Friday, February 27, 2004

Milton Friedman: My Hero

Playboy Interview, Playboy Magazine, Feb 1973, at 59.

"Playboy: Quite apart from emission standards and effluent taxes, shouldn't corporate officials take action to stop pollution out of a sense of social responsibility?

Friedman: I wouldn't buy stock in a company that hired that kind of leadership. A corporate executive's responsibility is to make as much money for the stockholders as possible, as long as he operates within the rules of the game. When an executive decides to take an action for reasons of social responsibility, he is taking money from someone else--from stockholders, in the form of lower dividends; from the employeees, in the form of lower wages; or from the consumer, in the form of higher prices. The responsibility of a corporate executive is to fulfill the terms of his contract. If he can't do that in good conscience, then he should quit the job and find another way to do good. He has the right to promote what he regards as desirable moral objectives only with his own money. If, on the other hand, the executives of U.S. Steel undertake to reduce pollution in Gary for the purpose of making the town attractive to employees and thus lowering labor costs, then they are doing the stockholder's bidding. And everybody benefits: The stockholders get higher dividends; the customer gets cheaper steel; the workers get more in return for their labor. That's the beauty of free enterprise."

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