much.

hello, i'm robert mackenzie. you join me here and this fine old library on the campus of the university, chicago. we're about to see the first of ten films by milton friedman, an economist of international repute, winner of the nobel prize, one of the most controversial and stimulating of our time in the weeks that lie ahead is friedman's first major television series unfolds. the famous and influential men and women who will occupy those seats are going to a lot to say about friedman's view.

the society in which we live today and his solutions for the ills of our time for that's what the series is about. milton friedman's view the way we live now and where we're headed now. like some people here, you may be appalled by his ideas or like others, extremely enthusiastic about them, whichever way it goes. i think you'll be fascinated by what milton friedman has to say. it's a gorgeous morning around the new york metropolitan area. skies are sunny now that a volcano over the eastern end of long island, a toxic out there.

but we've got some lovely weather to talk about. and i promise you this, back at the beginning of the month, all this was a swamp covered with fires. and that's what the canarsie indians who lived here traded the 22 square miles of soggy manhattan island to the dutch for $24 worth of cloth and trinkets. the newcomers founded a new amsterdam at the edge of an continent. in the years that followed it proved a magnet for millions of people from across the atlantic, people were driven by fear and poverty who were attracted by the promise of freedom and plenty. they out over the continent and built a new nation with their sweat, their enterprise and their vision of a better future for first time in their lives, many were truly free to pursue their own objectives. that freedom released the human energies which created the united states. for the immigrants who were welcomed by this statue. america was truly a land of opportunity and.

they poured ashore in their best clothes, eager and expectant, carrying what little they owned. they were poor, but they all had a great deal of hope. once they arrived. they found, as my parents did, not an easy life, but a very hard life. but for many, there were friends and relatives to help them get started, to help them make a home, get job, settle down in the new country. there were many rewards for hard work, enterprise and ability life was hard, but opportunity was real. there were few government programs turn to and nobody expected them. but also there were few rules and regulations. there were no licenses, no

permits, no red tape to restrict them. they, in fact, a free market and most of them thrived on it. many people still come to the united states, driven by the pressures and attracted by the same promise. you can find them in places. this it's chinatown in new york, one of the centers of the garment industry, a place where hundreds of thousands of newcomers have had their first taste of life in the new country. the people live and work here are like the early settlers. they want to better their lot and they're prepared to work hard to do so. although i haven't often been in factories like this, all very familiar to me because this is exactly the same kind of a factory that my mother worked. and when she came to this country for the first time at the age of 14, almost 90 years ago, and if there had not been factories like this here, then at which she could have started

to work and earn a little money, she wouldn't have been able come. and if i existed at all, i'd a russian or a hungarian today instead of american. of course, she didn't stay here a long time. she stayed here while she learned the language well. she developed feeling for the country, and gradually she was able to make a better life for herself similarly, the people who are here now, they are like my mother. most of the immigrants from a distant. they came here because they liked it here better and had more opportunities. a place like this gives them a chance to get started. they're not going to stay here very long or forever. on the contrary, they and their children will make a better life for themselves as they take advantage of the opportunity that a free market provides to. the irony is that this place violates many of the standards that we now regard as every worker's right it's poorly ventilated it's overcrowded. the workers accept less than the

rate it breaks. every rule in the book. but if it were closed down, who would benefit? certainly not the people here. their life may pretty tough compared to our own, but that's only because our parents grandparents went through that stage for us, we've been able to start at a higher point. frank says. and his father was 12 years old when he arrived. all alone in the united states. he'd come from sicily. that was 53 years ago. so he filled in least the crystal. frank is a successful dentist with a wife and family. they in lexington, massachusetts. all one bottle fills the whole decanter. there's no doubt in frank's mind what freedom combined with opportunity meant to his father and then to him, or what his italian grandparents would think if they could see how he lives

now, they would not believe they would see that a person could immigrate from a small and make such a success of their life because to them they were closely related to the the fields working in the field as a peasant. my father came over it was he made something for himself. then he tried to build a family structure, whatever he did was for his family. it was for a better life, for his family. and i can always remember him telling me that, you know, number one thing in life is you should get an education to become a professional person based on that word, a plasterer from the vicinity family, like all of us who live in united states today. oh, much to the climate of freedom we inherited from the founders of our country, a climate that gave full scope to the poor from other lands who came here and were able to make better lives for themselves and

