Ryan Jada

On Milton Friedman

Milton Friedman popularized the idea of Stockholder theory which holds that businesses are only obligated to make money for its stockholders and its duty is to maximize profits. Because stockholders are directly connected to the company through their investments, they have the most at stake should a loss occur. Friedman believed that a person must do whatever is necessary to benefit their long term self-interests as long as they follow the law. He applied this thought to companies and wrote about it in his book Capitalism and Freedom. Friedman felt that companies should hold no social responsibility to communities because that risked the initial relationship between stockholder and business. He felt that business involvement in communities would lead to totalitarianism. Many believe Friedmans theory to be the most beneficial business philosophy. It does not require businesses to consider or spend time on ethical issues like safety or the environment or customers in general. The Friedman doctrine instead banks on companies following laws in

order to guarantee profit which is in the interest of the stockholder. Believing that a company that makes a harmful product risks profit and the interests of the shareholder. Friedman made two points to support his theory. His first point was that any morality could be considered controversial and that alone wasnt enough to warrant criticism of the lack of concern expressed by businesses towards society. He felt that businessmen were not moralists and were not capable of making ethical decisions. His second belief was that by maximizing long term self-interest, the greater good would eventually be achieved.

Friedman was a staunch supporter of the free market. He felt strongly enough to say that the free market was directly connected to the human aspect of individual freedom and that those who criticized it were actually against freedom. He felt it was the only method or system of government that could influence people to work together voluntarily. He felt that self-interest could push people towards this. Friedman saw greed as a part of human nature and inherent in the structure of all societies, he felt that a successful society was one that figured out a system that used greed to its advantage. To him, free market capitalism with heavily limited government interference was that system. He once said The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered

to enable people who hate one another to deal with one another and help one another. Believing that economic freedom was a prerequisite to political freedom, Friedman was an economic advisor to Ronald Reagan during his presidency. He was a believer in cutting taxes because they posed a threat by the government to individual liberty; a major proponent of the free market. Similarly, He supported deregulation of businesses, and saw fair employment and equal opportunity hiring laws as inhibiting business freedom and preventing businesses from hiring someone based on the qualifications that the employer is looking for.

Strongly against government intervention and government sponsored programs, Friedman once said If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand. He felt that programs like social security and minimum wage laws rarely actually helped the people they were designed to help . He saw these programs as simply reducing competition and increasing poverty by making it hard for business to hire people. On minimum wage he said that, it prevented businesses from hiring workers without skills because managers would be forced to pay them at high wages than their actual worth, calling it charity.