Hey, “Occupy Wall Street” — Occupy This!

This video is about 30 years old, but it’s quite timely and it’s only two and a half minutes long. If you don’t recognize the people, it’s Milton Friedman being interviewed by Phil Donahue.

(Hat tip to one of our clandestine operatives.)

Copyright © 2011. The Sensuous Curmudgeon. All rights reserved.

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31 responses to “Hey, “Occupy Wall Street” — Occupy This!

  1. While Friedman could argue that “productive activities of capitalism” have been the most effective in improving the lot of most people – which may be true, by the way – the fact remains that improving the lot of most people has also resulted in the large increase of the world population.

    It seems that one can only make such arguments with the hidden assumption that resources are unlimited; which they are not.

    We now stand at a world population of seven billion; and many population experts think we have far exceeded the human footprint that Earth can sustain when the oil runs out and the human contributions to climate change become more serious.

    The question that remains, then, is whether or not capitalism can drive economies that can rationally reduce the human population humanely to the point that preserves all living organisms and encourages sustainability instead of continually increasing consumerism.

    And won’t evolution take its course anyway? What will humans be in another ten or twenty thousand years if they still exist?

  2. Mike Elzinga asks:

    The question that remains, then, is whether or not capitalism can drive economies that can rationally reduce the human population humanely …

    The most prosperous countries tend to have low birthrates. It’s the countries with lots of poverty where everyone seems to have 10 kids.

  3. The most prosperous countries tend to have low birthrates. It’s the countries with lots of poverty where everyone seems to have 10 kids.

    Yes indeed; and if the standards of living can be improved, and if women can be given political, social, and reproductive rights in those countries, then one can expect birth rates to come down. That would probably take a capitalistic economic system and enlightened political systems that treat women fairly.

    But the question still remains about the large human footprint on the planet. Can capitalism be adapted away from a constantly growing economic system – with “unlimited” get-rich incentives – to one that sustains comfortably without continuous growth? What kinds of incentives would work in such an economic system?

    Are humans going to be the first species on the planet that learns to live within its means; or will it simply bang up against a catastrophic crash when it uses up all its resources? If it does the former, can the economic system be called capitalism as we have known it?

  4. Anyone who can smack down Phil Donahue like that is okay in my book….

  5. Ceteris Paribus

    @ Longshadow;

    Call it a smack down if you will, but Friedman’s performance is on the
    intellectual level of William Lane Craig refuting an atheist in a staged
    debate.

    Go ahead, turn off the audio and watch it again. Other than Craig
    having more hair than Friedman, the body language and facial expressions are all the same.

    Friedman even throws in a gratuitous Argumentum Ad Hitlerum about half way thru, fulfilling Godwin’s Law, and revealing that his argument is more style than substance.

    If there was any truth in the argument Friedman makes, it is 30 years
    old and the world has changed a lot during that time. Last spring even
    the sharp trading rulers of the Kingdom of Saudi Arabia figured it was
    cheaper for them to spend spend $133 billion on its population of 26
    million to keep an Arab Spring from happening there. That would be like
    the US spending $1.5 trillion on its 99%.

    Wealth is a relative concept – there will always be an uneven
    distribution of wealth. The goal of those in power should be to rig the
    game in a way that maximizes gains while minimizing catastrophic losses.
    That’s the way evolution works, and that’s why there is no such thing
    as ID in biology or economics. Only theocrats should need to bother themselves with preserving some notion of an absolute morality.

    By the way, a good Guardian article on the mathematics of distribution
    is at

    http://www.guardian.co.uk/commentisfree/2011/nov/11/occupy-movement-wealth-power-law-distribution

  6. The distribution wealth in a free market system is the result of a vast multitude of volitional economic transactions, all of which involve each participant believing he is better off as the result of the transaction than before. We either trust the free market to efficiently distribute resources (including money) or we don’t. If you don’t, where, as Friedman says, are you going to find the “angels” who will better decide who is to be rewarded how much for their physical or intellectual economic activity? The same people who blew half a billion dollars on Solyndra? Some bow-tied regulator in Washington who cannot possibly have enough information to figure out how to make a pencil, let alone figure out how much everyone’s economic activity is worth?

    If you trust such people to make such decisions, you may get social and economic justice, but along with it comes the grinding poverty of the masses that only free markets have ever been able to free them from.

  7. @Ceteris Paribus:That would be like the US spending $1.5 trillion on its 99%.