their children. you girls going to have this? you i know don't want that. but in the past 50 years, we've squandering that inheritance by allowing government to control more and more of our lives instead of relying ourselves, we need to rediscover the old truths that the immigrants knew in their bones. what economic freedom is and the role it plays in preserving personal freedom. the. that's why i came here to the south china. it's a place where there's an almost laboratory experiment in what happens when government is limited to its proper function and leaves people free to pursue their own objectives. if you want to see how the free market really works, this is the place to come. hong kong, a place with hardly

any natural resources. about the only one you can name is a great harbor. yet the absence natural resources hasn't prevented rapid economic development. ships from all nations come here to trade because there are no duties, no tariffs on imports or exports. the power of the free market has enabled the industrial people of hong kong to transform was once barren rock into one of the most thriving and successful places. asia aside from its harbor, the only other important resource of hong kong is people. over four and a half million of them. don't like america. a century ago, hong kong in the past few decades has been a haven. people who sought the freedom to make the of their own abilities.

they, many of them are refugees from countries that don't allow the economic and political freedom that's taken for granted in hong. despite rapid population growth, despite the lack of natural resources, the standard living is one of the highest in all of asia. people work hard, but hong kong success is not based on exploitation of workers wages in hong kong have gone up four fold since the war and that's after allowing for inflation. the workers are free, free to work long hours. they choose free to move to other jobs if they wish the market gives them that choice. it also determined what they make. you can be sure that somebody somewhere is willing pay for these cheap plastic toys. otherwise they simply wouldn't be made.

competition from places like south korea and taiwan has made cheap products less profitable profitable. so hong businessmen have been adapting. they've been developing more sophisticated products and new technology that can match anything in the west or east. and their employees have been developing new skills. hong kong never stops. there's always some business to be done some opportunity to be seized. it's long been a tourist center and a shopper's paradise, and it's now one of the business centers of the east. it's the ordinary people of hong who benefit from all this effort and enterprise.

this thriving, bustling, dynamic city has been made possible by the free market. indeed freest market in the world. the free market enables people to into any industry. they want to trade with whomever they want to buy in the cheapest market, the world to sell in the direst market and around the world. but most important of all, if they fail, they bear the costs. if they succeed, they get the benefits. and it's that atmosphere of incentive that has induced them to work, to adjust, to save, to produce a miracle. this miracle hasn't been achieved by government action, by someone sitting in one of those tall buildings. people what to do. it's been achieved by allowing the market to work work.

walk down any street in hong kong and you'll see the forces of the market in operation. mr. chung metal containers. nobody's ordered him to. he does it because he's found that he can do better for himself. that than by making anything else. but if demand for metal containers went down or somebody found a way of making them cheaper, mr. chung would soon get that message. a few doors away. mr. used has been making traditional cantonese gowns for 42 years, but the for these elaborate garments is falling the firm has already gotten that message and is now looking for another product. the market tells not only what to produce but how best to produce it through another of prices. the cost of materials, the wages of labor and so on made, for example if these workers could

earn more doing something else, mr. ho would find a way to mechanize picture frame production. inside this chinese medicine shop, a market is going on the customers confidence that this painful looking ordeal will help him doesn't rest on any official of the bone doctors qualification. it comes from experience, his own or his friends. in his turn, the doctor him not because he's been ordered to, but because he gets paid. the transaction is voluntary, so both parties must expect to benefit or it will not take place. believe it or not, this backyard is the entrance to a factory. the workers here are, some of the best paid in hong kong kong.

it's hot, sticky, extremely noisy. the workers are highly skilled, so they can command high wages. they couldn't to their employer to improve working conditions by offering to work for less. but they would rather accept the conditions and take the high wages and, spend them as they wish. that's their choice. the best known statement the principles of a free market. the kind of free market that operates in hong was written on the other side of the world. okay. 200 years ago in scotland, adam smith taught at the university

of glasgow. his brilliant book, the wealth of nations was, based on the lectures he gave here. the basic principles underlying the free market as smith taught them to his students in. this university are really very simple. let's look at this led pencil. there's not a single in the world who could this pencil remarkable statement? not at all. the one from which it's made for all i know, comes from a tree that was cut down in the state of washington to cut down that tree. it took a saw to make the saw. it took to make the steel. it took iron ore. this black center we call it led. but it's really compressed graphite. i'm not sure where it comes from, but i think it comes from some mines in south america.

