Friedman actually has replies to many of the issues you’ve raised. He is not convinced that government can do anything efficiently and his argument rests on Darwinian principles: government employees are insulated from the consequences of their failed policies in a particular way that biases them towards towards inaction, inefficiency, and even waste.
For example, he talks about the bias of the FDA towards rejecting new drugs over approving them. If the FDA approves a new drug and it kills a handful of people it makes the front page of every newspaper in the country and becomes a huge scandal that costs the FDA heads their jobs. However, if the FDA rejects a drug that could have saved a million lives over several decades then nobody even knows about it!
So the FDA is extremely biased towards rejecting anything and everything that comes their way. But since companies can sue the FDA if they don’t exactly follow the law when rejecting drugs, the FDA has developed extremely long and detailed and cumbersome documentation processes. The forms and the trials are so extensive and cumbersome they take years and billions of dollars to complete. And the end result is that many drugs never even start the process because the companies have no guarantee of being able to recover their investment!
His alternative to all this is simple: tort law. A robust tort law allows people to sue drug companies for selling harmful drugs. This is actually how things worked before the FDA existed and it led to drugs such as Aspirin that might never have existed in today’s regime!
Anyway, the hardest thing about trying to evaluate Friedman’s arguments is that each one is pretty compelling in isolation but the sum total of all the changes is such a radical departure from what we have now that it’s hard to fathom.
I think I’m coming around to it though. One thing that’s indisputable is that our current governments have totally betrayed us and left everyone polarized, isolated, angry, and utterly lacking trust in societal institutions.
Thank you for taking the time to discuss this with me, I am finding this very enjoyable and educational.
I agree with Friedman in principle, but then I look at Ford and the other car companies with the Pinto and Takara airbags, etc. The cost of paying lawsuits gets factored in and until the cost point breaks over the deaths and injuries are just a cost of doing business. With regulation that actually has teeth and enforcement, just doing the bodies-to-profits calculations becomes an untenable solution and the recalls happen even if they aren’t profitable. I don’t think a private tort system is capable of having the teeth to achieve this in the real world. It is why Libertarianism still has a central government. It will have its inefficiencies, but it’s a right tool for the right job kind of thing.
Same with asbestos, lead, fillers in food, etc. The damages from them are so divorced from the product that many may not know who or what caused it. Lawsuits have a hard time with those kinds of things even if you know exactly which business is the cause. Look at tobacco and leaded gasoline and myriad others where lawsuits failed initially because damage was difficult to prove before the government stepped in. If fossil fuel companies can pay for the science that muddies the water on climate change, what chance does John Doe have doing enough through a lawsuit to stop DuPont from flooding the planet with forever chemicals?
I like where Friedman is coming from, but I hold him at the same level as Marx or any other economic theorist: assuming a spherical cow, at a specific temperature, without friction, and without wind resistance. I like Henry George the same way. That’s why I still claim to be a libertarian (just a left leaning centrist one), because I think Friedman and George are actually the better end result and closer to a workable solution than Marx. Marx was onto something though, and shouldn’t be dismissed outright. I do think we have stuff to learn from all branches of economic theory, and subscribe to a “the truth will be somewhere in the middle” philosophy.
Friedman actually has addressed the Ford Pinto question directly. He makes the very good point that it’s not a matter of principle, it’s a difference of opinion on the cost-benefit analysis. The deaths that resulted from Ford’s decision not to install a $13/car shield to protect the gas tank were tragic and regrettable but the argument that we can’t put a price on human lives does not fly.
We HAVE to put that price on a human life if we’re going to use cost-benefit analysis as a tool to help allocate resources. It doesn’t matter whether it’s a communist government party official, a liberal democratic courtroom, or the CEO of a business. The calculation needs to be done because resources are finite.
Friedman makes the rather dramatic point of asking whether it would be worth it to spend a billion dollars to save a person’s life. No matter what number you might ultimately settle on, there will always be disagreement because there are always alternative ways to spend the same money that might save even more lives. It would definitely not be worth it to spend NASA money to make the world’s safest car if that means a million people starve to death due to that choice of resource allocation.
Friedman is not opposed to central government of course. He mentions it in that video that he believes in the court system. He also believes government is the right call for several other functions which he discusses in other lectures (national defence and of course legislation to protect people’s rights and resolve disputes and other issues that arise).
For what it’s worth, the amount of money Ford lost in the long run, from lawsuits and settlements paid, reputational damage, loss of marketshare, loss of R&D, and loss of consumer confidence was astronomical. Ford learned the hard way that marketing for automobiles is not about convincing a consumer to buy your car once, it’s about convincing them that they made the right decision to buy your car so that they continue buying cars from you for the rest of their life.
In other words, brand loyalty is absolutely everything to car manufacturers and if you abuse that trust you lose bigtime. Now the Ford Pinto will live on forever as an example of corporate shortsightedness and callousness. There are plenty of people who would never buy a Ford again for that mistake.
