The following video clip shows talk show host Phil Donahue interviewing Milton Friedman (circa 1979). Despite the date, the dialogue will sound current. Friedman was a well-known champion for “private free enterprise” (a term he thought more appropriate than “capitalism”). Donahue was the Oprah Winfrey of the day.
Imagine you are a participant on the stage. After listening to the dialogue, craft an essay that explains how you would intervene to reconcile the opposing perspectives. You might begin by saying, “Phil, wait; you’ve asked Prof. Friedman the wrong question. You should have asked him how he would explain the economic consequences of rent-seeking on the operation of the private free enterprise system. You’re both right. Here’s why . . .”
-Phil expresses concern that a private enterprise system “seems to reward not virtue as much as ability to manipulate the system.” How would you explain to him that such a concern implies the economic idea of rent-seeking? What way of defining rent-seeking would you use to explain the idea to him?
-How would you explain to Phil that greed is a real human vice, but also that the idea of greed is generally a mis-characterization of the motive force driving the wealth-creation process? What statements made by Milton and the other authors would you deploy to reinforce your argument?
-How would you argue to Milton that his descriiption of the free enterprise system is, of course, accurate, as far as it goes, but he should have explained to the audience what John Kay said: “Crony capitalism is very different from the market economy”? How would you explain to the audience what you mean by that statement? What evidence from the readings would you use to illustrate your point(s)?
-How would you explain to the audience that Milton omitted an important point, too? How would you explain that market forces not only help to alleviate poverty and “improve the lot of the ordinary people,” but they also work to remedy another one of Phil’s concerns: “the concentration of power”? What are the economic mechanisms by which that happens?
-How would you summarize by explaining that the key issue is one of creating institutions that create the most entrepreneurial experimentation, freedom of entry into the market process, and authentic consumer feedback?