this red top up here, the eraser that a rubber probably comes from where the rubber tree isn't native. it was imported from south america by some businessmen with the help of the british government, this brass, i haven't the slightest idea where it came from or the yellow paint or the paint and made the black lines or the glue that holds it together. literally thousands of people cooperated to make this pencil. people who don't speak the same language, who practice different religions, who might one another if they ever met. when you go down the store and buy this pencil, you are in effect trading few minutes of your time for a few seconds of the time of all those thousands of people, what brought them together, induced them to cooperate, to make this pencil. there was no commissar sending

offices from sending out orders from some central office. it was a magic of the price system, the impersonal operation of prices that brought them together and got them to cooperate to make this pencil so that you could have it for a sum. that is why the operation of the free market is so essential, not only to promote productive efficiency, but even more to foster harmony and among the peoples of the these people are crossing between two very different societies. this has will the official border crossing points. china and hong kong. nowadays there's a considerable amount of traffic at this border. people cross a little more freely than they used to. many people from hong kong trade

in china and the market has helped bring the two countries closer together. but the barriers between them are still very real on this side of the border, people are free not only in the marketplace but in all their lives. they are afraid of say what they want to write, what they want to do pretty much as they please not. so over there. that is why people in china who cannot get permission to leave go to desperate lengths to escape. they risk their lives in the process. many lose their lives, but that doesn't keep others from following. some are attracted by higher material standard of life in hong china, but more by the natural human desire to be free. the people who get official permission to leave china are fortunate. they're to be able to enjoy the benefits of the freedom they'll

find in hong kong. but more important, that will give them a much wider freedom freedom, human and political has never existed and cannot exist without a large msure of economic freedom. those of us who have been so fortunate to have been born in a free society tend to take freedom for granted to regard it as a natural state of. mankind, it is not. it is rare and precious thing. most people throughout history, most people today have lived in conditions of tyranny and misery, not freedom and prosperity. the clearest demonstration of how much people value freedom is the way they vote with their feet when they have no other way to vote. of course, many of the people pour into hong kong will end up

in conditions and most of us in the west would find appalling. hong kong is very far from utopia. it has its slums, its crime, its desperately poor people. but the people are free. that's, after all why so many of them have come here, despite having to live in leaky houseboat in one of hong kong's many small harbors here, they have freedom and the opportunity to better themselves, to improve their lot, and many succeed. there is appalling poverty in hong kong. it's true, but the conditions of the people have been getting better over time. they are far better off now than they were when they first came across the border from. china and that poverty appalling

us because we're accustomed to much higher standards of life is not poverty is viewed by most of the people in the world it's poverty to which they would aspire a state of affairs that they would like to. there is an enormous of poverty in the world, everywhere there is no system that's perfect. there's no system that's going to eliminate completely poverty in whatever sense. the question is which system has the greatest chance, which is the best arrangement for enabling poor people to improve their lot? and on that, the evidence history speaks with a single voice. i do not know any exception to the proposition that if you compare like with like freer the system, the better off the ordinary poor people have been. ask yourself what it is that assures these garment workers in hong kong a good way, not high

by western standards, but high enough to enable them to live far better than most people in the world. it's not government or trade unions, us. these workers do well because competition for their labor skills. when a business man faces trouble, a market threatens to disappear, or a new competitor arises. there are two things he can do. he can to the government for a tariff or a quota or some other restriction on competition. or he can adjust and adapt. in hong kong. the first option is closed. hong kong is too dependent on foreign trade, so the government has simply had to adopt a policy of complete noninterference. that's tough on some, but it's extremely for the society as a whole. only the businessmen who can adapt, who are and adjustable

survive and they create good employment opportunities for the rest the complete absence tariffs or any other restrictions. trade is one of the main reasons why hong kong has been able to provide such a rapidly rising of life for its people even communist recognizes hong kong

success. it set up shop here and now accepts the universal symbol of capitalism. the bank of china the official bank of communist china is the largest bank in hong kong. there's no doubt that china recognizes the power of the market in all this. the government of hong kong has played an important not only by what it has done, but as much by

what it has refrained from doing. it has made sure that laws are enforced and, contracts are honored. it has provided the conditions in which a free market can work. most importantly. it has not tried to direct. the economic activities of the colony colony. no government official is telling these people what to do. they are free to buy from whom they want to sell, to whom they want to work for whom they want. sometimes it looks like chaos. and so it is. but underneath it's highly organized by the forces of a free marketplace with no right here to express chicken, chicken leg. you know, these are from right from the chicken. you don't quite tell you no lie. the impersonal forces of a free