    For the US to do that, we’d have to have European-style taxation levels for our middle class. The “99%” would have to tax itself, to spend that much money on itself.

    We’re not the Kingdom of Saudi Arabia, whose economy depends on one product closely controlled by a hereditary aristocracy. As LRA kindly worked out for us one day, confiscating all the wealth of the 1% wouldn’t get us anywhere near what the Occupy Wall Street crowd demands. If they want a European-style welfare state, the “99%” has to pay the same high tax rates that the “99%” has to pay in Europe.

    Hey, they’re having the same Occupy movement in London are they not? Guess a European welfare state won’t be enough to make them happy…

  8. While I agree that nearly everyone operates on at a least some level of self-interest and that it is generally a good thing, I would also posit that unregulated greed, unregulated self-interest is not conducive to the general good. That’s how you get an Oligarchy/feudal system. When the top 1% earn more than the entire bottom 50%, when the top 1% see their earnings grow over 270% while the earnings of the bottom 20% barely budge, When the top 1% is doing better than ever and those living below poverty level reach record levels, how is this good for the society or the economy? You can’t tell me the top 1% just work harder, that’s BS.

    While many people might dream of winning the lottery, most of us just want to make a decent living, be able to take care of our family and have a comfortable retirement. That is being taking away from us by the greed and fraud of the few. The efficiency, stability and welfare of a country does not depend on the 1%, it depends on the 99% who do the real work. Teachers, police, firemen, soldiers, nurses, sanitary disposal, construction, plumbers, electricians, etc, etc, etc. You don’t get rich doing those jobs but you do help the country.

  9. RogerE says: “I would also posit that unregulated greed, unregulated self-interest is not conducive to the general good.”

    Yes, they should have shot Thomas Edison before he went too far!

  10. The Curmudgeon says, “Yes, they should have shot Thomas Edison before he went too far!”

    That is NOT what I’m talking about and you damn well know it.

  11. RogerE says: “That is NOT what I’m talking about and you damn well know it.”

    I’m sure that the Federal Office for Knowing Who is Good and Who is Bad (FOK-WIG-WIB) will be able to sort it all out.

  12. “That is being taking away from us by the greed and fraud of the few.”

    Your blame is misplaced.

    The current state of the economy can be laid at the feet of politicians meddling in the markets, especially the mortgage and real estate market. And they are continuing to meddle.

    In their spare time they are borrowing $1.5 trillion a year to fund out of control government spending. At the moment they are planning to do so for a very long time. Increasing taxes on a scapegoated few would make barely a dent in this deficit. Confiscating all of their income would not eliminate the deficit and would only make the economy much, much worse.

    This is what comes of the hubris and arrogance of politicians and social engneers, centralized government economic “planning”, and attempts to overly regulate, control, and manipulate markets.

  13. Ok, if not Thomas Edison, who didn’t really make that much money anyway, how ’bout Bill Gates? Or if you lean in the other direction, Steve Jobs? Should we confiscate their wealth (well, not Steve Jobs — the government already did that when he died) because they have “too much”?

    And as long as we were talking about using up our resources, these two men (and others like them) have done more to stretch our resources more than all the policies of all the governments of the world. Economic success isn’t just about using resources. It’s really about doing more with less — in other words, using resources economically.

    We will not “run out” of resources. Any given resource will gradually become scarcer, or harder (more costly) to retrieve, but will not suddenly run out. When this has happened in the past, we have switched to alternatives, or in some cases, enterprising individuals (or groups of individuals called “corporations”) have developed new means of extracting the resources.

    Life goes on. At least it will if we don’t let some idiot tyrant start WW III.
    Or get hit by an asteroid again. But that’s another story.

  14. HaterOfAllThings

    “The current state of the economy can be laid at the feet of politicians meddling in the markets, especially the mortgage and real estate market. And they are continuing to meddle.”

    For all the pining that the corruptive influence is coming from government, how do you think government gets to the point of meddling in the first place? Ethanol, for instance, is heavily supported from the government as the green fuel of choice… but why do you suppose that is? Do you think they just decided on their own to subsidize corn so many years ago? Why do you think the government puts so much money into oil subsidies if not because of corporate lobbyists who buy politicians? Why do you think the derivatives market is worth 5 times the GDP? Is it because government meddled too much, or because they were manipulated by people who have them in their pocket to meddle in just such a way as to help certain people at the expense of others? It’s easy to point fingers at government if they’re centralized, and they’re clearly evil f***wits who deserve endless torture for being bought as they have been, and no one doubts the capacity of government to manipulate the market, but don’t kid yourself into pretending that the buck stops there.

