a suit. dr. lander, i promised you could make observation on that without going to great detail. not when these was used in to preserve pregnancies. women 25 and 30 years ago there was absolutely zero evidence that it would cause cancer in anybody. certainly not in the children of the women who were pregnant. and for you to say that in the 1941 studies that showed just that there is no.

1941 study. this happens to be my of expertise i'm an endocrinologist there was nothing there. let's not go any further down that road. let me ask you let me ask you, mr. on that question, i don't see if the problem in drugs is that there is a lack of competition and there are a number of drug companies in the united states and and around the world a lack of innovation. how regulated often, which is designed to keep products off the market that is further, restrict the supply of drugs is going to enhance either competition or innovation. as a matter of fact. everything that i have learned in economics would tell that that is likely to reduce innovation and reduce competition. and one of the great benefits of drug regulation that if i'm a pharmaceutical company with old tried and true drug in the market, i really want the fda to keep new drugs off the market. it will enhance the market value of that drug. i think that's a lesson that you learn from from government regulation, whether it's national highway traffic safety administration, regulation of fuel standards, be it drugs, be it controls their effect is

anti-competitive. it's not pro-competitive at all. if i go on with bob's point just a moment, he and i am sure and all economists would agree that the most effective way to stimulate competition would be to have complete free trade and eliminate tariffs. the anti-consumer measures on our statute books are restrictions on foreign trade. as a consumer federation, america testified against, we have been asked to now the and drug administration and here doctor i know your team lives in this. what was your reaction to milton's analysis of where it's fallen down? well, i think it's even worse than than milton's analysis or dr. wardell is analysis of it. if one could could look at that at the the past 25 or 30 years of new drug innovation. one could see that most of the drugs that you are would regard as miracle were developed before the key file for amendments.

that's the 1962 of 1960, which ruled what again just about the 1962 amendments as as mt. said added efficacy to the regulation of a safety. actually it's what the regulators did with, this law that went haywire. i don't how one can object to the law in itself. what what the regulator did was go go mad. with respect to safety when the only thing that added to the law was the point of as there are the two major decline inextricably for a very hazardous disease like cancer. you will tolerate a very dangerous drug. and for a headache, it's got to be very, very safe. now, this we've known all the time, but the regulators have gone to the point of utilizing some history over thalidomide and new legislation, which i think was originally designed by keith fifer, to get himself be president by lowering the cost drugs to make, which are absolutely obstructive.

so now, instead of 75% of the new drugs used in this country being, developed in this country, less than 25% of them are they're being developed. now, could we just clarify this point, though? are you saying there should not be government intervention in the food and drug field of that kind, or is it simply the policy adopted by the fda or imposed on it by the people for. is where it went wrong? i believe that certain guidelines are necessary and it's possible to construct guidelines based upon the five four amendment taking responsibility for decision making from the bureaucrats and the food and drug. you say how would say by giving it two panels of impartial experts to make this decision. now, milton, do take that. you buy that. no, i don't buy that. why not? because i have never seen it. have you ever seen a cat barked? not actually, no. well, governmental agencies,

governmental laws follow their own. just as the physical laws say that cats don't bark. these laws of social say that when you start and set up a regulatory agency power, those powers are going to be used. i want to move on to the third area that milton chose, the interstate commerce commission as an investigation. now, this is closer to your line of country bob. what is your reaction first to his analysis and what do you think needs doing about it? well, you're not going to get much dispute from i don't think anybody sitting around here as to what the benefits of or costs rate regulation, transportation are. the group that you will find now supporting continued regulation that would be the american trucking association. and they can even make a very persuasive case or one that is consistent from one day to the next. there simply is good reason for continuing this type of regulation. it might continue longer than, say, airline regulation. did because the number of people whose has been enhanced by, this

