Free to Choose Part 7: Who Protects the Consumer Featuring Milton Friedman

Summary

In this episode of 'Free to Choose,' Milton Friedman explores the effectiveness of government agencies designed to protect consumers. Through a detailed narrative, Friedman critiques the consumer protection movement by presenting historical examples, such as the regulation of the railroad industry and the pharmaceutical sector, to argue that these measures often hinder innovation and elevate costs. The film suggests that consumer interests might be better served by the market itself rather than heavy-handed regulatory oversight. In discussing various examples, such as the Consumer Product Safety Commission and FDA regulations, Friedman advocates for consumer choice and market-driven solutions over government intervention.

Highlights

• Regulations often result in unintended negative consequences, reducing consumer choices and increasing costs. 😵
• Historical examples, such as railroad and pharmaceutical regulations, demonstrate how consumer interests are better served by market dynamics than by government agencies. 😬
• Bureaucratic red tape and regulatory processes can delay or prevent the introduction of innovative products in the market. 🚫
• Consumer freedom to choose is a better safeguard of interests than mandated protections by the state. 🏖️
• Milton Friedman argues for a reduction in consumer protection agencies, advocating instead for informed consumer freedom. 📉

Key Takeaways

• Government regulations often fail their intended purpose and instead burden consumers with higher costs. 🎭
• The market naturally provides the best products as businesses compete for satisfied customers. 🔄
• Government interventions can stifle innovation and result in fewer choices for consumers. 🛑
• Historical regulatory efforts, like those in the railway industry, ended up protecting businesses more than consumers. 🚂
• The unintended consequences of regulatory agencies often include reduced safety and increased expenses. 💸

Overview

In this segment of 'Free to Choose,' Milton Friedman challenges the notion that government intervention is necessary to protect consumers. Using a plethora of historical anecdotes and modern examples, Friedman demonstrates that the state often fails in its aims to safeguard the public while concurrently stifling innovation and raising the costs of goods and services.

Friedman asserts that the free market inherently incentivizes businesses to provide superior products as they seek to attract consumers. This natural competition benefits consumers through better choices and competitive pricing, a sharp contrast to government-led initiatives that often protect manufacturers rather than consumers.

Throughout the episode, Friedman illustrates the detrimental effects of regulatory commissions, citing how the Interstate Commerce Commission and FDA create barriers to entry, limit the availability of new drugs, and generally serve the industries they were meant to regulate rather than the consumer.

Chapters

• 00:00 - 00:30: Introduction and Overview The chapter titled 'Introduction and Overview' begins with Robert McKenzie welcoming the audience to the University of Chicago. The context is set for a discussion involving a group of distinguished guests who have gathered to watch and discuss a film by Milton Friedman. This film is part of Friedman's 'Free to Choose' series, focusing on the consumer movement and the establishment of government agencies aimed at protecting consumer interests over recent decades. The introduction poses critical questions about the effectiveness of these consumer protection initiatives and explores whether there might be better ways to safeguard consumer interests.
• 00:30 - 29:00: Milton Friedman's Arguments Against Government Intervention In this chapter, Milton Friedman presents arguments against government intervention in economic affairs. He questions the effectiveness and efficiency of government intervention and suggests that free-market solutions are often superior. Friedman's arguments are framed within the context of broader economic and social policies, exploring both theoretical and practical implications.
• 29:00 - 57:09: Discussion and Debate with Panelists The chapter begins with a background on the Corvair, a car from the 1960s that was famously condemned by Ralph Nader for being unsafe at any speed. This sets the stage for a discussion on the necessity of government regulation and protection in the market. Panelists engage in a debate over the evolving role of government agencies to ensure safety and fairness in today's market dynamics. With historical references and current scenarios, the chapter delves into arguments for and against government intervention, providing a comprehensive overview of differing viewpoints on the effects of regulation on innovation and consumer protection.
• 57:09 - 60:00: Final Thoughts and Next Week's Preview This chapter delves into the influence of bureaucratic decisions in Washington on consumer options and expenses. It highlights how agencies regulate prices, quality, and product choices, already costing taxpayers over five billion dollars annually since a significant unspecified attack.

