Free or Equal – Preview Trailer

(Music) (Music) JOHAN NORBERG: My name is Johan Norberg, a
writer and an analyst, and I was born and raised here in Sweden. I was three years old,
when the Nobel Prize in Economics was awarded to Milton Friedman here in Stockholm. This
is Stockholm City Hall, the traditional place for the Nobel banquet. This is where Milton
Friedman celebrated his prize. (Music) Milton Friedmandid a lot more than win the Nobel Prize here in Stockholm. He had a thought-provoking message that won him thousands of advocates and opponents all over the world. In 2002, I had the pleasure of meeting Professor
Friedman, and the thing that struck me was his intellectual curiosity. His research led
him to believe in the power of free markets and economic freedom, while many people today
place a greater emphasis on government safety nets and greater financial equality. On this thirtieth anniversary of Milton Friedman’s
PBS television series, I’ll revisit his ideas on the struggle between freedom and
equality. (Music) JOHAN NORBERG: No matter where you come from,
whenever there is a problem, it’s tempting to look to the government for solutions. Since
the recession of 2008, we’ve seen unprecedented government intervention in the financial sector,
and in the automotive industry. We’ve seen new spending programs, more tariffs and new
regulations. And we’ve seen the largest buildup of government debt in American history;
a debt that might haunt us for generations. Some people blame the financial crisis on
Milton Friedman and his theories of free markets, but Friedman would say that economic freedom
is not just to reap the rewards when times are good; it’s also to bear the consequences
of your actions when times are bad. We don’t have free markets as long as speculators can
keep the profits when they win, but send the losses to the taxpayers when they lose. I was born and raised in Sweden. And my country has made an effort to make people’s lives,
“more equal.” To reduce differences of outcome, we tax heavily and redistribute wealth
among our citizens…and many people in the United States advocate a system like ours.
If, on the other hand, the government gives everybody the same freedom to work and reap
the rewards, some will do better than others. The result will be equality of opportunity,
but not equality of outcome. Here in the United States, you’ve accepted more inequality
of outcome. And over the past thirty years, a debate has been raging between these two
competing alternatives. Can we live with economic freedom…even though it doesn’t guarantee
a specific result, even though it’s built on the ongoing destruction of old ideas and
businesses that are no longer competitive? Can we accept freedom, even though freedom
to choose also means that we will not all be equally successful? To answer these questions, Milton Friedman
traveled the world to examine various economic systems. He concluded that for most people,
an emphasis on economic freedom would lead to both individual and political freedom. Many commentators say that Milton Friedman did more for freedom than anybody else in
recent decades. He convinced many nations to embrace economic freedom. In the U.S.,
he led the effort to abolish the military draft, which he considered nothing less than
slavery. When Milton Friedman died in 2006, The Economist
magazine’s obituary had the headline, “How Milton Freed Man.” On the other hand…writers
like the Canadian anti-capitalist, Naomi Klein, claim that he helped authoritarians by advising
them to adopt free market economic policies. Most controversially, in 1975, Friedman traveled
to Chile to lecture about economic liberalization and he also met with the dictator, Augusto
Pinochet, and in 1988 he went to China to talk to the communist leaders about economic
reform. So who’s right? Friedman would advise us
to test his ideas by examining the evidence of recent history. Have his ideas changed
our world? For better or for worse? Whose assessment of his legacy is right? (Music) After the Second World War, and the Communist
Revolution in China, this rock in the middle of nowhere became a refugee camp with millions
of extremely poor people. To Milton Friedman the scientist, this was
a perfect natural experiment to test his theory about free markets. Hong Kong had no prospects,
no natural resources, and little land that could be cultivated. But almost by accident,
it was given economic freedom. The British government couldn’t be bothered with local
Hong Kong affairs. And the governor here happened to favor free markets. So Hong Kong never
introduced all those policies that other governments did: no tariffs, no regulations or government
intervention in the economy. So the economy could evolve in a natural way. As a result,
Hong Kong became an economic powerhouse. FRIEDMAN: If you want to see how the free market really works, this is the place to come. Hong Kong, a place with hardly any natural
resources; about the only one you could name is a great harbor. Yet the absence of natural resources hasn’t prevented rapid economic development. NORBERG: When Friedman came to Hong Kong in 1980, it could boast statistics on life expectancy
and infant mortality that equaled western countries. Incredibly, it was on its way to
become richer than its colonial ruler, Britain. (Music) FRIEDMAN: This thriving, bustling, dynamic city has been made possible by the free market…indeed the freest market in the world. The free market
enables people to go into any industry they want; to trade with whomever they want; to
buy in the cheapest market around the world; to sell in the dearest market around the world.
But most important of all, if they fail, they bear the cost. If they succeed, they get the
benefit… and it’s that atmosphere of incentive that has induced them to work, to adjust,
to save, to produce a miracle. NORBERG: And what a miracle it’s been. Friedman
was standing next to the tallest building on the skyline, and just look at that skyline
now; there are more skyscrapers here than in all of New York City.
Between 1950 and 2000, Hong Kong’s GDP per capita increased more than ten times. Friedman
concluded that this success was due to the free market. FRIEDMAN: This hasn’t been achieved by government
action, by someone sitting in one of those tall buildings telling people what to do.
