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Milton Friedman Was Wrong

theatlantic.com

24 pointspseudolus13 comments

I would prefer that corporations do what they do best - make profits - and leave the ancillary baggage we’ve put on them to the government or individuals. Companies should not be providing health insurance and retirement benefits, nor should they be intertwined with the government as always happens in highly regulated “private” industries.

If we want to force corporations to be extensions of the government and provide various non-essential services, then yes, they should care more about non-profit motives. However this is a mistake and it makes a company do things it shouldn’t do. I wish companies could only focus on maximizing shareholder value.

I wish companies could only focus on maximizing shareholder value while paying the taxes for the public infrastructures they rely on, such as law, transport, or education.

I wish companies should stop focusing on "maximizing shareholder value", and instead returned just enough profits to keep them going, and focusing on keeping customers happy.

Why? Companies keep customers happy because of competition. You can't force companies to make anyone happy, but you can set up a situation where making customers happy if I'm their best interest.

This seems so basic Incant believe economists are even arguing this still. Milton / argument is not dissimilar to a naive view of survival of the fittest. Yet in nature, we have altruism. If you want to maximize shareholder value you need to maximize stakeholder value. Just like in nature where being as greedy as possibly does not always maximize fitness.

> Milton / argument is not dissimilar to a naive view of survival of the fittest. Yet in nature, we have altruism.

I don't understand the point you're trying to make. Altruism also contributes to higher fitness because altruistic communities transfer surplus resources to members in need, thus improving their odds to endure through hard times.

That is my point. But the simple minded view of evolution found altruism challenging. I’m saying that increasing shareholder value is the simpleminded equivalent, that we should be focused on stakeholder value.

I don't agree you have a point. You try to make a point and accuse it of being naive, but once your point was totally refuted you still insist on it by resorting to demeaning accusations such as "naive" and "simpleminded" even though you acknowledge your accusations are baseless and wrong.

Well, for me it seems two ideas are mixed up here. Non profits can do exactly that - instead of focusing on profits they can maximize other "stakeholders". Corporations with goal to maximize profits are not going away, because investors will not invest into non profits expecting return on investment

Milton Friedman wasn’t wrong. It’s important to mention that he specifically stated that businesses should operate within both legal and ethical norms. Suggesting that unethical or illegal behavior is excused by his theory is wrong.

In addition, businesses are only “islands of socialism” to the extent that it increases profit. Ronald Coase’s ‘Theory of the Firm’ lays out the logic of this arrangement. Business relationships are voluntary, and the threat of monopoly is greatly exaggerated.

Scientist: "assuming a frictionless sphere in a vacuum... ...we can build a limited but useful model"

Media: "Scientist was wrong because the world is not a vacuum"

Internet: "Earth has 4 corner simultaneous 4-day time cube within single rotation. Wake up sheeple!"

We're talking about this (again) because of Business Roundtable's updated statement of purpose.

This history of Business Roundtable was illuminating to me:

https://press.princeton.edu/titles/10135.html

Lobbying America The Politics of Business from Nixon to NAFTA

"Lobbying America tells the story of the political mobilization of American business in the 1970s and 1980s. Benjamin Waterhouse traces the rise and ultimate fragmentation of a broad-based effort to unify the business community and promote a fiscally conservative, antiregulatory, and market-oriented policy agenda to Congress and the country at large. Arguing that business's political involvement was historically distinctive during this period, Waterhouse illustrates the changing power and goals of America's top corporate leaders."

I collect books about policy making (legislation) and stumbled upon this book. What a find.

My TLDR: History of Business Roundtable is like the metamorphosis of the NRA. Previously reasonable no controversy organization that was taken over by radical ideologues and transmuted into something horrible.

Whereas many left wing skeptics ("snarkists") lampooned Business Roundtable's recent change of heart, I'm far more charitable. We're all connected and need to figure out some way to get along. So I'm glad for the effort.

Maybe I just need to find reasons to be optimistic.

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