Free to Choose Part 7: Who Protects the Consumer Featuring Milton Friedman Transcription

• 00:00 - 00:30 hello I'm Robert McKenzie welcome again to the University of Chicago where a distinguished group of guests have met together to watch a film and to discuss it a film by Milton Friedman in his series free to choose in it he examines the consumer movement the whole development of high-powered government agencies in recent years recent decades in this country which have set out to protect the interests of the consumer now does this consumerism really work or are there better ways of protecting the interest in the consumer that's the
• 00:30 - 01:00 question Milton Friedman asks in this film [Music]
• 01:00 - 01:30 [Music] the 1960s Corvair condemned by Ralph Nader is unsafe at any speed since inators attack it's being increasingly accepted that we need government protection in the market produce today there are agencies all
• 01:30 - 02:00 over Washington where bureaucrats decide what's good for us agencies to control the prices we pay the quality of goods we can buy the choice of products available it's already costing us more than five billion dollars a year since the attack
• 02:00 - 02:30 on the Corvair government has been spending more and more money in the name of protecting the consumer this is hardly what the third President of the United States Thomas Jefferson whose monument this is had in mind when he defined a wise and frugal government as one which restrains men from injuring each other and leaves him otherwise free
• 02:30 - 03:00 to regulate their own pursuits of Industry and improvement ever since the Corvair affair the US government has increasingly been muscling in between buyer and seller in the marketplaces of America by Thomas Jefferson standards what we have today is not a wise and frugal government but a spendthrift and snooping government the federal regulations that govern our lives are available in many places one
• 03:00 - 03:30 set is here in the Library of Congress in Washington DC in 1936 the federal government established the Federal Register to record all of the regulations hearings and other matters connected with the agencies in Washington this is volume one number one in 1936 it took three volumes like this to record all these matters in 1937 it took four and then it grew and grew and
• 03:30 - 04:00 grew at first rather slowly and gradually but even so year by year it took a bigger and bigger pile to hold all the regulations and hearings for that year then around 1970 came a veritable explosion so that one pile is no longer enough to hold the regulations for that year it takes two and then three piles until on one day in 1977 September 28th
• 04:00 - 04:30 the Federal Register had no fewer than 1,754 pages and these aren't exactly what you would call small pages either many of those regulations come from this building consumer product safety outlines a piece of what you go please thank you the Consumer Product Safety Commission is one of the newest agencies set up in our behalf coil one of its jobs is to give advice
• 04:30 - 05:00 to consumers the cue to keep in ways that children's garment but its main function is to produce rules and regulations hundreds and hundreds of them designed to assure the safety of products on the market it's hard to escape the visible hand of the Consumer Product Safety Commission except for food and drugs ammunition and
• 05:00 - 05:30 automobiles which are covered by other agencies it has power to regulate just about anything you can imagine already it costs 41 million dollars a year to test and regulate all these products on our behalf and that's just the beginning the Commission employs highly trained technicians to carry out tests like this checking the brakes on a bike but the
• 05:30 - 06:00 fact is that 80% of bike accidents are caused by human error these tests may one day lead to safer brakes but even that isn't sure the one thing that is sure is that the regulations that come out of here will make bikes more expensive and will reduce the variety available yes they really are testing how matches strike and the tests are
• 06:00 - 06:30 very precise the pressure must be exactly one pound the match exactly at right angles no matter how many tests are done children's swings are never gonna be totally safe you cannot outlaw accidents if you try you end up with
• 06:30 - 07:00 ludicrous results it hardly seems possible but they really do use highly skilled people to devise regulations that will prevent toy guns from making too big a bang the Commission in effect
• 07:00 - 07:30 is deciding what they think is good for us they are taking away our freedom to choose [Music] consumers don't have to be hemmed in by rules and regulations they're protected by the market itself they want the best possible products at the lowest price and the self-interest of the producer leads him to provide those products in
• 07:30 - 08:00 order to keep customers satisfied after all if they bring goods of low quality here you're not gonna keep coming back to buy and if they bring goods that don't serve your needs you're not going to buy them and therefore they search out all over the world the products then might meet your needs it might appeal to you and they stand in back of them because if they don't they're going to go out of business you see the difference between the market and the political action the
• 08:00 - 08:30 governmental agency here nobody forces you you're free you do what you want to there's no policeman to take money out of your pocket or to make sure that you do what you're told to over a quarter of century ago I bought secondhand a desk calculator for which I paid $300 one of these little calculators today which I can buy for $10 or so will do everything that did and more beside what produced this tremendous improvement in
• 08:30 - 09:00 technology it was self interest or if you prefer greed the greed of producers who wanted to produce something that they could make a dollar on the greed of consumers who wanted to buy things as cheaply as they could did government play a role in this very little only by keeping the road clear for human greed and self-interest to promote the welfare of the consumer when governments do intervene in business innovation is titled
• 09:00 - 09:30 railroads have been regulated for nearly a century and they are one of our most backward industries the railroad story shows what so often results from the good intentions of consumer protection groups in the 1860s railroad rates were lower in the United States and anywhere else in the world and many customers thought that they were too high they complained bitterly about the profits of the railroads now the railway men of the time had their problems - problems it
• 09:30 - 10:00 arose out of the fierce competitiveness among them many railroads all trying to get their share of the market all trying to make a name for themselves if you want to see what their problems were as they saw them come and have a look at this from inside this private railroad car it may not look as if the people who ran the railroads had any real problems some like the owner of this private car had done very well this
