Capitalism and Freedom (1960) - Day 1d

pages 7 - Chapter 1

1. It's believed that individual freedom is a political problem and material welfare is an economic problem. That any kind of political system can be combined with any kind of economic system. (e.g. "democratic socialism" would be different from "totalitarian socialism")
2. This chapter's thesis:
1. That's bullshit. Economics and Politics are intimately connected.
2. There are only certain combinations that will work.
3. Any socialist society will not guarantee individual freedom.
3. Economic Freedom
1. Is an end to itself in the broader understanding of freedom
2. Is necessary to have political (individual freedom)
3. "Intellectuals in particular have a strong bias against regarding [economic] freedom as important. They tend to express contempt for what they regard as material aspects of life, and to regard their own pursuit of allegedly higher values as on a different plant of significance and as deserving of special attention."
4. Most citizens think that economic freedom is as important as personal freedom:
1. Someone who is forced to spend 10% of his income on Social Security is being deprived of his personal freedom. [Someone who is forced to do business with someone whom he doesn't want to (for whatever reason) is being deprived of his personal freedom.]
   
2. So is the person who needs to have a license to operate a business.
   
3. So is the person who can't charge as high (or low) a price as he wants.
4. Bottom line: Economic freedom is an important part of Freedom.
5. No society has every had a large amount of personal freedom that also didn't have a lot of economic freedom. (If PF --> EF = If No EF --> No PF)
6. The typical state of mankind is tyranny, servitude, and misery.
7. The 20th century is an exception and the political freedom accompanied the development of the free market. (So to of the Golden Age of Greece and early Roman era)
8. But you can have EF w/o PF. Fascist Italy, Spain and Germany. [Cuba]
   
9. Bentham and Philosophical Radicals beleived people would vote for free-markets, that Political freedom would lead to Economic Freedom. They were right.
   

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Brush up on world history. Review each civilization/country/government with regards to the amount of economic and personal freedom they had.




Look up history of the free-market. When did it develop? How does the 20th century compare to throughout all history? Were the Golden Age of Greece and early Roman era free-markets? Did they have large amounts of political freedom?

Look up % of the world living in relative states of freedom.

What are some examples of hypocritical stances professors have vis-a-vis intellectual pursuits vs. business ones?

http://www.reason.com/news/show/118175.html
http://www.cato.org/speeches/sp-pjo061897.html

John adds he thinks it was Milton Friedman who came up with the absolutely brilliant argument of "What would intellectuals do if we said we don't need all these books on competing theories of the same topic. What a waste of resources! The government should figure what which is right and then make all books equal."

Capitalism and Freedom (1960) - Day 1c

pages xv - xvi, Preface

Book came from lectures given at conference directed by John Van Sickle and Benjamin Rogge, sponsored by the Volker Foundation.

pages 1- 6 Introduction

1. The quote, "Ask not what your country can do for you -- ask what you can do for your country." Either half is bad.
2. The government is a means.
3. There is no greater threat to freedom than the concentration of power.
1. "Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp."
   
4. Scope of government must be limited. Two broad principles of government
1. Government has two functions:
1. Protect our freedom (from both inside and outside)
1. Preserve law and order
2. Enforce Private Contracts
3. Foster competitive markets
2. Maybe...Enable us to accomplish jointly what we can't solely
1. Doing this is dangerous. If we do it, we must be careful. We should only use this function if voluntary co-operation and private enterprise
2. Government power should be dispersed.
1. Better the state than the federal. Better the local than the state.
1. This sets up almost competing governments
2. Two reasons
   
1. See red type above.
2. Great advances in civilization never came out of centralized gov't.
1. E.g. Columbus wasn't directed by the gov't to find a new trade route.
2. Many achievements are the product of
   
1. Individual genius
2. Strongly held minority views
3. A society that permitted variety and diversity
5. The book's Theme:
   
1. Major: The role of competitive capitalism: The organization of the bulk of economic activity through private enterprise operating in a free market.
2. Minor: The role of government in such a society.
3. First two chapters deal with this on an abstract level (principles)
4. The later chapters apply those principles to a variety of particular problems.
6. A Word About The Word "Liberalism"
   
1. In the 1700 - early 1800's, "liberalism" emphasized freedom and the individual as the ultimate entity in society.
2. In the late 1800's, and especially after 1930 in the U.S., liberalism came to mean "a readiness to rely primarily on the state [coercion] rather than on private voluntary arrangements to achieve objectives regarded as desirable."
1. Welfare and equality replaced freedom.
2. Ol' country liberals recognized freedom as the best way to promote welfare and equality.
3. New liberals see welfare and equality as an alternative to freedom.
1. Any government powerful enough to "make everybody equal" will be too powerful to limit to just doing that.

What is mercantilism? (Friedman says that the new liberals are turning back to that.)