regulation, that is, people who drive trucks, who own licenses to operate, to haul only hardbound books between peoria, springfield, illinois or something of that sort. those people are very numerous and it's going to be very hard to do something. does this prove anything about the nature of intervention and regulation or is it simply an example of where the thing was done extremely badly and not in the interest the public. it proves i think it proves a great deal about government regulation and it is no different i don't think in the area of health and safety regulation. let me give you one piece of information about one area of very important health and safety, which i think even milton friedman would be in favor of in some form. and that is the regulation, pollution control, or at least the establishment of property rights. so as to somehow reduce pollutant levels. and what they would be if we allowed unlimited pollution. in the case of environmental policy, the strongest proponents in the congress for environmental policy from the northeastern part of the united states and the weakest proponents, those the worst

voting record in the congress come from the southwest and from alaska. you might ask yourself, why is that? and one possible answer, i guess, is while the air is dirty in new york city, but i don't think you'd find many people really worried about the quality there. new york city. what they're worried about their future employment and the value their assets in new york city. what would happen, in the absence of environmental policy in this country, is that more business would move to the southwest and to the western part of the united states as a result. eastern congressmen are very much in favor of a policy which prohibits through pollution control regulations that prohibits the privatization. i don't prohibit the form it takes, but use this as an excuse. just as they will use various excuses. let's say before the miss agency to plump for very standards or in order to promote the value of their product. before we go back to d.c. when i want to do that. milton, what's your reaction to his pollution point? because i know he's very interested in it. well, he and i would agree would

agree with his general position that there is role for government on pollution. i would agree that the present technique of controlling pollution are terrible and they are terrible and they are what. they are for precisely the reasons he specifies because they are an effective way in which you can use the excuse of pollution to serve some very objectives. that's part of the way in which governments meow. if i may go back to my cat, we've discussed this in greater length in a book that we've written to go along with program on free to choose the program itself was too short for us to be able to get much in about pollution when dealing with we really had to skip it because it's such a complicated and difficult subject. but there is a real role for government because that is a case in which you are protecting third parties and every one of the valid cases, in my opinion for government entering in has to do with third parties. there's a case for require ring brakes because that's to protect person you might head. that's wholly. there's no case for requiring

air bag, in my opinion. but there is case for requiring that you accept that distinction, by the way. no, because when you're injured. because of a failure to use a passive restraint. i am, in a sense going to have to help pick up part of your medical bill as part of your insurance rates because they're spread. and so only on gilligan's island, when you have six or nine people not interact doing such that all of society is affected, does your distinction have any validity? go slow when you're when you're sick from alcoholism, who pays for it on the alcohol? the studies have only shown excessive amounts of alcohol to most people. and what about cirrhosis? the liver, my dear? it's a very common all of the all of these it's a long, expensive disease that it certainly pours on the nose, may very interesting distinction here that you can damage yourself. you've been saying or it's up to you as well to run the risk of damaging. but but but can you make the distinction back to her question because she says, no, we mustn't do that because the fellow hurts himself is going to go to a government subsidized. not just one, but it's one that it's all the party liability.

well. answer that issue with it because. my go only. let me separate the two issues because i really want to get to this because your answer is a very favorite and there is an element of validity to it. well, it's only because we've made two mistakes, but you don't have to be in a government hospital for it to be valid because when you're in traction for a moment. hold on for a moment. the problem with your answer is that you're saying wrong justifies another. i believe that we ought to have much less intervention into those areas as well and i don't i'm not willing to follow a policy which implies saying you that every person goes around with a sign on his back saying property, the u.s. government do not mutilate that spindle or bend. do you? the government intervention in those areas where example the bar association's in the eyeglass industry were not allowing members to advertise and then the federal trade commission stepped in and now consumers have the ability to make those kinds of. you're into another area. but the answer brief answer because we want to discuss it is here i am against those governmental measures which have

enabled the organizations to have the power prevent advertising but they shouldn't. no, it wasn't. bob crandall said. bob crandall said that in an area like interstate commerce commission, there is nothing really to be said in defense at does anybody dissent from that or have we knocked them flat? that happens to be the one area in which so far as know, you cannot find any dissent anywhere. even one of the most effective presenters. what was wrong with icc was done by one of ralph nader's groups. maybe you were associated with that group. that's the thing that really baffles me fundamentally. here are people like ralph nader and his groups who look at and say, and what is their solution to the problem. more of the same. a different kind regulation. the only problem is that the wrong people were in there regulating. no, no, no. that's not true at all. no, that's that's a complete working of nader now. yes. that's that's the doctor landauer solution for the medical problem. let's have the right people doing the right thing and that's a complete misnomer about the difference between.