• 10:00 - 10:30 was the equivalent of the private jets of today's business tycoons but for each one who succeeded many didn't survive the cutthroat competition what we have here is a railroad map of the United States for the year 1882 it shows every railroad than in existence the country was literally crisscross with railroads going to every remote hamlet and covering the nation from coast to coast between points far distance like for
• 10:30 - 11:00 example New York and Chicago there might be a half a dozen lines that would be running between those two points each of the half dozen trying to get business would cut rates and rates would get very low the people who benefited most from this competition where the customer shipping goods on a long trip on the other hand between some segments of that trip say for example Harrisburg and Pittsburgh there might be only a
• 11:00 - 11:30 single line that was running and that line would take full advantage of its monopoly position it would charge all that the traffic would bear the result was that the sum of the fares charged for the short hauls was typically larger than the total sum charged for the long haul between the two distant points of course none of the consumers complained about the low price for the long haul but the consumer certainly did complain about the higher prices for the short
• 11:30 - 12:00 hauls and that was one of the major sources of agitation leading ultimately to the establishment of the Interstate Commerce Commission the cartoonists of the day delighted in pointing out that railroads had tremendous political influence as indeed they did they use the consumers complaints to get the government to establish a commission that would protect the railroads interests [Music] it took about a decade to get the Commission into full operation by that
• 12:00 - 12:30 time needless to say the consumer advocates had moved on to their next crusade but the railway men were still there they had soon learned how to use a commission to their own advantage they solved the long haul short haul problem by raising the long haul rates the customers ended up paying more some protection the first Commissioner was Thomas Cooley
• 12:30 - 13:00 a lawyer who had represented the railroads for many years the railroads continued to dominate the Commission in the 1920s and 30s when trucks emerged as serious competitors for long distance hauling the railroads induced the Commission to extend control over trucking truckers in their turn learn how to use a commission to protect themselves from competition
• 13:00 - 13:30 this firm carries Freight to and from the Dayton Ohio International Airport it's the only one serving some routes and its customers depend on it but Dayton air freight has real problems it's ICC license only permits it to carry Freight from Dayton to Detroit to serve other routes it's had to buy rights from other ICC license holders including one who doesn't own a single truck it's paid as much as $100,000 a
• 13:30 - 14:00 year for the privilege our company is in the process of trying to get rights to go there now yes we'll do that and thank you for calling sir the owners of the firm have been trying for years to get their license extended to cover more routes now I have no argument with the people who already have ICC permits accepting for the fact that this is a big country and since this is the inception of the ICC in 1936 there has been very few entrance into the business
• 14:00 - 14:30 they they do not allow new entrants to come in and compete with those who are already in of course Dayton airfreight suffers but so do the customers who pay higher freight charges quite frankly I don't know why the ICC is sitting on its hands doing nothing this is the third time to my knowledge that we've supported the application of Dayton air freight to help us save money help free enterprise help the country save energy help help help it's all comes down to
• 14:30 - 15:00 consumers ultimately going to pay for all of this and they are the bane the ICC it has to be the blame Dayton air freight now has many of its trucks lying nine trucks that could be providing a valuable service far from protecting consumers the ICC has ended up making them worse off as far as I'm concerned there is no free enterprise and interstate commerce it no longer exists in this country you have
• 15:00 - 15:30 to pay the price and you have to pay the price very dearly that not only means that we have to pay the price that means that the consumer is paying that price the price consumers pay when it comes to medicine could be their lives in the 19th century pharmacies contained an impressive array of pills and potions most were ineffective and some were deadly
• 15:30 - 16:00 there was an outcry about drugs that maimed or killed the Food and Drug Administration in response to consumer pressure succeeded in banning a whole range of medicines [Music] the tonics and lotions with their excessive claims disappeared from the market in 1962 the Kefauver amendments gave the FDA power to regulate all drugs
• 16:00 - 16:30 for effectiveness as well as for safety today every drug marketed in the United States must pass the FDA it's clear that this has protected us from some drugs with horrific side effects like filete Emine and we all know of people who have benefited from modern drugs what we don't hear much about however are the beneficial drugs that the FDA has prohibited well if you examine the
• 16:30 - 17:00 therapeutic significance of drugs that haven't arrived in the US but are available somewhere in the rest of the world such as in Britain you can come across numerous examples where the patient has suffered for example there are one or two drugs called beta blockers which it now appears can prevent death after heart attack we call this secondary prevention of coronary
• 17:00 - 17:30 death after myocardial infarction which if available here could be saving about 10,000 lives a year in the United States in the 10 years after the 1962 amendments no drug was approved for hypertension that's for the control of blood pressure in the United States whereas several were approved in Britain in the entire cardiovascular area only one drug was approved in the five-year
• 17:30 - 18:00 period from 67 to 72 and this can be correlated with known organizational problems at FDA these carts are taking to an FDA official the documents required to get just one drug approved well hi there must be the new one they called me about it took six years worked by the drug company to get this drug pack the implications for the patients
• 18:00 - 18:30 are that therapeutic decisions that used to be the preserve of the doctor and the patient are increasingly becoming made at a national level by Committees of experts and these committees and the agency for whom they are acting the FDA are highly skewed towards avoiding risks so there's a tendency for us to have
• 18:30 - 19:00 drugs that are safer but not to have drugs that are effective now I've heard some remarkable statements from some of these advisory committees when considering drugs one has seen the statement there are not enough patients with a disease of this severity to warrant marketing this drug for general use now that's fine if what you're trying to do is to minimize drug toxicity for the whole population but if you happen to be one of these not enough