at work back in the united states. rachel broccoli is on the quarter. prices are the key. the prices that people are willing to pay for products determines what's the prices that have to be paid for raw materials for, the wages of labor and so on determine cheapest way to produce things. and in addition, these selfsame prices, the wages of labor, the interest on capital and so on determine how much each person has to spend on the market. it's tempting to try to separate this final function of prices. the other two to think that or other you can use to transmit the information about what should be produced and how it should be produced without using those prices to determine much each person gets. indeed, government activity over the few decades has been devoted to little else, but that's a very serious mistake. if what people is not going to be determined on what they and

how they produce it and how successfully they work, what incentive is there for them to, in accordance with the information transmitted, there's only one alternative force. some people telling other people what to do. we got a ball. let's go ahead. one week up. firstly here 30. hey, look at. and chris and two broccoli and very good golly i know well they're trying nice oh boy look what i got real good today real nice come on. try one of those on negative oh many more free lunch over here than me for nothing over here. well, if you don't charge, you have a free line. no, i'm right. now, flush. but what? the fundamental principle of the free is voluntary cooperation, the economic market.

buying and selling is one example, but it's only one example. voluntary cooperation is far broader than that. to take an example that, at first sight seems about as far away as you can get. the language we speak the words we use, the complex structure of our grammar. no government bureau designed that. it arose out of the voluntary interactions of people seeking to communicate with one another more consider some of the great scientific achievements of our time. the discoveries, an einstein or a new, the inventions of a thomas alva edison or an alexander graham bell, or even consider the great charitable activities of a florence nightingale or an andrew carnegie. these weren't done under orders from a government office. they were done by individuals deeply in what they were doing, pursuing their own and cooperating with one another. this kind of voluntary cooperation is built so deeply

into the structure of our society that we tend to take it for granted. yet the whole of our western civilization is the unintended consequence of that kind a voluntary cooperation of people cooperating with one another to pursue their own interests. yet in the process, building a great society. and here at, the harvard library and the university of chicago, our distinguished guests have their own ideas, too. so let's join them now. it seemed to me he was saying that the golden age for america when it was truly a land of opportunity, was the late 19th, early 20th century. no regulations, no permits, no red tape. i would argue that the government played a decisive role in an enormous to the railroads and creating an american capitalist economy. and secondly if you go back to that golden age, you find that the government constantly intervened in a rather characteristic way that u.s. troops against strikers. american labor history been the most violent, bloody class anywhere in the world.

and the government up until 1932. the law, the courts, the society always sided with business, always sided against working people. therefore, i would argue that both economic actually and in terms of repressing the attempts people to assert their freedom, our government, prior to the rise of the welfare state in this country was more or less owned by business. milton friedman michael harriot to nursing the hole in the barn door and he's not looking at the barn door itself. the plain fact is, during the whole of that period when our government did intervene from time to time and mostly to do harm, i agree with him that government intervention was in the main not a good thing. tariffs example on the other hand throughout that whole period government spending, federal government spending, central government spending never was more than 3% of the national income it was trivial. the land grants, the railroads were a minor. i'm not i don't approve of them. i'm not saying they were a good thing, but they a very minor factor. one has to have a sense of

proportion. and that goes to the whole discussion am not an anarchist. i am not in favor of eliminating government. i believe need a government, but we need a government that sets a framework and rules within which individual is pursuing their own objectives. can work together and cooperate together. and they work together and cooperate together, not only in economic areas. i want to hold for a moment, though, to that golden age theory that we were best when we were regulated, at least in the late 19th and early 20th century, because remember the sweatshop analogy comes out of there when there was no attempt to restrict hours, work or to regulate working conditions. now is that a view you accept of that period? well, i think necessary to contrast what's happened in the interim. i don't see how we can talk that without comparing with the interim period. now, you talked earlier about the fact that during the last 50 years we had squandered some of our inheritance of freedom. absolutely. and i believe during the last 50 years, we really have our freedom.

