“Few are those who realize the undeniable truth that State help kills self-help.”

Over the past few years, I have greatly enjoyed listening to several hundred episodes of the EconTalk podcast, hosted by Russ Roberts and sponsored by the Hoover Institution at Stanford.¹ Roberts describes himself as a “classical liberal,” which, to my understanding, basically means he believes in limited government and personal responsibility—though he’d refrain from saying he is a libertarian. Roberts is known for breaking down complex economic ideas and presenting them in a form that is palatable to the layman, plus he is a terrific interviewer. Roberts completed a PhD at The University of Chicago under Gary Becker, who himself studied under Milton Friedman. Friedman was in his last years at the school when Roberts began his degree there, and though he wasn’t taught firsthand by Friedman very much, he considers himself a student of the late economist, having learned from his ideas and writings. In any case, both became associated with the Hoover Institution in later years, and when Roberts began the EconTalk podcast, Friedman joined him for a two-part episode in the show’s first year, which was recorded only a few short months before Friedman’s death at the age of 94.

Milton Friedman was a Nobel Prize winner whose name I knew long before I had even heard of EconTalk or considered reading one of his books. I didn’t even know he was an economist, because I am an engineer, and we’re not supposed to care about things like economic policy. But I had heard his name somewhere. Some events and situations unfolded in my personal life that led me to take a deeper interest in these things. My search led me to EconTalk which led me to Friedman’s book, Capitalism and Freedom. The book is based on a series of lectures Friedman had given several years prior in reaction to the drastic increase in government spending after World War II. I’m not well versed in any of this, so some of what Friedman writes about, especially in the early chapters on monetary policy and international trade agreements, will need some further reading (or possibly a re-read) to iron out the details. But for the most part, his writing is clear and concise. He points out flaws in economic, political, and philosophical schools of thought that have led to government overreach and subsequent limitations on freedom, and he makes a positive case for “the free market.”

The most important takeaways from the book for me were: political and economic freedom are ideals that we come closer to achieving with a smaller, decentralized government; government intervention almost inevitably leads to unintended, adverse effects; nearly all currently implemented government policies/systems/regulations (social security, public housing, professional licensing) should not exist; having freedom means having freedom to fail.

The gist of the book is to delineate how the government should function such that we can have laws and infrastructure but avoid sacrificing personal freedom. The individual (or the family unit) and their freedom are of paramount importance, and they should have the freedom to choose their way of life, even if that means that they will make mistakes. They are responsible for their own well being, not the government.² The two contrasting views he presents are the “liberal” (prior to a modern bastardization of the term), who pursues personal freedom, and the “egalitarian,” who pursues equality of outcome.

Friedman posits that we cannot have political freedom without economic freedom. He walks us through voluntary vs. coerced economic activity, elucidating the classically liberal view that it is not his business what a man does with his time and resources as long as he is not infringing on the freedom of others. The role of government in the market should be limited to enforcing rules determined by market participants; only cautiously should the government approach problems such as monopoly and neighborhood effects, and they should do so with a predisposition toward inaction. He scrutinizes any and all government intervention into economic activities, which by definition encroaches on personal freedom. Should social security exist? Should manicurists and hairdressers need licenses? What about doctors? Is public housing a good idea? Should parents be allowed to choose where their children attend school? In basically every case he presents, Friedman expounds on the possible choices, and then explains why the choice that allows the most freedom is the best option. He speaks in the abstract at times, but provides many concrete examples that are easy to glean from.

The juicy stuff is mostly Friedman dissecting current government systems, detailing how they have failed and become twisted and are now completely different than they were intended. E.g. public housing has overloaded school districts with “problem children”; social security forces citizens to purchase a lousy, government-run annuity; occupational licensure has become a means for gatekeeping, decreasing available services; coerced “fair” hiring practices have damaged businesses, and thus affected patrons of the business; minimum wage means businesses can’t employ as many people; collecting taxes for redistribution has caused a decrease in charitable donations. His chapters on education, licensure, and social welfare are particularly good and thought-provoking.

He doesn’t just throw this stuff around though. He provides pages and pages of justification and careful thought and he earnestly considers viable alternatives to his preferences. He is humble enough to make known when he is out of his depth and to occasionally throw up his hands and suggest that he cannot conceive of an elegant solution to a problem. He also remains compassionate throughout and never trashes opposing views—even in cases where big government is proposed, he assumes that these come from misguided men of good will. The book has been both praised and ridiculed for its divisive ideas, and I intend to check out some further literature on both sides of the divide.

Basically, Friedman believes in human dignity. We each need to take responsibility for ourselves. Care for our neighbor should be conducted within our own means and proximity, not by syphoning off from the community as a whole. Government activity should not infringe on our freedoms or artificially limit our choices. Some may squander their personal freedom and make terrible mistakes, but that is to be human. I found Capitalism and Freedom to be a very thoughtful treatise, and though I think some of Friedman’s proposals are probably unachievable ideals, I agree with a lot of what he says. I understand how some of it might come off as harsh, but I broadly agree with his instinctive distrust of paternalism.

1. Roberts also recently became president of Shalom College in Jerusalem. Thankfully, he’s still going to be doing EconTalk.

2. There is a section on taking care of the poor. Friedman’s conclusions are not harsh, but suffice to say he doesn’t think bloated government programs are the answer to poverty. An area I would like to explore further is the divide inside of Christianity regarding this issue (Friedman was agnostic and doesn’t address anything in the book from a religious perspective). Some would argue that because Christians are called to care for the poor, and there are Christians in government, those officials should try to implement policies to that end. This doesn’t feel quite right to me and has some obvious pitfalls that don’t take too much thinking to discover.

Sources:
Roberts, Russ. “Friedman on Capitalism and Freedom”. EconTalk.org. 6 September 2006.