    “Increasing taxes on a scapegoated few would make barely a dent in this deficit. Confiscating all of their income would not eliminate the deficit and would only make the economy much, much worse.”

    Again, it seems to conclusively be beyond the capacity of libertarians and conservative nutbars alike to grasp who is being blamed here. No matter what anybody says, someone like Thomas Edison or Bill Gates comes up as if they were even remotely similar in any way whatsoever to the actual targets. I don’t recall Steve Jobs buying politicians so that he could be free to bet against his own investors in order to invite their defaults. Nobody is saying Bill Gates doesn’t deserve his wealth. Nobody is saying even that Warren Buffett isn’t a smart investor. They’re saying that those who buy politicians for the purpose of legislating new rules and amendments to old rules that encourage crashes and damage the middle class are the problem. Do not dare place a Mark Zuckerberg and the Koch Brothers into the same pigeonhole. Anyone who does that is every bit as skilled a constructor of strawmen as any creationist out there.

    The ability of the free markets to thrive depends not only on limited capacity of government to manipulate markets, but also on limiting the ability of corporate interests to manipulate government. The purpose of government when it comes to the market is simply to ensure that the ground rules are strictly upheld without fail. They are currently too easily manipulated by certain companies to ensure that that does not happen. The problem isn’t too much or too little regulation, but that the regulation that does occur is WRONG.

  15. Is it because government meddled too much, or because they were manipulated by people who have them in their pocket to meddle in just such a way as to help certain people at the expense of others?

    The corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the corporations are in control of the government. Let us expand the powers of the government to protect us from the…

  16. There’s only one way out of that cycle. Reduce the power of the government to meddle in markets.

  17. Incidentally, if Banker Joe makes a buck on trading a derivative, how did it cost me a buck? Just like in the Middle Ages we’re blaming the bloodusckers, the usurers, the middlemen for our woes. As though they don’t produce anything. (A few people come right and SAY “Jews”.)

    But middlemen do perform a service for which they are deservedly compensated. And those who trade in financial instruments do so as well.

  18. Incidentally, if Banker Joe makes a buck on trading a derivative, how did it cost me a buck

    It increases the volatility and risk of the market in which you are trading. In a perfect/ideal world, this risk wouldn’t affect your separate, independent trades, but in the real world, it does.

    There are many analogous situations: driving speed is regulated because the risk is not limited to just the driver, it extends to other road users. International trade in hoof-and-mouth-infected cattle is illegal because a trade between Mexico and Argentina carries some risk to other countries like the U.S. In a perfect world it shouldn’t, but in the real world, it does. You cannot conduct industrial chemistry experiments in your residential neighborhood, because no matter how experienced a chemist you are, some risk accrues to your neighbors. And so on.

    Market actions between Alice and Bob can (inadvertently) affect Charlie. Thus, Charlie has a stake in what Alice and Bob get up to. That is the quintessential situation in which regulation is called for. Its why we have basic rules like speed limits.

    Now, its an entirely different argument about what sort of market regulation should be used or how much is really needed. I don’t really want to argue about that. But your belief that no regulation is the correct answer flies in the face of reality, which is that derivatives trading can have a significant impact on the volatility of marketplaces beyond the derivatives market.

  19. It increases the volatility and risk of the market in which you are trading.

    How did it do that? I’m aware that you CLAIM it does. Outline for me, if you would, the chain of cause and effect.

    Market actions between Alice and Bob can (inadvertently) affect Charlie. Thus, Charlie has a stake in what Alice and Bob get up to. That is the quintessential situation in which regulation is called for.

    So when you sell your house, you affect the market and so other people in your neighborhood should have the right to keep you from selling so they can have better prices for their houses? Or should you all agree to not sell below a certain price?

    But your belief that no regulation is the correct answer

    Quote me or retract.

    which is that derivatives trading can have a significant impact on the volatility of marketplaces beyond the derivatives market.

    And regulations will not have significant effects on the volatility of marketplaces beyond the derivatives market? See, when you argue against regulation, you’re willing to go out to third and fourth and higher order effects on completely different markets to make your case, but when you argue FOR regulation, nary a word.

  20. formatting issue, perhaps the benevolent hand of SC could fix it for me.

  21. Gabriel Hanna says, “There’s only one way out of that cycle. Reduce the power of the government to meddle in markets.”