i spent over half that time working for one of the world's largest industrial companies upon company, deeply involved with the launching of new ventures and got to know free enterprise system well and have a very healthy respect for it. but during that interval and particularly during the last few years and i've been more involved with government and with environmental matters, i have become convinced that our freedom is improved when the people are allowed to add to their freedom in the american press the freedom for voting with dollars in the marketplace, the freedom to vote with their ballots in the place to put some restraints on the excesses of the marketplace, particularly when you're concerned with such things as the long impact on our health from the pollution of our environment, the of carcinogenic materials or the irradiation of our people was nuclear products. what about putting some restraints on the excesses of government? hasn't that become an ever more serious problem?

how it that a government of the people supposed does things which a very large fraction of the people would really prefer to have done such as overtax over govern them overregulate them. i think you're looking again at one side and not the other. and of course, i agree. we have to look at what's happened in the interim. we're better off than we were 50 years ago. never would deny that. but we stand on the shoulders of the people who went before. we have to look at how much they achieved, where they started and. that was the period in which you had the tremendous influx of immigrants from millions and millions and millions of them. when you opened up a continent, when you had achievements built in. are you saying, though, that there's any sense in which i'd rather go back to those circumstance where there are no regulations of factory work, no. our limitations are able to work. do you want to return to that or do you say that was a stepping stone to where we are now? it depends on what you mean by circumstance. i don't want to have to go back to using a horse buggy instead of an automobile, but i would

prefer to go back to the kinds of governmental regulations or absence of regulations, a greater degree of freedom which was given individuals to pursue one activity or another, which then then which prevails. now, i think really our industrial leaders have been dragged into the future screaming. they resisted the child labor. they resisted social security labor unions and now the environmental model. once the government forced to pay attention to those by the voting, the people on the ballot box and the polling place, then the industrial leaders, business paid attention to those rules. and they've done a good job in most cases of abiding that excuse me, bob galvin isn't. now, come on. is that a fair statement? maybe the industrialists have a a a clearer of history and its prospects are the most precious asset we possess is freedom. the easiest way to lose one's freedom to go into receivership and? i mean, economic receivership,

because receiver is a dictator. and to the degree that we employ the costs and the burdens of government that lead us in the direction of further debt, ultimate receivership and then the political consequence of the imposition of the political dictator over the economic and the job and the living rights of the individual. but maybe the industrialists can see down the pike as to the consequence of all this michael harriot. i just that that two things one to to view freedom positive fully. i think people over 65 years of age in the united states today are freer now because medicare i do not think that the freedom to die from the lack of medicine was a very good thing. secondly, related to industrialists, i think that one of the one of the startling things about american history, that when franklin roosevelt was saving the system itself, the main beneficiary is were screaming bloody murder at him

for being traitor to his class when. he was, in fact, the salvation of that class. and i think if you therefore if look at our history, i do think you a tremendous myopia on the part of industrialists and you find that the positive increments to our freedom. interestingly enough have not come from the college graduates. but often from people with and from the best people. it's come from working people. it's come from poor people. it's come from blacks, hispanics and the like milton. would you reply? but then tell us why you took us to hong kong to prove such an unequal settlement? as i am too agreeing with michael harrington, i will agree in part with what he's just said. i do not believe. it's proper to put the situation in terms of industrialists versus government. on the contrary, one of the reasons why i am in favor less government is because when you have more government industrialists take it over and the two together form a coalition against the ordinary worker in ordinary consumer. i think businesses a wonderful institution provided it has to

face competition in the marketplace and it can get away with something except by producing a better product at a lower cost. that's why i don't want government to step in and and help the business community. now, i want to go to your question. medicare, there are many people who have benefited from medicare, but you're not looking at the costs. what has happened to the people who are paying for it? it isn't. we don't have a free it isn't coming from nowhere. and are they benefiting from it in a cost effective way? those the questions it's it's demagoguery, if you'll pardon me. michael michael harrington to say the people who have medicare are freer of course, in one dimension. but they themselves have been paying all their lives and. have they gotten a good bargain at the moment? they have the young men, the young working people who are going into social security now, they're going to get a very raw deal indeed. and interestingly, on that point, people over 65 are paying more of their spendable for medical care.

