Milton Friedman on Capitalism

Last week we saw Why Socialism Does Not Work in the real world.

This week, a quick look at capitalism courtesy of Milton Friedman.

Or, as Phil Donahue thinks of it, greed. 

Capitalism as Greed

I take issue with equating capitalism and greed. At least in the current sense of greed. I do not think there is anything wrong with working hard to better your life.

To me, greed connotes a zero sum game. There is one 12 inch pie. Greed is me wanting it all. Even if I do not need the entire pie to live comfortably. No pie for you!

Capitalism is not necessarily a zero sum game. New products, services, etc., create bigger or additional pies. Perhaps capitalism now allows me a 14 inch pie. But there are plenty of additional pieces for others.

Steve Jobs baked his own pies. Pies that would not exist without him. Jobs needed people to help design and make the pies. That created employment. And employees, with income in their wallets, were able to go out to restaurants, buy new televisions, take vacations, etc. This created additional employment and boosted the overall economy.

Employees paid taxes on their income. Tax receipts that, in part, supported the welfare state. Without Jobs, less employment, less income, less tax receipts, and less money to help the needy.

Steve Jobs did not simply make innovative new pies for himself. Being a greedy, no-good capitalist, Jobs sold pies to consumers. People liked Jobs’ pies as he sold a lot over time. So I assume that these consumers received some benefit in purchasing these pies.

And, of course, taxes were paid on every pie sold. More wealth transferred to government to build roads, pay pensions, etc.

And what about brand new businesses that sprang up because of Jobs and his pies. Need a form fitting pie plate? A special fork? Smart, creative types (I mean miserable, greedy evil people) identified complementary niches and set up enterprises to meet consumer needs.

If there was no incentive for Steve Jobs to create new pies, would the public and economy be better or worse off? The latter, I think.

(And for the sake of my nephew, pies is a metaphor for iPods, iPads, iPhones, etc. I do not want him texting me on where to find the nearest Apple bakery. Nor do I want him putting ice cream on his iPhone. Again.)

And you can use this logic for people like Bill Gates, Mark Zuckerberg, Jeff Bezos, Beyonce, etc. Sure they all made oodles of money from their efforts. Their “greed.”

But is your life affected in a negative manner from their success?

Milton Friedman on Capitalism

In 1979, Milton Friedman discussed capitalism as greed with Phil Donahue.

In light of all the Occupy movements and demonization of capitalism, it is interesting to hear Friedman’s thoughts.

Although communism is less an issue today, Friedman’s words ring true over 30 years later.

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1 Response » to “Milton Friedman on Capitalism”

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