What happened in 1930 that, after that point in the U.S., liberalism came to mean relying on the state as opposed to individual responsibility?

What made leftist ideas popular? (John says the Depression and the New Deal.)

Why should it be government's job to foster competitive markets? What does Friedman mean when he says competitive markets?

What if someone says, the Internet is a major advance that came from gov't?

Capitalism and Freedom (1960) - Day 1b

Pages xi - xiv, Preface, 1982

Back in 1960 when it was first published it was ignored by the media. If it has been sympathetic to Socialism and the welfare-state, it would have attracted attention.

Free to Choose (1981) is a Capitalism and Freedom's child.
It has more nuts and bolts. Capitalism and Freedom is more theoretical.

Friedman reiterates (or really states it for the first time, since this is the preface to the earlier edition) that the it was not "book-larnin'" (about which my brother is fond of joking) that destroyed Socialism but rather its simple and undeniable results found wherever it was regrettably attempted. It makes one almost feel sorry for Socialists, if you assume their motives altruistic, that their most noble attempts to help the poor result not just in exacerbating their poverty but their eventual death!
In the U.S., intellectuals and Democrats became disillusioned by the Vietnam War (and the role their Presidents Kennedy and Johnson played), and the failure of welfare, public housing, support of trade unions, integration of schools, federal aid to education, and affirmative action.
I'd like to know the history of each of these programs. When did they start? When and why did people realize they were a failure? (Answer: Read Losing Ground by Charles Murray) Also, confirm with John that it is odd that it was Democratic presidents (Johnson and Kennedy) who got us involved in a foreign war to fight against communism.

This change led to Reagan being elected in '80 after seeing Goldwater be defeated in '64.

Friedman concludes by emphasizing how books like his and Hayek's don't create these changes.
In essence, he seems to support my belief that right now we need to let the liberals take over for awhile and let people get some "a posteriori" results from higher taxes, spending, and entitlement programs. That will create more conservatives quicker than some well written books or debates. It's really an affirmation of esoteric Buddhism's emphasis on experiential learning.

So what are books like this good for?

1. Subject matter for bull sessions.
2. To keep options open until a crisis forces real change. There is a great "tyranny of the status quo."

Interestingly, at the time of Friedman's writing (1982), he points out that the draft was the only one in a list of 14 unjustified government activities that had been eliminated. I doubt any of the others has been since then. Assuming that the other 14 have much more to do with economic freedom than personal freedom, this is a perfect example of my belief that the liberals have been winning.

Capitalism and Freedom (1960) - Day 1a

Page vii - x, Preface, 2002

1. 1960, total federal, state, and local government spending was 26% of GNI. (Non-defense spending was 12% of GNI, Defense was 14% of GNI.) The book's ideas were widely ignored.
2. 1982, total governmental spending was 39% of GNI (Non-defense was 31% of GNI, Defense was 8% of GNI). The results of this massive increase in government spending changed people's opinions and got Reagan and Thatcher elected.
3. 2000, total spending = 36%
4. 2006 total spending = 43%. (Source: Grandfather Economic Report)

1. Opinions of the book's ideas also were boosted by a posteriori results:
1. The end of a 70-year experiment (Berlin Wall fell in 1989, Soviet Union collapsed in 1992)
1. Top down vs. Bottom Up
1. Central Planning and Control vs. Private Markets
1. Socialism vs. Capitalism
2. Smaller Scale Examples of Capitalism beating Socialism
   
1. Hong Kong and Taiwan vs. China
2. West Germany vs. East Germany
3. South Korea vs. North Korea
3. China: 1970's Deng Xiaoping privatized agriculture (Socialism with Chinese Characteristics) which increased productivity.
1. All this gave credence to Friedrich A. Hayek's Road To Serfdom (1944)
4. Other Countries
1. After World War II, everybody thought development in the third world requried central planning plus massive foreign aid. This failed and was pointed out in Peter Bauer's Equality, the Third World, and Economic Delusion.
   
2. East Asia Tigers
1. Hong Kong
2. Singapore (an island city-state at the tip of the Malay peninsula)
   
3. Taiwan
   
4. South Korea
3. Latin American countries
   
4. Countries in Africa, after adopting free markets, increased prosperity.
   
5. Eastern European Countries: the ones that went towards free-markets saw increased economic prosperity.

Read up on which and the impact of Latin American, African and Eastern European countries adopting free-market policies. Aren't Socialists just plain-old, flat-out, straight-up, evil if they aren't willing to accept that poorer people, while not as well off as the wealthy in these societies, are infinitely better off under Capitalism than not?

I'm curious how Friedman explains why, despite the ubiquitous failure of Socialism the world over and the movement towards free-markets, that total U.S. governmental spending as a percentage of GNP has continued to increase. (John says see: Larry Niven and Larry Pornelle)