now than they were before medicare was enacted. been not a very successful program, government health things. well, it doesn't do things as well as that. it hasn't done things well in britain and canada and the united states. then you took us to hong kong on. exactly point that here you set a true model of the market operating. is that really the fair description of hong kong at the moment? yes, it's not a again, there aren't any such things as 100% one way and 100% the other. everything is mixed. of course, hong has a government and happens be a government. in this case there's no democracy. hong kong, it's run from britain. it's a crown colony of britain. and the british governor general so on financial secretary run it but the situation in hong kong is that there is very little government regulation industry. there's complete free trade, there are no tariffs, there, no export subsidies, there are no restrictions on the purchase and

sale of of money. so that is comes about as close as to a complete free market as you can find in the world today. and there is no doubt that the main beneficiaries have been the low income people, the people who poured into hong kong by hundreds of thousands and millions out of red china and who keep on to get in there. this goes to michael harrington's question. if an industry really system of a free enterprise system is a system in which the poor or ground beneath the heels of these rapacious industrialists worried about how would he explain the success in hong kong, the extent to which people continue to vote with their feet to go there? you're not asking to make of the united states one gigantic hong kong or sweatshop or whatever you want to call it. you're you would acknowledge that that there is a historic development of an economy and what may be right one stage in the development of an economy

may not be right for another stage isn't the issue where do we go here? what what pragmatic decisions do we make about the direction of the american economy? should it be toward more and more? or should it be trying to preserve an adequate balance between, freedom of choice and government? again, the problem is to distinguish two things. this comes back to an earlier the circumstances terms of the physical arrangements and the circumstances in terms of the rules that guide society. now in case of hong kong, of course i'm not asking that we crowd our people to a density of population such as hong kong, as hong kong is, a marvelous example just because it's circumstances are so terrible, it's physical circumstances, and the people in hong kong would love to get elsewhere into less crowded circumstances if other people would let them in. this is a problem of immigration, which is a very important restoring on human freedom in the period before

1913, we had complete 100% freedom of immigration into the united states. we don't know. but go back to your question. do you think hong kong would exist if it weren't in close juxtaposition to the china hong kong exist. it is very that it would have the policies it has now if it weren't in close just juxtaposition to communist china. well, now, but to answer your question directly, yes, i am in favor of the united states having not the circumstance. it's not the physical circumstances, the policies that hong kong has had of zero tariffs, complete free trade of no restrictions on export, no restrictions on monetary transactions of a far degree of governance, far lesser degree of governmental. i agree with what peterson said before, that there are a third party effects. there are things like the question is whether we're handling in the right way. and i think we're not. i want to bring bob galvin in here. i've got beginning of milton's

agenda there. no tariffs, for example, no restrictions, no quotas. now, will business business wear that kind of policy i think big business and, all business could wear that kind of policy if we could find the appropriate balancing factor that in the rest of world trade, where we trade outside our border, as others come in, we are required to trade against socialized institutions. that's a very different of an institution than the private institution. the private institutes can clearly operate more efficiently if. it is not imposed upon an artificial price from the socialized institution across seas. so i think there has be not protectionism, but there has to be an internal rational rule of the road that prevents the socialized institution from subsidizing and taking advantage of the private institutions.

sorry, did you include the nine countries of the common market though? as socialist, are you prepared to have open competition? all the nine countries of the common market, the nine countries of the european common market engage in the most dramatic of the socialized institutions. i don't agree with them at all. we are hurting ourselves by trade from abroad. other countries are hurting themselves and us by the measures you describe. but we're only hurting ourselves, even the more if we imitate them. i don't think that friedman that your mother would get a job sewing today in if we had no tariffs at all. what would happen is wouldn't be any sewing jobs in america. we'd be making nothing but computers what that might be some other kinds of jobs. then she would get a job at a very low level in making computers. yeah. although although you do face the problem that you've had both a leading businessman and a leading conservative congressman and not accepting your prescription sweeping away. but of course, the two greatest

enemies of the i would say the greatest of free enterprise and of freedom the world have been on the one hand, the industrial, and on the other hand, most of my academic colleagues will end up in government for opposite rate for opposite reasons. people like michael harrington and my academic colleagues want freedom for themselves. they want free speech. they want freedom to write, they want freedom to publish, to do research, but they don't want freedom for any of those awful businessmen. now, the businessmen are very different every businessman wants freedom for somebody else that he wants special privileges for himself. he wants a tariff from congress and congress. well, the way in which congressmen get elected is by performing favors to constituents, and if indeed you were to wipe out completely all tariffs if you were to reduce government controls this country to what they are now, i not think that would be in the self-interest of an even minimum number. the world for whom i have the very greatest respect, or bob galvin, for whom i have the