• 19:00 - 19:30 patients and you have a disease that is of high severity or disease that's very rare then that's just tough luck on you for ten years mrs. Esther Osteen suffered from severe asthma the medication she received had serious side effects her condition was getting worse but the drug her doctor preferred was prohibited by the FDA
• 19:30 - 20:00 so twice a year mrs. Oz Dan had to set out on a journey I had been very sick I had been in and out of the hospital several times and they couldn't seem to find a way to control the asthma and I had to change my lifestyle once I was out even for a short time mainly because the cortisone
• 20:00 - 20:30 derivatives were softening the bones and causing a puffiness of the face and other changes in my body the doctors were pretty anxious to get me off the cortisone derivative the drug her doctor wanted her to have had been available for use for five years in Canada
• 20:30 - 21:00 once across the border at Niagara Falls mrs. s Dame could make use of a prescription that she'd obtained from a Canadian doctor all she had to do was go to any pharmacy there she could buy the drug that was
• 21:00 - 21:30 totally prohibited in her own country the drug worked immediately this one made such a difference in my life both because of the shortness of breath being resolved and also because now we didn't have to worry so much about the softening of the bones fortunately once I got that medicine very quickly everything sort of reverted back to much
• 21:30 - 22:00 more of a normal lifestyle and I'm very grateful that I was able to find relief it was easy for mrs. ester Dane to get around the FDA regulations because she happens to live near the Canadian border not everyone is so lucky it's no accident that despite the best of intentions the Food and Drug Administration operates so as to
• 22:00 - 22:30 discourage to the development and prevent the marketing of new and potentially useful drugs put yourself in the position of a bureaucrat who works over there suppose you approve a drug that turns out to be dangerous a thalidomide your name is going to be on the front page of every newspaper you will be in deep disgrace on the other hand suppose you make the mistake of failing to approve a drug that could have saved thousands of lives who will know the people whose lives might have
• 22:30 - 23:00 been saved will not be around their relatives are unlikely to know that there was something that could have saved their lives a few doctors a few research workers they will be disgruntled they will know you are i if we were in the position of that bureaucrat would behave exactly the same way our own interest would demand that we take any chance whatsoever almost of refusing to approve a good drug in order to be sure that we never approve a bad one
• 23:00 - 23:30 drug companies can no longer afford to develop new drugs in the United States for patients with rare diseases increasingly they must rely on drugs with high-volume sales for drug firms have already gone out of business and the number of new drugs introduced is going down
• 23:30 - 24:00 and where will it all lead we simply haven't learned from experience remember prohibition in a burst of moral righteousness at the end of the First World War when many young men were overseas the non-drinkers imposed on all of us prohibition of alcohol they did it for our own good and there is no doubt that
• 24:00 - 24:30 alcohol is a dangerous substance unquestionably more lives are lost each year through alcohol and also the smoking of cigarettes then through all the dangerous substances that the FDA controls but where did it lead this place is today a legitimate business it's the oldest bar in Chicago but during Prohibition days it was a speakeasy Al Capone bugs Moran many of the other gangsters of the day sat around this
• 24:30 - 25:00 very bar planning the exploits that made them so notorious murder extortion hijacking bootlegging pour the customers who came here they were people who regarded themselves as respectable individuals who would never have approved of the activities that Al Capone and Moran were engaged in they wanted a drink but in order to have a drink they had to break the law prohibition didn't stop drinking but it
• 25:00 - 25:30 did convert a lot of otherwise law bdn citizens into lawbreakers fortunately we're a very long way from that today was the prohibition on cyclamate and DDT but make no mistake about it there is already something of a gray market in drugs that are prohibited by the FDA many a conscientious physician feels himself in a dilemma caught between what
• 25:30 - 26:00 he regards as the welfare of his patient and strict obedience to the law if we continue down this path there is no doubt where it will end after all if it is appropriate for the government to protect us from using dangerous cat guns and bicycles for logic calls for prohibiting still more dangerous activities such as hang gliding motorcycling skiing if the government is to protect us from ingesting dangerous
• 26:00 - 26:30 substances the logic calls for prohibiting alcohol and tobacco even the people who administer the regulatory agencies are appalled at this prospect and withdraw from it as for the rest of us we want no part of it let the government give us information but let us decide for ourselves what chances we want to take with our own lives as you can see all sorts of silly things happen when government starts to regulate our
• 26:30 - 27:00 lives setting up agencies to tell us what we can buy what we can't buy what we can do remember we started out this program with the Corvair an automobile that was castigated by Ralph Nader is unsafe at any speed the reaction to his crusade led to the establishment of a whole series of agencies designed to protect us from ourselves well some 10 years later one of the agencies that was set up in response to that move finally got
• 27:00 - 27:30 around to testing the Corvair that started the whole thing off what do you suppose they found they spent a year and a half comparing the performance of the Corvair with the performance of other comparable vehicles and they concluded and I quote the 1960 63 Corvair compared favorably with the other contemporary vehicles used in the tests nowadays there are Corvair fan clubs throughout the country
• 27:30 - 28:00 Corvairs have become collectors actions consumers have given their verdict on Ralph Nader in the government regulations as Abraham Lincoln said you can't fool all of the people all of the time it's time all of us stopped being fooled by those well-meaning bureaucrats who claim to protect us because they say we can't protect ourselves the men and women who have fostered this movement have been sincere they believe that we
• 28:00 - 28:30 as consumers are not able to protect ourselves that we need the help of a wise and beneficent government but has so often happened the results have been very different from the intentions not only have our pockets been picked of billions of dollars but also we are left less well protected than we were before [Music]
• 28:30 - 29:00 now back here at the University of Chicago The Consumerist themselves get their chance to argue their case I agree with mr. Friedman with respect to those agencies which have had the major purpose of economically propping up a certain industry which is why consumer advocates like myself advocate the elimination of the ICC the CA B the Maritime Commission but when you're talking about consumer protection in the marketplace and when you're talking about government watchdog in competition
