Social Responsibility of the Firm

Submitted to Dr. D. Frear

MBA 505
Zead Mahmood





Summarization of Milton Friedmans Interview
Population and Ecology
The first video is about Population and Ecology by Milton Friedman. The video was from 1977
Q and A session where Professor Friedman talked about environmental. The first question to
Friedman was
In light of the pressures from the ecology and population, how should this alter the economic
policies of our country?
Dr. Friedman talked about a system under which you do not artificially encourage population or
artificially discourage population, and then you will end up with the right population. The
figment of Malthusianism is real in some parts of the world, but it has not been real in the
advanced countries of the world. Dr. Friedman said the rate of population growth has been
slowing down in the United States. People are moving in big cities thats why most of the
country now has fewer people per acre than it did 100 years ago. Dr Friedman also replied that
U.S. is under populated by the standards of almost any place in the world. What is desirable is a
system in which parents, people who choose to have children, bear the costs and the full
responsibility of those children.
Dr Friedman also talked about the reason why we are giving so much attention to ecology and
population because we are rich enough to be able to afford the luxury. The water is cleaner and
safer to drink today than it was 100 years ago. Not only is the water cleaner in the U.S., but it is
cleaner all over the world. The air today is cleaner than it was in the past and the automobile has
been a source of less pollution, not more.
Dr. Friedman also said not to create more myths that somehow or other we have been destroying
an untroubled continent. Today, we have more acres of woods growing due to a very profitable
lumber industry. The greatest measure to protect wildlife has not come from government, but
from private associations that provide private hunting preserves for profit. Dr. Friedman says
there is a real problem here, but put it into perspective and dont think that the answer is always
another governmental law, which will restrict the freedom of people to use their own resources.

The Normal State of Man: Tyranny and Misery
The second video by Milton Friedman is The Normal State of Man: Tyranny and Misery
Milton Friedman was one of the most respected and admired economic minds of the 20th century
and a staunch supporter of the free market system. In the 1980s he was the economic advisor for
Ronald Reagan. He provides a logical and understandable explanation as to why a society tends
to drift towards tyranny. His explanation is so clear. In this video he discussed about the golden
ages of different societies throughout history.
At the beginning Dr Friedman talked about the people who born in free society are lucky because
take freedom for granted. He also said there is a small fraction of people who have the luxury in
free society. The normal condition of mankind is tyranny and misery.
Without maintaining the freedom there are not many options and we will return to the state of
tyranny and misery. He said that he is optimistic because we the people are ignorant.
Dr. Friedman is asked; what took us into this island of time, which we are so different or have
enjoyed the difference from the history of mankind? Then he replied there have been golden ages
in mans history. Between these ages something happens that swipes the slate clean. As time
passes, the slate gets filled back up again. He also explained that it is easy to introduce law and
restraints than it is to remove them and it is easier to pass a law than it is to repeal one. But
during this time we need to improve these changes and restraints on ourselves. The initial
objectives are always good, but that doesnt mean the outcome is. Then, finally the slate becomes
so filled up that there is no room left to write on.
Next, Dr. Friedman is asked; what do you think would provide for a wiping clear of the slate?
Dr Friedman indicates about controlling government spending. In 1928 the government spending
in the U.S., federal, state, and local has never exceeded 10%, except in the civil war and the First
World War. But today its risen over 40% of the income and in case in Britain its over 50%-
60%. He says if this continues we are through. The first necessity as a tactical matter is to set an
end to spending. As a strategic matter, the main necessity is to have a change in the intellectual
climate of opinion, which will substitute a belief in the individual responsibility for the false
belief in social responsibility. The problems that have risen to us have not come from evil
people, but from good people who are trying to do good in a fundamentally flawed way.
Welfare is the provision of a minimal level of well-being and social support for all citizens,
sometimes referred to as public aid. In most developed countries, welfare is largely provided by
the government; its a noble concept by that we can help other people who need help and
support. Dr Friedman discussed about that matter in this video he said there is a difference
between helping someone out of your pocket and helping someone out of someone elses pocket.
Dr Friedmans said we need to use that money for a good reason. Dr Friedman also pointed out
nobody spends somebody elses money as carefully as he spends his own money, and you cannot
spend somebody elses money unless you first get it. It is coercion and people have to act
according to it and by that people wasting someone elses money. It is the coercion, which is
unavoidable, that destroys the good and the idea of doing well and converts it into doing bad.











