What We Learned from Milton Friedman

I am a big fan of Milton Friedman.  I’m also becoming a big fan of Creating Shared Value.  Some believe the two values are inconsistent, but I disagree.

milton-friedman-300x202In 2005, Reason Magazine posted an online debate between Friedman and Whole Foods Market CEO John Mackey.  The debate coincided with the 35th anniversary of Friedmans’ famous The New York Times Magazine article entitled: : "The Social Responsibility of Business Is to Increase Its Profits." 

Now, 2005 was before Mr. Mackey became the darling of the tea party because of his defense of privatized medicine in 2009.  At the time, I’m sure, free marketers took sides with Friedman. 

But in that debate, Mackey makes a compelling case for businesses understanding the long-term effects of their operations and decisions—and for learning how to articulate the benefits of capitalism to society:

Both capitalism and corporations are misunderstood, mistrusted, and disliked around the world because of statements like Friedman's on social responsibility. His comment is used by the enemies of capitalism to argue that capitalism is greedy, selfish, and uncaring. It is right up there with William Vanderbilt's "the public be damned" and former G.M. Chairman Charlie Wilson's declaration that "what's good for the country is good for General Motors, and vice versa." If we are truly interested in spreading capitalism throughout the world (I certainly am), we need to do a better job marketing it. I believe if economists and business people consistently communicated and acted on my message that "the enlightened corporation should try to create value for all of its constituencies," we would see most of the resistance to capitalism disappear.

Today, I have to admit, I agree with Mackey.  Milton Friedman’s 1970 article that the only social responsibility of the corporation is to maximize profits was not wrong.  It was poorly expressed. As Mackey points out, Friedman’s words have been (ab)used by leftists ever since—usually by leftists who’ve never read the article. 

Earlier in the debate, Mackey pointed out that Adam Smith’s less famous work focused, not on maximizing profits, but on maximizing value:

[E]conomists would be well served to read Smith's other great book, The Theory of Moral Sentiments. There he explains that human nature isn't just about self-interest. It also includes sympathy, empathy, friendship, love, and the desire for social approval. As motives for human behavior, these are at least as important as self-interest. [hyperlink added]

We’ve learned many great ideas from Friedman, including the ridiculous cost of government hidden in a 32 cent pencil.  Free to Choose was the most important book on economics I read in high school.  I’m sure it was for many others, too. 

We also learned the importance of messaging from Dr. Friedman  by way of John Mackey.  We owe both men a debt of gratitude.  And we owe the great free market system our vigilance in promoting the political system that advanced humanity more than any.  By creating shared value, corporations keep the engine of liberty alive. 

On Friday, I’ll write more on the idea of Creating Shared Value. 

Are there any courageous business executives alive today?

The most disappointing thing about leaving the military is that it usually means leaving the last bastion of leadership in America.  If you open your own business or freelance, you probably don’t notice the cowardly bastards populating corner offices in most American enterprises.  You’d puke, as Holden Caulfield might say.

John Mackey of Whole Foods had the courage to oppose socialized medicine AND to defend his position and his right to say it. Gina Loudon led a Nationwide Tea Party Coalition BUYcott in support of Mackey.  It was a wild success. How many corporate CEOs, COOs, CMOs, CIOs, or CFOs stood behind Mackey?

None. Because 99 percent of business executives are myopic cowards. They would rather strap on knee pads and crawl to the White House to beg Prince Barack for scraps from Andy Stern’s bounteous plate than to stand on their own two feet and say, “You, Mr. President, are destroying the American job engine.”

Maybe I’m wrong.  Maybe all you enterprise executives save puppies from burning buildings in your spare time.  Maybe you jump on private jets to Afghanistan and kill jihadis when you leave the office, sleeping on the flight home. Maybe you’re not self-serving cowards.

Prove it.

Comment on this post.  Tell St. Louis and America who you are, the company you help run, and what you’re doing to stop the socialization of America? 

Please don’t bother if you’re going to tell me you give $2,000 to Republican candidates every year.  The Republicans allowed this disaster to come about.  The GOP made Barack Obama—the Democrats are too screwed up to to that.

Why aren’t you in the streets?  Why aren’t you funding conservative activist groups the way George Soros, Eric Schmidt, and Mark Cuban fund the commies?  Why don’t you take a stand even at the expense of a few customers?  Mackey did it, and we stood behind him.  Where the hell are you?  Why aren’t you belittling and ridiculing the White House’s anti-liberty schemes instead of licking Obama’s boots at a White House photo op?

Tell us here, you brave, tough leaders.  Tell us.  Tell us, because we’re looking for someone to rally behind.  We want another Mackey to buy from.  We are ready to shop YOUR STORES.  We’re just looking for a few good leaders! 

Yes, there are a few brave men and women among you. Damn few, though. Damn few. You want to know why ACORN and SEIU and all the other leftists keep shaking you down?  Because you’re cowards, and you pay. No one in his right mind would buy stock in ANY company in America that’s run by a weasel who praises free markets, then bows to our socialist prince.  Your profits are solely in the short term.  You and your company are doomed to destruction because you are failing in your fiduciary duties.

Prove me wrong.  Show us what you’re made of, if it’s anything but tapioca pudding.  Comment.  Go public.  We don’t shop in shady back rooms.  Man up and act like Americans.

Comments section is open.  Use it, ya weasels.