• 29:00 - 29:30 consumers need and as every poll is showing they're demanding more and more protection and to give just two examples of how information is simply not enough to protect the consumer five years ago I could not have bought a child's crib in this country that would have had this flat sufficiently close together that I did not have to worry about the child strangling not until the government in the Consumer Product Safety Commission stepped in to consumers then have a choice to buy that type of a crib strangulations down 50% and in 1975 if I had wanted to lease a see Rox machine I
• 29:30 - 30:00 could not have done it and not until the Federal Trade Commission antitrust stepped in and forced competition into that marketplace did I have that choice and in one year the price went from fourteen thousand dollars down to five thousand dollars those are dollars back in our pocketbooks to say nothing of minimized emotional trauma well before we asked Milton Friedman to come back on that let's establish the viewpoint of our other participants and experts doctorate renowned Ovitz your reaction well I think the cost is certainly outrageously large and the benefits are trivial if any I think that
• 30:00 - 30:30 perhaps Milton overstates it's slightly to make his point but basically I would have to agree with it in the area that i know best which is the regulation of new drug development and Joan Claybrook well in the auto safety field we have saved about fifty five thousand lives and millions of injuries because of auto safety regulations since the mid 1960s I might also comment that the cost of auto crashes each year the American public is forty eight billion dollars a year fairly substantial when you compare it
• 30:30 - 31:00 to other things much less again the human trauma the Bob Kendall well I think it's impossible to disagree with Milton Friedman on the effects of economic rate regulation of the sort that the railroads and the trucking industry have been through the intent of that legislation was of course to protect the rarer than to protect the trucks and the same thing is true for maritime regulation what sustains regulation is sort of a populist theory that somehow through government we will
• 31:00 - 31:30 redistribute wealth from people who own business firms to consumers in fact that doesn't work that way it doesn't work that way in economic regulation and there's very little evidence that it works that way in any kind of regulation as to whether we get any value from health and safety regulation I think much of it is tuned to new to know well that's where the area I want to start with because remember that was the first part of his argument the whole idea of consumer product safety action by the state now is that so far working very
• 31:30 - 32:00 close to it as I know what's your reaction Kathleen are running well on product safety in the state of that the the lawnmower industry had said for 20 years they could not design is safe lawn more only when the Consumer Product Safety Commission forced them with the new standard suddenly their creative genius was overnight they came up with net whips that were made out of plastic and they came up with very innovative forces which is why we're that government presence actually triggered innovation that otherwise would have been left uncovered it's very easy to
• 32:00 - 32:30 see the good results the bad results it's very much harder to see you haven't mentioned the products that aren't there because the extra costs imposed by Consumer Product Safety Commission have prevented them from existing you haven't mentioned the case of the tris problem on the inflammable garments here you had a clear case where the a regulation of the CPSC essentially had the effect of requiring all manufacturers of children's sleepwear to impregnate them
• 32:30 - 33:00 with Tris three years five years later the regulation required the garments to be non flammable and as it happened Triss was the most regularly readily available chemicals which could do it but let me finish the story first because the second half of the story is the important part of it it turned out the Tris was a carcinogen and five years later or three years later I'm not sure the exact time the same agency had to prohibit the use of those sleepwear
• 33:00 - 33:30 garments forced them to be disposed of at great cost to everybody concerned let's look at the real interesting history here 1968 when Congress passed the flammable fabric act they did not tell the CPSC what chemicals would comply with that what would not and so initially when industry said we're going to use Tris the Consumer Product Safety Commission from their initial test we're disturbed by it and had announced informally to industry that they were not going to allow Tris to be used industry blocked and said we're going to take you to court because the Act only
• 33:30 - 34:00 says it has to be flame-retardant you the government cannot tell us how to comply and it was the industry that forced the hand of CPSC away and they don't even deny that I'm not trying to defend the industry go slowly I am NOT pro industry I am Pro consumer unlike you I'm not pro industry and of course industry will do a lot of bad things the whole question at issue is what mechanism is more effective in protecting the interests of the consumers the dispersed widespread
• 34:00 - 34:30 forces of the market take the case of the flammable fabrics suppose you had not had the report you believed they was right to test them don't you for a government agency attest no not at all there are private consumer testing agencies there's the consumers research there's consumers union you speak about a widespread demand for more protection those agencies have met those organizations they have all these publications on cars all they do is they test the brakes and steering they never crash like a the most important thing to know about a car when you buy it is if
• 34:30 - 35:00 the car crashes are you gonna be killed unnecessarily so you can't even get that information but the reason they don't test it's too expensive that's why is it too expensive for him because the number of consumers who are willing to buy their surface and take it is very very smooth that is not why the reason why it's cuz its enormous ly expensive course but if they had a large enough number of customers if there were enough customers enough consumers yes even an egg situation which is ridiculous it's not a chicken and egg situation and technological information is important
• 35:00 - 35:30 for consumers to have which is the basis and the thesis of your argument surely that you would say that one of the things that society does is that groups together to provide basic services to the Pope police traffic services all sorts of basic kinds of things of the mail service and the fire service and all the rest of it why is it that they shouldn't even do testing of technological subjects which the public has no way it seems to me that that Professor Friedman could could give a little bit on this ground certainly in the dissemination of information as a free rider problem and