The Path to Socialism
In this video Dr Friedman explains the dynamics that naturally lead toward collectivism and
away from the far preferable state of individual liberty.
He discussed about the human tendency to take for granted the good things that happened and in
the other hand when bad things come it is said that a law should be passed and something should
be done and that is a very natural human tendency. We never had a movement against
collectivism and toward government control this things need to be explained but the remarkable
point of view, is how a century or a century and a half has passed were the dominant philosophy
is just the opposite.
Dr. Friedman also talked about the history that we cannot find a date in history were the bulk of
the human race was not living in a condition of tyranny, misery, and dictatorship. If you take any
place on the globe and look back in history, for the most part, the majority of these places
mankind has lived in tyranny and misery.
Dr. Friedman also talked about that people need to recognize that the maintenance of a free
society is a very difficult and complicated thing. To maintain it we need self-denying ordinance
of the most extreme kind. It requires a willingness to put up with temporary evils, and the basis
of the subtle and sophisticated understanding. If we try to do something about that it will make
them worse but you will spread your tentacles and get bad results elsewhere.
Dr Friedman also said about collectivism. If someone faces danger so u gets someone to help
you out. The argument for voluntary cooperation for a free market is not so simple. If people are
allowed to cooperate voluntarily and dont interfere with them, indirectly through the operation
of the market they will improve matters more than someone can who is appointed directly. He
also talked about the people in positions of power politically are selfish and greedy. The great
bulk of mankind is selfish and greedy as well and one of the interesting features about the 19th
century is that there is no century in history in which charitable activities has been more wide
spread and on such a wide scale as it has been in the 19th century. He also said because the bulk
of mankind is selfish and greedy and he also thinks government in a way puts unselfish and un
greedy men in charge of selfish men, but government is an institution were by the people who
have the greatest drive to get power over their fellow man and get into a position of controlling
them.
Dr. Friedman was asked; were we going in your opinion
He said we are the masters of our own destiny. We have the time to avoid it, but the people of
this country have to recognize the danger and take the difficult and important steps to set a limit
on the extent to which they are going to permit government to interfere with their lives. If we
continue down this road, Dr. Friedman says he doesnt believe there is any philosophy that will
enable us to avoid it. His thought is that we have less than a 50% chance that we will be able to
avoid it and we may be fighting a losing battle. To support Dr. Friedmans side there are two
main points. The first is the extraordinary ability and ingenuity of the American people in finding
ways to get around laws. The second is the inefficiency of government. If government is doing
bad things than it is only the waste that prevents the harm from being greater and the waste in
government have two very important elements. One is if government were now spending 40% of
our income efficiently, we would be slaves. The second is that the waste is so obvious, that it
arouses counter movement on the population and that people are so disillusioned with
government that it increases the chance that they will recognize were this road is taking them and
get off that train before it goes all the way.







