[ch4s3]

On the contrary. Friedman argued that if as an executive you try to steer a business towards your particular personal aims that you are presuming to know more than you do about what is best for your shareholders who actually own the company. He is arguing that political whim is not a way to allocate the scarce resources of a company/society.

In particular the article linked in this blog post is Friedman arguing against Nixon's price controls and Nixon's insistence that it was "socially responsible" to not raise prices as you own costs went up. Stripping the article of this consequence is either dishonest, or stupid.

[therobot24]

So my interpretation of how Friedman drew his theories of market (and granted I'm no expert, just a layman reading things online) are about every business should optimize as much as utterly possible even if this results in exploitation, because the market will accept exploitation until it can't and correct. I think you and i are aligned in this belief. Where i think we're separated, likely cause i just didn't explain it very well, was that to me, this means you as a CEO are accepting exploitation under the guise that you have the ability to react to the market forces to correct for it. That you 'know the market' and can adapt as needed. Such as described in the Friedman quote within the article which expresses an extremely libertarian view of how companies should be able to hire and fire workers:

> “...consider a situation in which there are grocery stores serving a neighborhood inhabited by people who have a strong aversion to being waited on by Negro clerks. Suppose one of the grocery stores has a vacancy for a clerk and the first applicant qualified in other respects happens to be a Negro. Let us suppose that as a result of the law the store is required to hire him. The effect of this action will be to reduce the business done by this store and to impose losses on the owner. If the preference of the community is strong enough, it may even cause the store to close. When the owner of the store hires white clerks in preference to Negroes in the absence of the law, he may not be expressing any preference or prejudice, or taste of his own. He may simply be transmitting the tastes of the community. He is, as it were, producing the services for the consumers that the consumers are willing to pay for. Nonetheless, he is harmed, and indeed may be the only one harmed appreciably, by a law which prohibits him from engaging in this activity, that is, prohibits him from pandering to the tastes of the community for having a white rather than a Negro clerk. The consumers, whose preferences the law is intended to curb, will be affected substantially only to the extent that the number of stores is limited and hence they must pay higher prices because one store has gone out of business.”

In my view, the scenario and reasoning by Friedman in how he applies market forces applying to business decisions is a view where you have an assumption of 'knowing the result' of any decision and using that 'knowledge' as justification for reasoning. When in reality, you don't know the result, you can estimate, but that's about it. So when an exec is applying Friedman principles they're trying to 'know the market' and that's a fundamental error in my mind due to the chaos of the world how it can manifest across all avenues of life.

[ch4s3]

> every business should optimize as much as utterly possible even if this results in exploitation, because the market will accept exploitation until it can't and correct.

I don't thing that's a correct assessment. He talks a lot about the need to follow laws an cultural norms and the importance of society setting normative guardrails for behavior. Moreover he point our I believe correctly that a lot of the worst behavior of businesses stem from monopoly power.

> In my view, the scenario and reasoning by Friedman in how he applies market forces applying to business decisions is a view where you have an assumption of 'knowing the result'

I think it only appears that way if you take small quotations like this out of context.

[therobot24]

>> In my view, the scenario and reasoning by Friedman in how he applies market forces applying to business decisions is a view where you have an assumption of 'knowing the result'

> I think it only appears that way if you take small quotations like this out of context.

Can you help me understand this. Like the purpose of using logic to deduce decision making is because there's a fundamental structure in assuring the result from those deductions is accurate (or enough to continue manipulation of the problem data). When you try to predict market reaction to a decision and ascribe harm or success based on the decision you're creating causation out of correlation, often incorrectly. Again, not an expert in economics, but when i view theories of free market forces and how they're part of the logic of business decisions i can't help but think the people using this information are assuming their knowledge and logic aren't fundamentally flawed and as a result are essentially just guessing without thinking they are.

[ch4s3]

Yeah, Friedman would clearly agree that you can't have perfect knowledge but he argues that bad business decisions are punished with losses and firms' owners will fire bad managers or they'll lose their investments.

You're actually touching on why he argues against efforts to regulate negative harms, because the government has an imperfect ability to predict the outcomes and there isn't a great feedback mechanism.

[AnimalMuppet]

So businesses have faster/better/more accurate feedback than government? That's probably true.

But history has shown that business feedback sometimes takes us to undesirable places, and government regulation is sometimes necessary.

[ch4s3]

Friedman doesn't argue against all kinds of government regulation, specifically he approves of regulating positive harms.

[therobot24]

ok i think i'm starting to get it a bit, the double edged sword is essentially the reason for focusing on emergent results which (i'm guessing in Friedman's mind) have more options for mechanisms for good results than a constrained market might.

[ch4s3]

I think that's a fair summary.