• 35:30 - 36:00 one of the problems is that while you and I might value the results from a consumer Union rather highly we don't have to pay for it we can look over the shoulder someone else borrow the magazine from the library and so forth I wouldn't go so far as to say that the government should not at all be in the business of generating information though I am concerned about exactly the same forces this this this evil industry that mr. Reilly talks about having its influence on how this information is prepared I don't see how we guard ourselves against
• 36:00 - 36:30 that but it seems to me that there is a case to be made that the market does not supply enough information it may not but the market supplies a great deal and there's also a free rider problem in the negative sense on government provision of information and there's people who have no use for that information or required to pay a pay for it I don't quite understand your position on this are you saying though that there's no place for government to test consumer product safety at all I am saying let's
• 36:30 - 37:00 separate issues I am saying there is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves there is of course a place well for a moment I'm trying to separate the issues there is a place for government to protect third parties if we go to your automobile place children children don't aren't choosers no no they don't make choices Harry my parents make their choices but let's go we can only take one issue at a time we're a
• 37:00 - 37:30 little difficult to take them all at once let's take one at a time I say there is no place for government to require me to do something to protect myself now if if government has information well obtained for a moment suppose it has information then it should make that public and available the next question is are there circumstances under which it's appropriate for government to collect information there may be some such circumstances they have to be considered one at a time sometime there
• 37:30 - 38:00 isn't sometimes there isn't but you see I want to get back take your your area in miss claim brother you are now involved on the airbag problem that's right if I understand the situation I don't know anything about the technical aspects of it but the airbag in a car is there to protect me as a driver it doesn't prevent me from having an accident hurting somebody else dudes it's only activated by an accident right now why shouldn't I make that decision who are you to tell me that I have to spend whatever it is two hundred three
• 38:00 - 38:30 hundred four hundred dollars on that airbag well we don't tell you that what we say is that when a car crashes into a brick wall at 30 miles an hour the front seat occupants have to have automatic protection built into the car and it's a very white very why have to I don't care whether it's an airbag well there are two reasons why one is that the sanctity of life is a fairly precious entity in this country it's more precious to me than it is to you my life sometime I do inside I see well then it couldn't be
• 38:30 - 39:00 too precious to you because it aboard you'd wear it all the time I beg your pardon yes other things are precious too yes okay but when your seatbelt is a relatively simple thing to go into but the light question is but I want an answer a direct answer there is a very there's a very basic reason why and it's it's because a person does not know when they buy a car what that car is gonna do when it performs in various and sundry different ways that's number one number two the there's a basic minimum standards performance standard it's not a requirement you have certain pieces of products in your cars but it's
• 39:00 - 39:30 a first basic performance standard built into your car that when you buy it no one's gonna have less than that so that you don't have people needlessly injured on the highway the cost to society the cost of the individuals the trauma to their families and so on you're suggesting theoretically that it's much better to let people go ahead and kill themselves even though they really don't know that that's what's going to happen to them when they have that excuse me you evading the fundamental issue if you have the information give it to them the question is not a question of giving them the information the question is
• 39:30 - 40:00 what is your right to force somebody to spend money to protect his own life not anybody else but only himself and the next question I'm going to ask you do you doubt for a moment that prohibiting alcohol would save far more lives on the highways than an airbag seatbelts and everything else and on what grounds are you opposed to prohibition on grounds of principle or only because you don't think you can get it by the legislature I'm opposed to prohibition because I
• 40:00 - 40:30 don't think it's gonna work that's the reason I'm opposed to the principle sure I want to suppose you could believe it would work suppose you could relieve prohibition could work would you be in favor of it no what I am in favor of is building products I'm in favor of building products so that at least they service the public I was fascinated by some of the initial comments everybody agrees that the old agencies are bad but the new agencies that we haven't had a chance to sweep into your net they
• 40:30 - 41:00 didn't if the basic principle is give me the information let me choose who myself if that's the ultimate goal why is it that in any hearing that you've ever gone to and I beg anyone to find me an exemption whether its airbags orondia saccharin whatever you never have the victims of the injury who lost their arm because of a lawnmower standing up and saying thank God that you gave me the right to become incapacitated never do
• 41:00 - 41:30 you hear a victim thanking the government for backing off never do you hit a victim of an anti-competitive action thanking the Justice Department for not bringing a suit dr. Lander I promised you could make an observation on that without going into great detail now when des was used in to preserve pregnancies in women 25 and 30 years ago there was absolutely zero evidence that it would cause cancer in anybody certainly not in the children of the women who were pregnant and for you to say that in 1941 studies that show just
• 41:30 - 42:00 that there is no 1941 study this happens to be my area of expertise an endocrinologist there was nothing applique let's not go any further down that road let me ask ya let me ask you mr. on a question I don't see if the problem in drugs is that there is a lack of competition though there are a number of drug companies in the United States and and around the world and a lack of innovation how regulation which is designed to keep products off the market that is further restrict the supply of drugs is going to enhance either
• 42:00 - 42:30 competition or innovation as a matter of fact everything that I have learned in economics would tell me that that is likely to reduce innovation and reduce competition and one of the great benefits of drug regulation is that if I'm a pharmaceutical company with an old tried and true drug in the market I really want the fda to keep new drugs off the market it will enhance the market value of that drug I think that's a lesson that you learn from from government regulation whether it's National Highway Traffic Safety Administration regulation of fuel