Article Comparison
In this article Welfare Good, Bad and Ugly author talked about that
Its easier to sign up for Medicaid than to work. Taking Medicaid beats working every day from
dawn to dusk, being tired to the bone, paying bills, buying groceries, paying rent, utilities, etc.
All you have to do is just take a check and all the extra gifts of the government, and take the easy
ride.
Author also talked about being a poor background does not decrease a persons intelligence.
Lack of pride and integrity destroy the morals and respect that makes this country the place
where you could achieve the goals you set, whether it be to own a home, have a family, or of
security.
The article by Robert Rector The Effects of Welfare Reform states evidence that children and
parents are actively harmed rather than helped by welfare. A poor child without welfare will do
better than a similar poor child with welfare. Welfare children will actually be more probable to
drop out of school and without education will stay on welfare as an adult. Welfare rather than
poverty is the culprit.
Author also talked about. Providing meals at schools, both breakfast and lunch. Where are the
food stamps going? Do they go for alcohol or drugs? If as a parent, you do not teach or practice
self-control you decrease your chance to succeed and that of your child. You have to have
respect for yourself. Anyone can make a mistake. There are no perfect people contrary to popular
belief. We are all human but you have to want to do better sometimes more than life itself.
Author also talked about Importance of education because we cannot get a legal job that pays
above minimum wage without a high school diploma. The job market is very difficult. Perhaps
we should extend the school attendance law to the age of eighteen or attaining a diploma instead
of the present ruling of sixteen. Do not expel the student; make them have to attend as a parents
responsibility. If the parents do not accept their responsibility they could face legal action for
breaking the law.
The Welfare System is financially breaking this country. Should there be limits on the number of
children covered? Should there be a limited time people can exist on this program? At present we
do not have any. Where does it stop?
In the article Effects of welfare Reform it is clearly stated poverty is not the cause of these
social problems. The government took prayer out of the schools. They have restricted teachers in
what they can teach, how they can teach and what kind of grading systems they can use. Parents
should be teaching their children themselves to respect marriage, work ethics, chances for
education and self-control.
Out of Wedlock births are rewarded by compensation. The more they bred the more money they
can make. As a parent you should be involved with your child in teaching them sexual self-
control, the need for education and to plan for their futures. Lead by example is a strong force.
The government is too involved with giveaways and not encouraging recipients to work for their
own rewards. We have to be self-sufficient in order to be successful. People should understand
they are responsible for their offspring.
In this Article Have Socialists Supported Collectivism and How Have They Sought to Promote
It, writer talked about the fact Socialists emphasize that people usually prefer to achieve goals
collectively rather than independently. Collectivism contrasts with individualism, which
emphasizes the liberty of the individual. Socialist view of human nature, in which a man is seen
as a social animal, which prefers to live in a social group rather than alone. Socialists assert that
action taken by people in organized groups is likely to be more effective than the sum of many
individuals' actions. Socialists also argue that that private property fosters conflict in society
between the rich and the poor, or between the employers and the employees and thus creating an
artificial divide, therefore .Socialists argue if you didn't have the property then the divide would
not exist, and this would be a class less society, which is the fundamental aim of a Socialist.
Writer also talked about why Socialists support collectivism because it upholds the idea of
reaching a class-less society. They also believe that property breeds acquisitiveness as it
encourages people to believe that personal fulfillment can only come by obtaining property.
Socialists believe that the earth is given to humankind in general, and therefore no individual has
the right to claim any part of it and say that it belongs to him or herself. Socialists believe that by
having common ownership, there is the possibility of imposing economic equality, and it is
possible to direct commonly owned property to serve the interests.

In this article People living in large cities faces many problems today.
Writer talked about the living standards and what encourages citizens to move in big cities.
Improving in living stadards in our lives, increasing people move into cities while some
Urbancitizens choose to live in suburbs or small towns because of rising problems caused by
modernization.Therefore, some insist that the government should encourage people to live in
small towns or rural areas, which is not a sound solution.
Writer mentioned some Problems in big cities
Private space becomes more limited and easily gets infringed, for instance.people living in cities
leadhighpace and highpressure life styles and thereby they own little time for themselves. Apart f
rom that,since there are too many industries and workshops, many individuals are exposed to noi
se and airpollutions, which have baneful effects on our physical and psychological wellbeing. In
addition, job
competition gets increasingly fierce in cities, especially in depressions, thus leading to some bad
socialbehavious like crimes, extremism, etc.
On the other hand writer thinks it will
not beneficial to encourage citizens to move out of urban areas,
allthough we are faced with lots of problems related to urbanization. At first, too many people liv
ing insuburbs or small towns is not environmental friendly. People living in rural areas exhaust
more lands andenergies than living in centralized cities because it is much more difficult and exp
ensive to construct
infrastructures for relatively scattered populations. Furthermore, people live in rural areas will la
ckadequate social experiences because there are less salons, cafes, bars and restaurants available
forencountering new people there. Which could give rise to alienation between people and childr
en raisedup in rural areas are more likely to have mental and psychological problems.
Author thinks living urban or rural areas have advantages as well as
disadvantages in themselves. It will better to have a perfect city plannings
rather than encouraging individuals to leave cities is a much better way to tackle those existed
problems.

