Anyone read Capitalism and Freedom?

I've started reading this book for an economics class. I'm having a hard time believing that everything would be better if we just privatized it, sold it off, and let the market do the rest(school voucher programs, doctors licensing, etc..). I told my professor this and i get the truly amazing response of, "well, what he(Friedman) says is pretty much mathematical fact."

:banghead:

So I'm frustrated. Thoughts?

In one of his books, Friedman hails Irving Fisher as the greatest economist that America ever produced.
As it happens, Irving Fisher was the fellow who wrote, just days before the great stock crash of 1929, that "Stocks have reached what looks like a permanently high plateau."

I think this tells us a lot about Friedman (and about economists...)

In a totally free market and that Capitalism was the best system in the world. Then I grew up.

Now I'm a believer in a cross between regulated capitalism and state services socialism.

I worked as a pit trader for 10 years and the market is so corrupt as to be unbelievable if you're not part of it.

Capitalism has one fatal flaw -- the greed of humans. Now I happen to think human greed was evolutionarily important in the survival and success of the species... but... in the world of corporations with room only for profit and not human needs, emotions or empathy. It is the nature of a corporation. I am not making a value judgement.

Socialism on the state level would include medicine, drinking water, infrastructure, schools, etc. People aren't willing to work if they won't see a benefit. I agree with capitalists on that one. But a way to be sure those at the bottom think they can attain the top through their own hard work, is to even the playing field. To me, that means making sure the whole of the society benefits from the wealth of that society. The people who benefit will then contribute.

Pure Capitalism eventually results in the concentration of wealth into a smaller and smaller oligarchy. And in the end, that destroys societies and economies.

Tell your prof to stick that in his pipe and smoke it

---- Friedman's downfall is the size of the model. When the "acceptable" bottom 20% of subsistence/poverty amounts to 60 million individuals, then that society is in danger of some stress fractures.

John Nash was a famous mathematician. Here is his example of market inefficiency:

Take the case of two gas stations being built in a small town made up of a single, one-mile long Main Street.

Town planners agree the gas stations should be placed at one-quarter and three-quarter mile marks, so that no one in town has to drive more than a quarter mile to fill up. And since residents are distributed evenly along Main Street, both stations would share exactly half the business in town. But try explaining that to the station owners. The owner who should build at the one-quarter mile mark knows people at his end of town will never go to the competing station because it's too far away. So he'd want to build closer to the center of town to dip into his competitor's mid-town market. Of course, the other owner is equally wily, and he, too, edges his station closer to the center of town. Game theory tells us — and an astute business sense dictates — that the two gas stations will both end up on the same corner in the exact center of Main Street. The equilibrium solution of the gas station game is clearly not the most efficient. While the stations still share half the town's business, people on the edge of town have to drive farther to get gas under equilibrium than under the town planners' solution.

But neither owner would have it any other way, because being located in the center of town is the most secure solution for each. This equilibrium is an example of free market inefficiency — and a critique of Adam Smith's invisible hand.

More...

I'm sure your professor will say that's not a real world example; but then, mathematics doesn't deal with the real world, it deals with models.

I've read that there is a mathematical proof that contradicts the free market assumption that if all individuals act in their own interest, then the result is optimal for society; but, I haven't been able to find such a proof.

making profit.

That doesn't always match up with what is good for human individuals or societies. In fact not all that often at all. Capitalism has it's place, the free practice of entrepreneurship certain is a component of a healthy society but it's only one part and perhaps not even the most important part.

Of course that's just my layman's HO.

That's Hayek, one of Friedman's mentors.

regardless of what one thinks of Friedman and his economic theories, the book is an interesting read.

It gets kids to think about the trade-offs between economic and political equality.

The rest of the book I can take or leave. At least Friedman was in favor of legalizing drugs. I wish he'd written more about his reasons for that.