Friedman actually has replies to many of the issues you’ve raised. He is not convinced that government can do anything efficiently and his argument rests on Darwinian principles: government employees are insulated from the consequences of their failed policies in a particular way that biases them towards towards inaction, inefficiency, and even waste.
For example, he talks about the bias of the FDA towards rejecting new drugs over approving them. If the FDA approves a new drug and it kills a handful of people it makes the front page of every newspaper in the country and becomes a huge scandal that costs the FDA heads their jobs. However, if the FDA rejects a drug that could have saved a million lives over several decades then nobody even knows about it!
So the FDA is extremely biased towards rejecting anything and everything that comes their way. But since companies can sue the FDA if they don’t exactly follow the law when rejecting drugs, the FDA has developed extremely long and detailed and cumbersome documentation processes. The forms and the trials are so extensive and cumbersome they take years and billions of dollars to complete. And the end result is that many drugs never even start the process because the companies have no guarantee of being able to recover their investment!
His alternative to all this is simple: tort law. A robust tort law allows people to sue drug companies for selling harmful drugs. This is actually how things worked before the FDA existed and it led to drugs such as Aspirin that might never have existed in today’s regime!
Anyway, the hardest thing about trying to evaluate Friedman’s arguments is that each one is pretty compelling in isolation but the sum total of all the changes is such a radical departure from what we have now that it’s hard to fathom.
I think I’m coming around to it though. One thing that’s indisputable is that our current governments have totally betrayed us and left everyone polarized, isolated, angry, and utterly lacking trust in societal institutions.
Thank you for taking the time to discuss this with me, I am finding this very enjoyable and educational.
I agree with Friedman in principle, but then I look at Ford and the other car companies with the Pinto and Takara airbags, etc. The cost of paying lawsuits gets factored in and until the cost point breaks over the deaths and injuries are just a cost of doing business. With regulation that actually has teeth and enforcement, just doing the bodies-to-profits calculations becomes an untenable solution and the recalls happen even if they aren’t profitable. I don’t think a private tort system is capable of having the teeth to achieve this in the real world. It is why Libertarianism still has a central government. It will have its inefficiencies, but it’s a right tool for the right job kind of thing.
Same with asbestos, lead, fillers in food, etc. The damages from them are so divorced from the product that many may not know who or what caused it. Lawsuits have a hard time with those kinds of things even if you know exactly which business is the cause. Look at tobacco and leaded gasoline and myriad others where lawsuits failed initially because damage was difficult to prove before the government stepped in. If fossil fuel companies can pay for the science that muddies the water on climate change, what chance does John Doe have doing enough through a lawsuit to stop DuPont from flooding the planet with forever chemicals?
I like where Friedman is coming from, but I hold him at the same level as Marx or any other economic theorist: assuming a spherical cow, at a specific temperature, without friction, and without wind resistance. I like Henry George the same way. That’s why I still claim to be a libertarian (just a left leaning centrist one), because I think Friedman and George are actually the better end result and closer to a workable solution than Marx. Marx was onto something though, and shouldn’t be dismissed outright. I do think we have stuff to learn from all branches of economic theory, and subscribe to a “the truth will be somewhere in the middle” philosophy.
Thanks! I’m really enjoying the discussion too!
Friedman actually has addressed the Ford Pinto question directly. He makes the very good point that it’s not a matter of principle, it’s a difference of opinion on the cost-benefit analysis. The deaths that resulted from Ford’s decision not to install a $13/car shield to protect the gas tank were tragic and regrettable but the argument that we can’t put a price on human lives does not fly.
We HAVE to put that price on a human life if we’re going to use cost-benefit analysis as a tool to help allocate resources. It doesn’t matter whether it’s a communist government party official, a liberal democratic courtroom, or the CEO of a business. The calculation needs to be done because resources are finite.
Friedman makes the rather dramatic point of asking whether it would be worth it to spend a billion dollars to save a person’s life. No matter what number you might ultimately settle on, there will always be disagreement because there are always alternative ways to spend the same money that might save even more lives. It would definitely not be worth it to spend NASA money to make the world’s safest car if that means a million people starve to death due to that choice of resource allocation.
Friedman is not opposed to central government of course. He mentions it in that video that he believes in the court system. He also believes government is the right call for several other functions which he discusses in other lectures (national defence and of course legislation to protect people’s rights and resolve disputes and other issues that arise).
For what it’s worth, the amount of money Ford lost in the long run, from lawsuits and settlements paid, reputational damage, loss of marketshare, loss of R&D, and loss of consumer confidence was astronomical. Ford learned the hard way that marketing for automobiles is not about convincing a consumer to buy your car once, it’s about convincing them that they made the right decision to buy your car so that they continue buying cars from you for the rest of their life.
In other words, brand loyalty is absolutely everything to car manufacturers and if you abuse that trust you lose bigtime. Now the Ford Pinto will live on forever as an example of corporate shortsightedness and callousness. There are plenty of people who would never buy a Ford again for that mistake.