• 42:30 - 43:00 economy standards be a drugs be it pollution controls their effect is anti-competitive it's not Pro competitive at all if I go on with Bob's point for just a moment he and I am sure and all economists would agree that the most effective way to stimulate competition who wouldn't be to have complete free trade and eliminate tariffs the most antique consumer measures on our statute books are restrictions on foreign trade has the Consumer Federation of America testified against tariffs your key news in this
• 43:00 - 43:30 what was your reaction to Milton's analysis of where it's fallen down well I think it's even worse than than than Milton's analysis or dr. Ward ELLs analysis of it if one could could look at the at the at the past 25 or 30 years of new drug innovation one could see that most of the drugs that you all would regard as miracle drugs were developed before the key file for
• 43:30 - 44:00 amendments the 1962 of 1963 what now again just revise the 1962 amendments as Milton said added efficacy to the regulation of safety actually it's what the regulator's did with this law that went haywire I don't see how one can object to the law in itself what what the regulator's did was go go mad with respect to safety when the only thing that was added to the law was a point of efficacy after all the two are
• 44:00 - 44:30 intertwined inextricably well for a very hazardous disease like cancer you will tolerate a very dangerous drug and for a headache it's got to be very very safe now this we've known all the time but the the regulators have gone to the point of utilizing some hysteria over thalidomide and a new legislation which I think was originally designed by Keef Alfred to get himself to be president by lowering the cost of drugs to make regulations which are absolutely
• 44:30 - 45:00 obstructive so then now instead of 75% of the new drugs used in this country being developed in this country less than 25% of them are there being developed else we just terrified this point though are you saying there should not be government intervention in the food and drug field of that kind or is it simply the policy adopted by the fda or imposed on it by the Kefauver amendment is where it went wrong I believe that certain guidelines are
• 45:00 - 45:30 necessary and it's possible to construct guidelines based upon the key file for amendment taking the responsibility for decision-making away from the bureaucrats and the Food and Drug Administration you say how I would say by giving it to panels of impartial experts to make this decision now Milton do you take that you buy that nope why not because I I have never seen have you ever seen a cat that barked not actually
• 45:30 - 46:00 no well governmental agencies and governmental laws follow their own laws just as the physical laws say that cats don't bark these laws of social science say that when you start and set up a regulatory agency with power those powers are going to be used I want to move on those the 30 that milton chose the interstate commerce commission administration now this is closer to your line of country Bobby okay what is your reaction first to his analysis and what you think needs doing about it well you're not gonna get
• 46:00 - 46:30 much dispute from I don't think anybody sitting around here as to what the benefits of costs of rate regulation and transportation are the only group that you will find now supporting continued regulation there'd be the American Trucking Association and they can't even make a very persuasive case or one that is consistent from one day to the next there simply is no good reason for continuing this type of regulation it might continue longer than say airline regulation did because the number of
• 46:30 - 47:00 people whose wealth has been enhanced by this regulation that is people who drive trucks people who own licenses to operate to haul only hardbound books between Peoria and Springfield Illinois or something of that sort those people are very numerous and it's going to be very hard to do something does this prove anything about the nature of government intervention and regulation or is it simply an example of whether thing was done extremely badly and not an interest the public it proves I think it proves a great deal of our government
• 47:00 - 47:30 regulation and it is no different I don't think in the area of health and safety regulation let me give you one piece of information about one area of very important health and safety regulations I think even Knowlton freedom would be in favor of some form and that is the regulation of pollution control or at least the establishment of property rights so as to somehow reduce pollutant levels and what they would be if we allowed unlimited pollution in the case of environmental policy the strongest proponents in the Congress for Environmental Policy come from the
• 47:30 - 48:00 northeastern part of the United States and the weakest proponents those are the worst voting records in the Congress come from the southwestern from Alaska you might ask yourself why is that and one possible answer I guess is that while the air is dirty in New York City but I don't think you'd find many people really worried about the quality air in New York City what they're worried about is the future employment and the value of their assets in New York City what would happen in the absence of environmental policy in this country is that more business would move to the southwest and to the western part of the United States as a result Eastern
• 48:00 - 48:30 congressmen are very in favor of a policy which prohibits through Pollution Control regulations prohibit say privatization i don't prohibit the form it takes but they use this as an excuse just as they will use various excuses let's say before the Miss Claybrooks agency to plump for very tight standard so in order to promote the value of therefore before we go back to icy season I want to do that Milton what's your reaction to his pollution point because I know he's very
• 48:30 - 49:00 keen to interested in it well he and I would agree I would agree with his general position that there is a role for government and pollution I would agree second that the present techniques of controlling pollution are terrible and they are terrible and they are what they are for precisely the reasons he specifies because they are an effective way in which you can use the excuse of pollution to serve some very different objectives that's part of the way in which governments me-yow if I may go back to my cat we've discussed this at
• 49:00 - 49:30 greater length in a book that we've written to go along with this program on free to choose the program itself was too short for us to be able to get much in about pollution when did we we really had to skip it because it's such a complicated and difficult subject but there is a real role for government because that is a case in which you're protecting third parties in every one of the valid cases in my opinion for government entering in has to do with third parties there's a case for requiring breaks because that's to protect the person you might hit that's
• 49:30 - 50:00 wholly different there's no case for requiring an airbag in my opinion but there is a case for requiring no because when you're injured because of a failure to use a passive restraint I am in a sense going to have to help pick a part of your medical bills part of your insurance rates because they're spread across Luton and so only on Gilligan's Island when you have six or nine people not interacting such that all of society is affected does your distinction have any validity when you're when you're sick from alcoholism who pays for it
