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In Reason in Common Sense, George Santayana, wrote, "Those who cannot remember the past are condemned to repeat it." You may more readily recognize the misquote that runs along the lines of, “Those who ignore history are doomed to repeat it.”

But the truth of the matter is some of the most intellectually superior people have had to re-examine history in order to learn from it. One man in particular started out his career as a Keynesian supporter of the New Deal and staunch advocate of government intervention in the economy. But then he about-faced and in the 1950s and 60s led the figurative charge rejecting government micromanagement of the economy. This man was probably one of the most influential economists of the last half of the 20th century. I won’t rattle on about him since you can do your own research. Suffice it to say that he himself has become an important lesson in history.

I refer to Milton Friedman, who had plenty to say that remains applicable to the economic environment of today. So impressive are his observations that I have actually transcribed a few of his comments made during a 1979 interview with Phil Donahue. What follows are those comments (and links to the YouTube videos).

MILTON FRIEDMAN ON CAPITALISM VS. EVERYTHING ELSE:

Donahue: When you see around the globe the misdistribution of wealth, the disparate plight of millions of people in underdeveloped countries… When you see so few Haves and so many Have Nots… When you see the greed and the concentration of power within—aren’t you ever… Did you ever have a moment of doubt about capitalism? And whether greed’s a good idea to run on?

Friedman: Well, first of all, tell me: Is there some society that you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed?

What is greed? Of course none of us are greedy—it’s only the other fella who’s greedy.

The world runs on individuals pursuing their separate interest. The great achievements of civilization have not come from government bureaus. Einstein did not construct his theory under order from a—from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the grinding poverty that you are talking about—the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worse—worst off—it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: That there is no alternative way—so far discovered—of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a Free Enterprise System.

Donahue: But it seems to reward not virtue as much as ability to manipulate the system.

Friedman: And what does reward virtue? You think that the Communist Commissar rewards virtue? You think a Hitler rewards virtue?

You think—excuse me, if you’ll pardon me—do you think American Presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? You know, I think you’re taking a lot of things for granted. Just tell me where in the world you’d find these angels who are going to organize society for us?

Donahue: Well—

Friedman: I don’t even trust you to do that.

WATCH THE ABOVE SEGMENT ON YOUTUBE BY CLICKING HERE

MILTON FRIEDMAN ON THE DEPRESSION:

Donahue: Am I to assume you that you wished that he (Herbert Hoover) had defeated FDR in 1930—uh, 30—

Friedman: Oh, that’s a very, very complicated question.

Donahue: Okay, but you’re not all crazy about the New Deal, I trust?

Friedman: On the contrary, I think the situation in 1932 was a very terrible situation, but it had been produced by the failures of the Federal Reserve System in the prior four years. It was not a failure of Capitalism; it was a failure of government. And Herbert Hoover himself—in his memoirs at the end of that time—said he had learned to his sorrow that the Federal Reserve was a—was a weak reed for a nation in time of trouble. So you can’t blame Hoover for the depression: You can’t blame business for the depression. But Hoover has to take some of the blame—

Donahue: Alright—

Friedman: Much of what Roosevelt did in the New Deal was unwise, but much of it was necessary—you can’t again give a black and white judgment.

MILTON FRIEDMAN ON BAILOUTS AND REGULATION:

Donahue: The government should help save Chrysler—we need three auto companies.

Friedman: The government has been helping to kill Chrysler, but it should not help to save Chrysler—of course not. This is a Private Enterprise System: It’s often described as a Profit System but that is a misleading label. It is a Profit and Losses System and the Loss part is even more important than the Profit part because it’s what gets rid of badly managed, poorly operated companies.

Donahue: What does?

Friedman: Losses. When Chrysler looses money—

Donahue: Oh, I see—

Friedman: When Chrysler looses money, its got to do something. When Amtrak looses money it goes to Congress and gets a bigger appropriation. The question at issue is, “Should the people in this country bail out Chrysler by taking money out of their pockets—not to buy cars which they want to buy—but to pay for whatever has been the cause of losses at Chrysler?” Government has been responsible for many of those losses by unrealistic regulations and rules—but they have affected all of the companies.

Donahue: You’re not going to condemn regulations regarding emissions and—

Friedman: I certainly am—of course I’m going to condemn them. Why not?

Donahue: Because if we don’t have them you’re not going to be able to breathe. And you and I will not be in our senior years able to sit around and argue with each other.

Friedman: Well those are assertions. They are statements that are made. But they are far from being correct. The fact is that pollution was going down long before we had any emission requirements, and it would go down without them. There is a case for doing something about pollution, but the way we’ve been going about it is the wrong way.

Donahue: Is there a case for the government to do something about it?

Friedman: Yes, there is a case for the government to do something about it. Because there’s always a case for the government—to some extent when what two people do affects a third party. There’s no case for the government whatsoever in mandating airbags. Because airbags protect the people inside the car—that’s my business. If I want to protect myself I should do it at my expense.

But there is a case for the government protecting third parties: Protecting people who have not voluntarily agreed to enter. So there’s more of a case, for example, for emission control than there is for airbags. But the question is, “What’s the best way to do it?” And the best way to do it is not to have bureaucrats in Washington write rules and regulations saying that a car has to carry this, that or the other. The best way to do it is to impose a tax on the amount of pollutants emitted by a car and make it in the self-interest of the car manufacturers and of the consumers to keep down the amount of pollution in that way.

Donahue: But how would you put a monetary value on a particulate matter which is emitted from the end of an exhaust pipe?

Friedman: You do it now! What do you mean, “How do you do it?” You now require people to spend something like $500 per car for the purpose—supposedly—of reducing particulate matter, which means for the purpose of giving them an incentive to disconnect the equipment that’s supposed to reduce pollution.

WATCH THE ABOVE INTERVIEW ON YOUTUBE BY CLICKING HERE