icc and health and safety regulation there a number of differences. one is one involves the economics and the benefits, profits to industry, and the other involves the sanctity of life and excuse me. just point. yes, the second one and it deals with your third party relationship is that what you're talking about? there is breaks because they're going to affect somebody else, but they're also third party effects. for example, if you don't have a helmet used by and you hit them with your motorcycle, you're going to have huge damage payments to make because they properly take precautions on, the public highways. and the question is, should the public highways be used so that they're going to harm somebody else? potentially, there is nothing two people do in a world, no manners island to himself. everything has third party issues, but you've got to have a sense of proportion. the important thing is that government intervention has third party issues. when government into these affairs that harms third parties, it picks my pocket, it reduces my freedom, it restricts many activities the world.

what are the benefits? and if the benefits the auto field, for example, are 55,000 deaths, that's a very dubious statistic because once again every study has looked at the benefits, not looked at the costs. oh, no, that's not true. at absolutely not that they have. i mean, the costs life you'll have at the fact, for example, that my mother's. car. yeah, i'll take the automobile by making automobiles much more expensive and it makes it more profitable to keep older automobiles on the road. the increased age of the automobile is an anti safety factor by making automobile safer so people can drive them people drive them faster or more recklessly than they otherwise would. there are more deaths. that's a totally unproven and indeed fully rebutted theory. and in fact, all the savings and lives that, you know, there are numerous studies, including from yale and cooper from yale and so on. but the but the key issue has been shown by the regulation that's been in in the last ten years you've had a huge saving in life, a decrease in the the vehicle deaths that have occurred, the rate of road

deaths occurs over the back again. yes, you see a major effect on the saving. a life has been from five mile an hour. oh, no, that's not true. which is not, after all in there. but that is also regulated primarily as a fuel regulation. yeah, that's right. it's a regulation available, but it's a british statement's not accurate. the savings in life have not been primarily, they've been they've been very important from 55, but they've been 55,000 deaths saved by vehicle safety regulation. it's it's me. there have been 55,000 deaths that you have estimated it to have been saved, not me. the other estimates excuse me. other estimates as well. the estimate by professor sam feltman of this university, a very, very serious estimated there were no lives saved. you took into account all of the indirect effects. now, maybe his study isn't exactly right. i don't think it is. i'm not going to try to do that. maybe the other is exactly right. we've got to be even you look at what have done. well, if it's even in between.

no, no, i beg. your pardon. if people voluntarily want to risk their lives. but you are saying again you really would not be in favor. we asked the order of prohibiting hang gliding. we asked the auto industry that was far more dangerous if they would prohibit 500. i think the speed limit. let me answer that. we ask the auto industry if they would remove of the safety standards that have been in effect since 1968. and what would be the savings to the public if they did that. and the answer that they came back with was we couldn't remove those. they expect them. now, the laminated windshield that don't crack their head open in the collapsible steering assemblies in the padded dashboard. what the public that is now the societal norm regulation has changed that the thinking of the public and the understanding of what's possible. and so what you're suggesting is that government regulation is willy nilly and it produces things the public doesn't excuse is doing for a moment. you can take credit for everything that's happened in this area, four wheel brakes were introduced before there were regulations. many of these before this week. i hope you'll join us again for the next episode in a week's time time.

and. whether a doctor or a gas attendant or factory or a bureaucrat, next week's is all about you. milton friedman looks at the labor market to discover how workers can best protect themselves in the toughest job markets. if you've ever had to go out and earn your own living, don't miss to choose. next week.

starting again, off little bit, adding on from the last class is lecture right. so last time we talked a