• 50:00 - 50:30 I'm the alcohol the studies have only shown excessive amounts of alcohol too much what about cirrhosis of the liver my dear it's a very cursory all of you various ting distinction here that you can damage yourself you've been saying or it's up to you if you want to run the risk of damaging yourself but if but but can you make the distinction because she says no we mustn't do that because the fellow hurts himself is going to go to a government subsidized op my ability as
• 50:30 - 51:00 well answer that issue with it because my NGO solely let me separate the two issues because I really want to get to this because your answer is a very favorite one and there is an element of validity to it well it's only because we've made two mistakes but you don't have to be in a government hospital for it to be valid because hold on for a moment the problem with your answer is that you're saying one wrong justifies another I believe that we ought to have much less government intervention into those areas as well and I don't am not willing to
• 51:00 - 51:30 follow a policy which implies saying you that every person goes around with a sign on his back saying property to the US government do not mutilate spindle or bend do you favor the government intervention in those areas where for example the bar associations in the eyeglass industry we're not allowing their members to advertise and then the Federal Trade Commission stepped in and now consumers have the ability to make those kinds of cookies you're getting into another area but the answer to brief answer because we want to discuss
• 51:30 - 52:00 it's here I am against those governmental measures which have enabled the organizations to have the power to prevent advertising Bob Crandall said that in an area like the state Commerce Commission there is nothing really be said in defense at all does anybody dissent from that or have we knocked them down flat that happens to be the one area on which so far as I know you cannot find any dissent anywhere even one of the most effective presentations
• 52:00 - 52:30 of what was wrong with ICC was done by one of Ralph Nader's groups maybe you were associated with that group that's the thing that really baffles me fundamentally here are people like Ralph Nader in his groups who look at an ICC and what is their solution to the problem more of the same a different kind of regulation the only problem is that the wrong people were in there regulating no that's not true don't know that that's a complete later now yes dr. Landau solutions for the medical problem let's have the right people doing the
• 52:30 - 53:00 right that's a complete misnomer about the difference between ICC and health and safety regulation there are a number of differences one is one involves the economics and the benefits of profits to industry and the other involves the sanctity of life and yes the second one and it deals with your third party relationship is that what you're talking about there is breaks because they're gonna affect somebody else but there were also other third party effects for example if you don't have a helmet used by someone and you hit them with your
• 53:00 - 53:30 motorcycle you're gonna have huge damage payments to make because they didn't properly take precautions on the public highways and the question is should the public highways be used so that they're gonna harm somebody else potentially there is nothing that two people do in a world no man is an island to himself everything has third party issues but you've got to have a sense of proportion and the important thing is that government intervention has third party issues when government intervenes into these affairs that harms third parties it picks my pocket it reduces my freedom
• 53:30 - 54:00 it restricts many activities around the world what are the benefits and if the benefits in the auto-filled for example are fifty five thousand deaths a that's a very dubious statistic because once again every study has looked at the benefits and not looked at the costs oh no that's not true at all absolutely not that they have I mean the cost in life your exam Technion reveals by making automobiles much more expensive you it makes it more profitable to keep older
• 54:00 - 54:30 automobiles on the road the increased age of the automobile is an anti safety factor by making automobiles safer so people are can drive them people drive them faster or more recklessly than the otherwise would there are more pedestrian deaths are totally unproven and indeed fully rebutted theory and in fact all the statements they you know they're numerous studies including from Yale and Cooper from Yale and so on but they but the key issue has been shown but by the regulation that's been in the last ten years you've had a huge saving in life or decrease in the the vehicle
• 54:30 - 55:00 deaths that are occurred the rate of field code s occurs the major effect on the saving of life has been from 55 mile an hour no that's not true which is not after all in there merrily is a fuel regulation yeah that's right it's a regulation available but your statements not accurate that the savings in life have not been primarily they've been as they've been very important from 55 but they've been 55,000 deaths saved by vehicle crash
• 55:00 - 55:30 safety regulation it's excuse me there have been 55,000 desks that you have estimated to have been saved not me the chart excuse me other estimates as well the estimate by Professor Sam peltzman of this University a very very serious study estimated there were no life savings if you took into account all of the indirect effects now maybe his study isn't exactly right I don't think it I'm not going to try to do into it but maybe the other study is in between no no I
• 55:30 - 56:00 beg your pardon if people voluntarily want to risk their lives you were saying again you really would not be in favor of prohibiting hang-gliding we asked the auto industry that is far more dangerous today we prohibit the 500 is the auto entity if they would remove all the safety standards they've been in effect since 1968 and what would be the savings to the public if they did that and the answer that they came back with why we couldn't remove those they expect them now the laminated windshields that don't
• 56:00 - 56:30 crack their head open and the collapsible steering assemblies in the padded dashboard sit why the public that is now the societal norm regulation has changed that the thinking of the public and the understanding of what's possible and so the you know what you're suggesting is the government regulation is willy-nilly and it produces things the public doesn't manage you can't take credit for everything that's happened in this area four-wheel brakes were introduced before there were safety regulations many of these this week I hope you join us again for the next episode in a week's time
• 56:30 - 57:00 [Music] whether you're a doctor or a gas attendant a factory worker or a bureaucrats next week's program is all about you Milton Friedman looks at the labor market to discover how workers can best protect themselves in the toughest
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