    How and how far? Help me understand. Are you saying there should be NO government regulation?

  22. HaterOfAllThings

    [Large comment deleted because of this:]

    I find both of these positions ridiculous to the point of wanting to put both people in a sack and beat them with sticks.

  23. HaterOfAllThings

    As a separate point, while I agree with you that middlemen perform a valid and well-defined service, my only disagreement is with the final clause there — “for which they are deservedly compensated.”

    Keyword of dispute is “deservedly”… as that’s a question of merit… which is understandably subjective. To me, a chemist in a pharmaceutical lab testing varieties of potential cancer treatment regimens is deserving of far more compensation than all the escrow officers in the world combined… but of course capitalism and meritocracy are not the same thing at all, so I’m not about to say that’s a realistic demand to put forth.

  24. How and how far? Help me understand. Are you saying there should be NO government regulation?

    Obviously not, since I’m not in favor of fraud, murder, or coercion.

    The question is, as always, how do we know the proposed cure is not worse than the disease? For example, eric says that if A makes a transaction with B that in some way affects C, government regulations are thereby legitimate. And there’s no end to that then, because anything anybody does, or doesn’t do, affects everyone. (If I don’t buy a good or service I affect its price just as much as if I do, and what is the price but the effect of the decisions of millions of people regarding the value of a good or service?)

    An example: gas is too expensive. Ok, fine, by law we will stop “gougers” from charging more than what is “fair”. Well, before the regulation you could get gas if you thought it was worth it to you, but after the regulation we have shortages and people can’t legally get it even if they have money. The result: black markets and probably rationing. Is that better or worse? Maybe we should think of those things before we regulate.

    Just like it’s stupid to make “Caylee’s Law” in response to whatever white girl was killed this week, maybe it’s stupid to make financial regulations every time something bad happens in the financial world. There are many kinds of derivatives besides credit default swaps. They have benefits or they wouldn’t exist. Options and futures and things of that sort improve the available price information and spread risk to people who are more eager to assume it. It’s unfortunate that stupid decisions in the financial sector can effect everyone but a) it was ever thus, b) government regulations also have unforseen costs, drawbacks, and consequences and c) everything everyone ever does always affects everyone.

    Furthermore, government regulations favor large companies at the expense of small ones. The more complicated they are, the higher the costs of compliance. GE can afford full time accountants and attorneys, but mom-and-pop operations are lucky if they can afford one. Large businesses prefer regulation if they benefit they get from restricting competition outweighs the cost of compliance. Which is why companies like GE and Goldman Sachs are more than happy to donate large sums to officials who promise more regulations.

    http://www.opensecrets.org/pres08/contrib.php?cid=N00009638

  25. @Haterofallthings:Keyword of dispute is “deservedly”… as that’s a question of merit… which is understandably subjective.

    If it weren’t for them, you’d be stuck with what you and your neighbors could make yourselves. As would we all. And we’d be back in the Middle Ages.

    I really don’t understand why you wish to dehumanize people who get things from where they are to the people who want them. It’s the old Physiocrat fallacy I guess.

    http://en.wikipedia.org/wiki/Physiocracy

    My physics students fall back on medieval notions of impetus any time they get confused–God knows where they learn it. I guess it’s the same with economics.

  26. Gabriel Hanna says: “I’m not in favor of fraud, murder, or coercion.”

    Such things have been illegal for centuries in Anglo-American law. There may be a need for a federal statute making it illegal to commit interstate fraud, but not much more is required. Honorable people in business have always been most protective of their reputations. That’s the consumer’s best guide. There have always been fraudsters, because there are always customers who don’t do their homework.

    Enacting all kinds of regulations, which are “prior restraints” on commerce, adds tremendously to the cost of transactions. And such regulations don’t deter crooks anyway, because crooks just ignore them. Surely Madoff’s operation was in violation of a zillion regulations. Regulations don’t prevent fraud. They just lull the public into thinking that if there are regulations, then everything must be okay. That’s a foolish assumption. Reputation is what matters more than regulations.

  27. Once upon a time, reputation DID matter more than regulation. Back in those days, if you had a problem with something, you could just hop on your horse and ride a few miles to one of your neighbors and they’d either take care of it or you could punch them in the nose and tell all your other neighbors not to deal with that person again. Reputation was essentially self-regulation and peer pressure. That is no longer the case and hasn’t been for a long time.