Conclusion
After watching all three videos of Dr. Friedman, I learned about issues and see how interesting
his views are on some of the topics discussed.
Dr. Friedman thoughts about why we have fewer people per acre of land today is due to the fact
that people have moved to larger cities. If we see the larger cities in the U.S., such as New York
City and Miami, Florida. Some people move to places like New York City for job opportunities
or because they want to experience the different cultures. Other people may move to a place like
Miami because they want to enjoy the beach and warm weather. So as we look at what Dr.
Friedman is saying, and we can see as people are moving away from the smaller cities, it reduces
the population of those cities and also the amount of individuals that can reproduce in those
areas. Once these individuals become established in their new environment and set roots in a
bigger city, they may have a family. As the children of these families grow older they too may
have children and so on for these cities have higher population.
In all three videos, Dr. Friedman hits on a main topic about the lucky people who are born into a
free society. In todays societies there is only a small fraction that can afford luxury to be free. It
is hard to find societies were mankind was not living in tyranny and misery. Dr. Friedman said it
is a very difficult and complicated thing to maintain a free society. He says we are very fortunate
to escape into an island of freedom and prosperity. There is no period in human history in which
the ordinary man has had as great an improvement in his life as he did in the 19th century in the
United States. Also, there is no century in history in which charitable activities have been more
wide spread and on such a wide scale as it has been in the 19th century. Friedman says that the
great threat to freedom is the concentration of power, which he regards as inherently more
concentrated in state rather than private hands.
Dr. Friedman also said we should allow people to cooperate voluntarily and not to interfere with
them, through the operation of the market they will improve matters more than someone who is
directly appointed. Dr. Friedman is committed to libertarianism and market fundamentalism. He
believes that markets are free, competitive, and self-governing with little need of states. States
are just bloated, unfair, wasteful, and arbitrary. An example of how Dr. Friedman feels is his
famous blaming of the Federal Reserve System for causing the Great Depression. He says that
the Great Depression was produced by government mismanagement rather than by any inherent
instability of the private economy. The Federal Reserve System was assigned responsibility for
monetary policy and from 1930 1931, it exercised this responsibility so ineptly as to convert
what otherwise would have been a moderate contraction into a major catastrophe (MacDonald &
Paul, 2011). Dr. Friedman says the Feds purpose is to save the financial sector and when
necessary to substitute its judgment for market signals. He doesnt object to state intervention
during crises, he actually demands it. Friedman blames the Fed for not intervening enough
during the Depression and when they did intervene, he says they intervened wrongly
(MacDonald & Paul, 2011). Dr. Friedman says that there is no major institution in the United
States that has so poor a record of performance over so long a period, yet so high a public
reputation as the Federal Reserve
Another issue that Dr. Friedman talked about of in the videos is government excessive spending.
He says that today the government spends roughly 40% of our income. The first necessity as a
tactical matter is to set an end to spending. Dr. Friedman proposes to abolish the money creating
powers of the Federal Reserve, freeze the quantity of high powered money, and deregulate the
financial system.
One of the areas of spending that he touches on is the welfare system. Dr. Friedman said welfare
is a noble concept, but there are flaws with it.
One flaw is, there is a different between helping someone of their own pocket, but it is another
thing helping someone out of someone elses pocket. The basic flaw is the idea that you should
do well with someone elses money. As far as Friedman is concerned most of the present welfare
programs should never have been enacted. He says if these programs were never put into place,
many people that are now dependent on them would have become self-reliant individuals instead
of wards of the state. The issue is these programs do exist and they cannot simply be abolished
overnight. What we need is a way to ease the transition from where we are to where we would
like to be, of providing assistance to people now dependent on welfare, while at the same time
encouraging an orderly transfer of people from welfare rolls to .The basic problem of the United
States today is that government interference is treating to strangle the true source of our
achievements. Over the past 200 years, America has produced the greatest freedom and
prosperity for the widest range of people that the world has ever seen. For the U.S. to get back on
track, the public at large needs a full understanding of the real nature of economic and political
freedom. Every society fundamentally must use voluntary exchange, but when it is accompanied
by an excess of attempted command, the combination of the two is tyranny and misery. The
command produces the tyranny and the voluntary exchange fighting against these commands
helps prevent the misery from being absolute.
Dr. Friedman will not argue that government doesnt have a role. He is just persuaded that the
problem of our society is too much government. He says that government is failing to perform
the functions which it alone can perform because we are trying to have it perform functions
which it cannot perform.











References

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FRIED.M (n.d) Population and Ecology. Retrieved From www.yahoo.com .On 07/25/2013
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