50 Years of Blaming Milton

Friedman. Here’s Another Idea.

Half a century after he blessed corporate greed, liberals are still trying to
rebut his arguments. They’re fighting the wrong battle

By Binyamin Appelbaum

Milton Friedman was a big hit with the executive class.Credit...George Rose/Getty
Images

Liberals love to blame Milton Friedman for the misbehavior of

American corporations.

Friedman, a free-market ideologue, published an essay 50 years

ago this week in The Times Magazine in which he argued that
corporations should not go beyond the letter of the law to combat
discrimination or reduce pollution or maintain community
institutions. Corporations, he said, have no social responsibilities
except the sacred responsibility to make money.

The essay was a big hit with the executive class. Rich people were
only too delighted to see selfishness portrayed as a principled
stand. Friedman’s creed became the standard justification for
corporate callousness. The Business Roundtable, a leading lobby
for large companies, declared in 1997 that maximizing profit was
the purpose of a corporation.

Critics have been fighting ever since to get corporations to

acknowledge broader responsibilities.

It’s the wrong battle. Instead of redefining the role of the

corporation, we need to redefine the role of the state.

Friedman’s essay was part of his broader campaign to revive faith

in the power of markets. He and his intellectual allies argued that
if corporations focused on making money, and government got
out of the way, the economy would grow and everyone would
benefit.

For decades, policymakers have embraced his advice. They have

slashed taxes; sought to undermine unions; and reduced some
kinds of regulation, notably in financial markets. Regulators made
it easier for companies to shovel money to shareholders by
repurchasing their own shares, and companies increasingly
compensated their executives with shares of company stock,
aligning their financial interests with those of the company’s
other shareholders.

It’s been an experiment on a grand scale, and the results are

depressingly clear. Growth has slowed, and much of the available
gains have been pocketed by a small minority of very wealthy
Americans. The shareholding class keeps getting richer; the rest of
the nation is falling behind.
There is an air of desperation about the incessant efforts to
address these problems by jawboning corporations to be better
citizens: the pleading with Facebook to take responsibility for the
filth it publishes; the campaigns to convince banks to steal less
money from customers; the public shaming of restaurants that
refuse to give paid leave to sick employees.

There may be some value in challenging executives who are

careful to tip their waiters handsomely, who reliably put water
bottles into recycling bins, who think of themselves as committed
to social justice, to bring those values to the office.
But promises are cheap, and corporations are particularly likely to
abandon benevolence during downturns — just when it’s needed
most. Last August, with great fanfare, the Business
Roundtablerevised its statement about the purpose of
corporations, acknowledging obligations to employees,
suppliers and the broader community. But Tyler Wry, a professor
at the University of Pennsylvania, found that companies that had
signed the Business Roundtable statement were more likely than
other big companies to announce layoffs in the early months of
the coronavirus pandemic — even as they paid out more money to
shareholders.

Government remains the most powerful means to express our

collective will. The necessary solution is to create stronger
incentives for good behavior and laws against bad behavior.

Instead of urging power companies to burn less fossil fuel, tax

carbon emissions.

Instead of pleading with McDonald’s to raise wages, raise the

federal minimum wage.

Instead of shaming Amazon for squeezing small business, enforce

antitrust laws.

Government also needs to do more to support economic growth.

Friedman’s negative vision of government has helped to obscure
the ways the public sector can help the private sector, for
example by investing in education, infrastructure and research.

The outsize political influence of corporations — and of those

made wealthy by corporations — is certainly one reason for the
widening gap between what the law requires and what many
Americans would like the law to require. But there is no sense in
waiting for corporations to disarm voluntarily. The rules must
be changed, and the process begins at the ballot box.

Corporations have a valuable role to play in American society, and

they contribute primarily by trying to make money. Friedman’s
narrow point is mostly correct. The missing part is the role of
government in ensuring that those profits do not come at the
expense of society.

The economist Robert Solow once observed that when he listened

to his liberal colleague John Kenneth Galbraith complaining
about the flaws of markets, he found himself reminded of the
virtues. When he listened to Friedman, by contrast, he was
reminded of the flaws.

After 50 years of listening to Friedman, it’s time to do something

about the flaws.

https://www.nytimes.com/2020/09/18/opinion/milton-
friedman-essay.html

1. Read the text and underline the sentence that best sum up the main idea.

2. Note down from the text phrases and word combinations in bold letters
corresponding to the thematic vocabulary of the topic. Translate them into
Ukrainian.
3. Make up the sentences of your own using some word combinations and
phrases from text.
4. Present the information on the theme using the thematic vocabulary and your
summaries as support.
5. Please, complete the following statements:

Corporations have a valuable role to play in American society, and

they contribute…
The necessary solution is to create stronger incentives for good…
Friedman, a free-market ideologue, published an essay 50 years
ago this week in The Times Magazine in which he argued that
corporations should not go beyond the letter of the law to combat
discrimination or…
Critics have been fighting ever since to get corporations to
acknowledge…