I have a growing admiration for Milton Friedman, the famous economist, but it is only up to a point to which I can dance to his music. I would like to start by admitting that I believe in wealth, the creation of wealth, private property and healthy competition and I also like Mr Friedman for his staunch beliefs and his appetite and capacity to slam piercing arguments but I can't quite agree on unregulated capitalism. I wonder what he would have to say about the recent fiasco about the young hedge fund manager, Martin Shkreli, who drove prices of life sustaining drugs of the terminally ill to unbelievable heights. So I dug into some of Mr Friedman's archived videos and found a similar case study- I think it was a young Micheal Moore, who I was surprised to learn had already started to unearth issues to feel sad about from a very early age, asked Mr Friedman's opinion about the 1970 Ford Pinto's famous gas tank situation.
To explain quickly, Ford's Pinto has it gas tank aligned in such a was that in the case of a rear end collision the car could blow up resulting in a fatality. What made Micheal Moore unhappy was the fact that Ford didn't recall the cars back to fix them with an inexpensive plastic bracket because Ford thought that the cost of a recall would be much greater than the estimated amount of lives lost. This was of course Micheal Moore interpretation of the incident and there are two sides to this story too. Milton Friedman then argues saying that it was okay for Ford to have done what it did because in a free market the consumer has the option of choosing a vehicle without possible hazards further strengthening the fact that his ideology is still the best. Now he is right in the confines of principled economics but real life is much more than mere economics. If Ford is right then Martin Shkreli is right too, more or less. This is the grey area between the principles of theoretical thinking and reality. I personally think that this is when effective government intervention is necessary because it is the duty of the state to protect its vulnerable. Economics takes it for granted that the entire consumer population is extremely efficient which is often not the case and besides even an enlightened population can't find out faults that they are unaware of.
How can someone know out of thin air that the product that they are going to spend on is possibly going to take their lives, its not possible. Such serious matters concerning social welfare should be declared by corporations. So my argument is for regulated capitalism. Where wealth is created only out of the truest and purest of intentions.