It’s been achieved by allowing the market to work. The complete absence of tariffs,
or any other restrictions on trade, is one of the main reasons why Hong Kong has been
able to provide such a rapidly rising standard of life for its people. (Music) NORBERG: My country has made an effort to make people’s lives more equal. We have
relatively free markets in business. It’s fairly easy to start a company and compete
without being stopped by licenses, regulations, and tariffs. But when people are allowed to
compete freely, some win, and make a lot of money, some lose, and they lag behind.
That’s when the Swedish government steps in; to reduce differences of outcome we tax
heavily, and redistribute wealth among our citizens. To many, this is the best of both
worlds…since we don’t really have equal chances in life. Some people have parents
who give them an interest in learning, ambition and opportunities, some don’t, some are
lucky in the genetic lottery, and some aren’t, some have good health, and some don’t.
To reduce the gaps that such differences might lead to, our government steps in. Sweden chose
to make equality a priority in the 1970s, when we were already one of the richest countries
in the world. Taxes were raised and benefit systems were made more generous. (Music) In many suburbs like this, outside of Stockholm,
the unemployment rate is higher than fifty percent. Even in the midst of the economic
boom, almost a quarter of the working-age population in Sweden did not go to work in
the morning, but got their checks from the government. It does seem to support the view
that economic incentives matter. With a sickness benefit of up to eighty percent
of your income, perhaps it wasn’t surprising that Swedes were off sick more than any other
people, even though we objectively were healthier than almost any other population. In 2004,
sickness benefits absorbed sixteen percent of the government’s budget. These statistics
have improved since…but interestingly, only after a determined effort by the government to reduce the equality of income, by lowering taxes, and making benefit systems less generous. So it seems that these changes increased incentives to work. Friedman emphasized something counter-intuitive.
There is a positive benefit to inequality of outcome for everybody. Some people become
millionaires, and some become billionaires, but that is because they were the ones who
made their customers happy. FRIEDMAN: That’s the economic system that
has transformed our society in the past century and more. That’s what gave the Henry Fords,
the Thomas Alva Edisons, the incentives to produce the miracles that have benefited us
all. They went in with their eyes open, they knew what they were doing; and win or lose,
we, society, benefited from their willingness to take a chance. NORBERG: If we did not allow a Lars Magnus
Ericsson, a Thomas Edison, or a Bill Gates to become incredibly rich, we would be more
equal. But Friedman would ask: would we be better off? If entrepreneurs did not think
that a possible reward for all the sacrifices they make, all their hard work, all the risks
they take, is a lot of wealth, then they might do something else instead. And in that case,
we would not have the goods, and the services, and technologies that make our lives better. We like the products of the free market: the
wealth, the choices, the goods and the services, that previous generations could not have dreamt
of. But we’re not as willing to accept the workings of the free market: the seemingly
chaotic ups and downs, the fact that it produces both winners and losers, so we give the government
power to deal with these problems. Listen to these words from 1980…don’t they still
ring true today? FRIEDMAN: Every time I come to Washington,
I’m impressed all over again with how much power is concentrated in this city. But we
must understand the character of that power. It is not monolithic power in a few hands,
the way it is in countries like the Soviet Union or Red China. It is fragmented into
lots of little bits and pieces, with every special group around the country trying to
get its hand on whatever bits and pieces it can. NORBERG: It’s not that people in government aren’t well-intentioned. These are not evil
people, purposely trying to wrest away our freedoms. It’s just the nature of the job. (Music) FRIEDMAN: The deals made here affect all of
us, and sometimes in ways we don’t like. But don’t blame the people making the deals.
They’re just pursuing their own self-interest, which may be as narrow as making a buck, or
as broad as trying to reform the world. NORBERG: Friedman worried that people would
stop doing what they…and others they deal with…thought was best. And instead, they
would be doing what the government encouraged or required through regulation, taxes, and
tax loopholes…and that creates new problems. Taxation to help the poor might result in
less growth, and so less poverty reduction, and bans on abortion may mean that abortion
takes place anyway, but becomes less safe. Tighter border controls might force immigrants
to stay in the U.S. once they manage to get in, rather than risk going back when the economy
retracts, and there are fewer employment opportunities. Every government intervention results in unintended
consequences. These consequences have to be dealt with as well, and that leads to new
unintended consequences. The result is a constant growth of government. In 1980, Friedman designed
a very graphic way to highlight this problem. (Music) FRIEDMAN: The federal regulations that govern
our lives are available in many places. One set is here, in the Library of Congress in
Washington, D.C. 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 1, Number 1. 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 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, the Federal Register had no fewer than 1,754 pages… and these aren’t exactly
what you would call small pages, either. (Music) FRIEDMAN: Freedom is not the natural state
of mankind. It is a rare and wonderful achievement. It will take an understanding of what freedom
is, of where the dangers to freedom come from. It will take the courage to act on that understanding,
if we are not only to preserve the freedoms that we have, but to realize the full potential
of a truly free society. NORBERG: Equality sounds good, and some value
equality of outcome more than anything else. The risk is that the outcome is that we’re
all equally poor. Market-based systems have made all of us richer, but some much richer
than others. In the end, we have to decide whether this wealth is the problem, or whether
poverty is the problem. As Milton Friedman put it in 1980, “The society that puts equality
before freedom will end up with neither. The society that puts freedom before equality
will end up with a great measure of both.” (Music)

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