respect. i think it would be in the self-interest of michael harriot. let's ask what the american people want and will there, because you're saying, in effect, that to get elected, congressman is giving the people what want. now, aren't you saying in the end then the people don't want this or don't understand the advantage of it? i'm saying that my whole function and purpose is to try to persuade the people to make different thing politically profitable. i'm trying to persuade the to make it clear that congressmen who pursue these policies are going to lose their jobs and. if we do that congressmen are pursuing self-interest. they're in a market. there's political market. they've got a product to sell and they've got to appeal to their customers. and i am just engaged in the kind of advertising. mr. but another another very experienced politician. governor peterson, let me ask you how you would cope with this problem. die for freedom. the people who decided that they wanted cool air. there was tremendous need. and so we built a huge industry, air conditioner industry, hundreds of thousands of jobs,

tremendous opportunities. and nearly all of us now have air conditioned homes and cars and offices. but then the people decided, they wanted clean air and they couldn't buy in the marketplace. so they voted at the polling place. they got their like two representatives to go to the congress and say, we are going to have clean air. now, overnight there was a new market and the free enterprise system responded to that and now there's a big environmental industry making earnings providing jobs, but also serving this public need to the freedom to breathe clean. you grossly underestimate the extent to which the private market is able to do it. it's not an accident that the air before you had any of this legislation the air and water was cleaner in the united states than they were in the united states 100 years ago. you know, the automobile added one kind of pollution, but it eliminated a far worse kind of pollution. if you consider what the streets of new york would like today, if you were still transporting

people by horse vehicles, you would have pollution on a scale that would stagger you in the same way. it's not an accident that air is cleaner and the water purer in those countries today that are the most advanced, then they are in the backward country. it's not not in afghanistan in that you find clean air and water. it's in the advanced countries. so the is a very much more subtle than people give it for being. i would like to get back to the to the real world because in the world there is no possibility that american business, which is a welfare business system, is going to adopt these ideas. what these ideas function as in the real world is a rationalization for the myth of free enterprise, which disguises the fact of state capitalism as an argument against social intervention in a society does intervene on behalf of the steel very quickly. finally, in terms of the american political process, i don't believe that political process is so simple as having

the people elect the government. the fact is that when i jimmy carter is elected president on a relatively liberal platform, he then has to win business confidence. it's because of the control of the investment process by corporate power. and i think that fact corporate power rationalized by free enterprise myths is the central problem of freedom in our time and that's what has to be a where we come to milton again i know when i've got i've got to comment on this because i think we let words get in the way of what really is the case. i take it you think we don't have socialism? i would say to you that 46% of every corporation in this country is owned. the us government that's corporate income tax. that means out of every dollar of profits that cut corporation makes $0.46, goes to the us government. the actual tax is higher than that because you tax that w when it comes to the individual, the the extent to which corporations, their investment decisions has been increasingly

reduced in government is dictating what they spend their investment funds on and in the name of pollution control and in the name of other things. it's a myth to suppose that there is some kind of a big corporate power over here. there was a time when corporations were more influential than they are now, but at the moment i they are a beleaguered minority rather than the dominant majority. but i'd like to take the others into this for a moment. what is the process for those of you who want to roll back the state or to push back governmental influence on the operation economy? before we let you know that, what would you do as a active politician, as another politician and a businessman? i personally think we ought to restrain the growth of government in the future by putting some sort of limit on government expenditures. i would like to see a constitutional amendment doing that. otherwise, we're to continue to have the government growing faster than economy, and that's pushing more and more the gross national product through the tin horn of government.

i think that would be that's a mistake. it's difficult thing to do. i we can find some way to do it without making ourselves less free in some way to be done. yes, i think we can. substantial headway by furthering our pluralistic society by encouraging and more people to think comprehensively. i think one of the big problems in our world is that leaders in government, an industry, are short sighted. they don't look at the long term impacts of decisions. and in democracy such as ours, the power is with the people, just like the textbooks say. and if they get this more comprehensive understanding and knowledge, they're going to see to that the special interests that elected officials will be in tune. we're going to be elected and they will look at the long term views like the citizenry is. so i am all favor of an all out push to get this freedom to vote in the polling place, add it to the freedom of the marketplace