    Sure, regulations don’t prevent fraud or any number of other crimes, just as the 10 Commandments don’t prevent murder, theft or adultery. However, they do usually provide for some manner of redress or punishment.

  28. HaterOfAllThings

    “If it weren’t for them, you’d be stuck with what you and your neighbors could make yourselves. As would we all.”

    And without those who consistently work to advance the progress of scientific knowledge, any of us would have, at best, a 50-50 shot of surviving to see our age hit the double-digits, and 90% of all people will never see a single day in which any of fraction of their potential in any field would ever be realized. Most of us would still think that the earth is riding on a turtle and the moon is made of cheese and we’d still be engaging in tribal warfare on a daily basis unless of course we forged alliances by either forcefully demanding sex slaves from other tribes or

    “I really don’t understand why you wish to dehumanize people who get things from where they are to the people who want them.”

    Give me the sentence in which I specifically dehumanized them. Go ahead. Tell me where I said that. If you would like to construct more distortions of people’s words, I think politics is an ideal stage for you.

    My point was not that they are worthy of being dehumanized, but that scientific advancement and increases in the knowledge base of humanity is of greater importance by several orders of magnitude. Yes, that’s a subjective opinion on my part in that I value knowledge above all else, but that was exactly the reason why I said that what is “deserved” was open to debate. For that matter, I would value someone in your profession (making assumptions here since you mentioned you had physics students) more than any middleman because you’d be involved in the spread of knowledge. If I was to distort your words the same you had done to me, I’d say that you were willfully devaluing physics itself by valuing the role of transaction offers.

    I accept that the very concept of independent third-party middlemen came about specifically because it was a safe presumption that no party with a major long-term financial stake in any exchange could ever be trusted. That does not mean, however, that the same added value is there as the market grows. Value in assuring the decorum of a shady industry centuries ago is not the same thing as saying it still has that value today when the system is orders of magnitude more complex, and it is far more valuable for lenders to exercise shady practices several levels of indirection away from individual transactions with consumers. Which is not to say that things are _better_, but that the area you need to focus your efforts on preventative measures to avoid fraud are completely different. Nowadays, most of these middlemen serve as conveniences (e.g. impound accounts) which makes the role worth some value, but not necessarily so terrific as to make a big deal over.

    Admittedly, scientific advancement in this day and age is also incremental and *apparently* slow, but that too is because so much value has already been built up, and we are adding grains of sand to an already mountainous pile.

  29. HaterOfAllThings

    Gah… EDIT : too much jumping around from window to window…
    The sentence here was left unfinished —
    …unless of course we forged alliances by either forcefully demanding sex slaves from other tribes or by offering up the hottest women in our village as “gifts” if we so happened to be in the weaker position.

  30. @HaterofAllThings:Give me the sentence in which I specifically dehumanized them.

    When you characterize an entire group of people as grasping, manipulative, and greedy and what they do as “shady”–merely because they do it–you are dehumanizing them just as surely as Stalin did with the so-called “kulaks” (most of whom were not even kulaks) and as Christians in the Middle Ages did with Jews.

  31. There is something Milton Friedman avoided answering. Excessive Greed. Capitalism is good for some things but dysfunctional for other things. Health care for example represents an expense so it doesn’t fit into a profit model. Sorry, expense and profit are different accounting columns.

    Capitalism did not encourage greed either. Large scale projects and organizations need capital to be created. But the mechanisms of the flow of capital do not require that a bunch of cronies create excessive bonuses, pay and perks for themselves. For many people a million dollars in savings is enough. So why do others think a billion here and a billion there is what they deserve? Where does reasonableness end?

    The problem with the system today and with the Milton Friedman clip is that Capitalists immediately suggest the system is good (it is) but fail to suggest it is corrupt in its current form! Regulated Capitalism that provides the capital to fund future growth is good. A bunch of self serving Capitalists getting wealthy, stealing from the stockholders and focusing on stock value instead of product quality, cost and social responsibility is not good. Milton never admitted flaws in the system, he was just being a cheer leader for greedy fat cats. Yes Milton they do exist!

    Like everything in life there are good corporations and good executives so this is not a generality about all capitalists. However, where the system is broken we need to admit the brokenness and then find solutions and then fix the system! It is not sustainable to encourage excessive greed for a few. Remember the historical quote “Let them eat cake”. If you know that quote you know what happened in France. People do not sit back and suffer indefinitely! Yes there is a difference between success and excessive greed Milton.