A student tries to trip
up Milton Friedman on the issue
of morality and self-interest. (Note: Friedman was a master
of the University-of-Chicago seminars in the 1960s, the
intellectual equivalent of ultimate-fighter cage matches.
His questioners did not seem to realize how seriously
mismatched they were. "Don't attribute to me your
conventional view of what a, quote, conservative believes
because I am not a conservative.") Why does Friedman not
think the firm as firm has any social obligation other than
to obey the law and make a profit?
The Milton Friedman chorus,
singing
lyrics that say a corporation is amoral and has as its
purpose the satisfaction of stockholders.
What exactly is a corporation? Does it
have real, physical existence? Can you take a picture of
one? (A picture of a building is not a picture of a
corporation.) Economists argue that the government cannot
tax a corporation because a corporation does not eat, drink,
or consume resources--people do that. Any tax on imposed on
a corporation ultimately is borne by a real person who has
less income than he or she otherwise would have. Friedman
argues a similar point about corporation donations to
charity. Who ultimately makes the contribution? Is there a
potential conflict of interest involved?
Going Places (1948) is an eight-minute
cartoon
showing the development of a business using the example of
soap production. It hits on many of the issues in running a
business, illustrating the importance of meeting demand,
improving technology, and keeping costs down. It shows the
role not just of the profit motive, but also of competition
keeping it in check. (Note the bit near the end when the
company tries to fix prices with another soap company. Would
they be successful if entry into the business was difficult
or impossible?)