because that's a potent combination. what voting the polling place is a very different kind of than voting in the marketplace. when you vote in the polling place, it is important, but it's a very different thing. when you vote, you vote for a package and if in the minority you lose, you don't get what you want when you vote in the marketplace, everybody gets what he vote. if if you vote for a i vote for a green tie i get a green tie. you vote for a blue tie. you're going to blue tie. if we do that in the polling booth, if 60% of us vote for a green tie, you have to wear a green car. but the 40% don't just shut up. they can try to influence the decision controlling their audience. it's a very different fish and mechanism for matching matching results to individual tastes and the kind of car i buy i still get dirty air. there are good people running, this society and most of the people that talking about work someplace and they know that their company is doing something pretty good or trying to do something pretty good. i think people are going to

start telling the leaders where they've gone wrong and start to redress it by the direction of the ballot. because if people in general are more conservative, in particular are more liberal, that is to say, if you ask the people in general, what do you think of government, get it off my back, less taxes if you ask in particular, what about health, national health, what about full employment? government is employer of last resort. what about pollution? do something about it. everett lad an article in fortune about a year ago, which is hardly a radical left wing journal showing this contradict and i think that there is in the united states today a rapid movement to left, right and center, which i obviously hope will be resolved not by an across the boards cut aimed of poor and working people, but at by an increasing democratization of economic power and an increasing democratization of the government. i think that in this complicated of huge institutions and bureaucracies, if we talk about freedom one of things i would like to see would a law

providing funds for any significant minority to buy the research to counter the majority if you don't have the expertise that knowledge technology today you're out of the debate. and i think that we have to to democratize information and government as well as the economy and society, i am sorry to say. michael harrington is not a solution to it. he wants minority rule. i don't i want individual rule. i want human beings separately. an individual need to have control of their lives. i don't believe that a minority that differs with me should have the right to take money out of my pocket to do research for them. they should go out and try persuade people to contribute to them. i should be free to get people to contribute to me to present my ideas, but the idea of having some of an official government agency is going to finance dissidents in the first place. anybody who has sense of realism about the way government at all will know that that will end up in the hands of the majority and not the minority. but can government in this extremely interdependent come

flex world economy, which is can you have a mystical belief in the invisible hand of adam smith? i happen to think that adam smith is one of the greatest intellectual figures in the history of the world, and that capitalism was one of the greatest advances that humankind has ever made, but precisely, i put this in historical context. capitalism is a friend of mine by the name of karl marx predicted some time ago has developed tremendous tendencies towards monopoly concentration. maltin original corporations money supplies that that are not controlled by the federal reserve or even the president of the united states anymore. and to think that you can respond to this radically new environment by, an 18th century solution, i think, really comes to an intellectual exercise. practical political effect is to rationalize as conservative power in america. this a myth, a complete myth that the development of an inner developed country in a more complicated world necessitates greater government intervention.

government intervention has not grown in those areas which arise out of the complexity. interdependence of the world has grown where in taking money from something. and all i have to say is government. dr. friedman has live in the 20th century, much less the 19th of the 18th. but again and we have we have to take societies as it exists today and build that to me the decisive thing at issue here is essentially mystic, nonstop presentation of an abstract solution taken out of time, which does not look to the tremendous evolution of capitalist society, the tremendous interdependence of the world, the fact that we now have not only national economic planning, but at the tokyo summit, then we have institutionalized economic planning of the major industrial capitalist powers. and under those circumstances, grant and the enormous achievement of adam smith, the enormous achievement of capitalists under this radical,

changed historical situation, to propose is those classic old solutions, i think, is to propose something nancy, which, however, does function seriously, to rationalize conservative corporate and political power. the great achievements of the 19th century came from by departing from the kind of system you now want to reimpose. you want to take us back to the 18th and 17th century when we had a when we had a corporate society, when we had government controlling things, the whole issue is not is what somebody is proposing in the 20th, in the 19th and the 18th. the whole issue, what is the right thing to do? what is the best way in which we can widen or opportunities, preserve our maintain our and it to me the kind of solutions you would propose involve more of the same more of the of the that have failed over over again to achieve the objectives we leave

the debate for there this week and we hope you'll join us again. the next edition of free to choose is for. when governments try to control the what goes wrong. milton friedman looks at modern governments in action in britain, in india and here in the united states. don't miss his stark and realistic assessment of the real we live in free to next week. and.

hello, i'm robert mackenzie. last week in this series, milton

friedman, the distinguished economist, took us to hong kong to see a free market system in which had a great deal of confidence and faith. this week, he takes us traveling again. di