An article from the Providence Journal written in May 2009 heralds Obama as a savior for re-asserting government's role in economy. Passing the largest budget stimulus in history, preparing an overhaul of the American automotive and banking industries, and his government-funded health care proposal are steps the president has taken and is continuing to push for to rid the United States from its current economic woes.
While the recession has left the American public searching for solutions, Milton Friedman may argue that Obama and his administration are sticking their noses where they don't belong. Friedman argues that government's scope should and must be limited, and that the power within must be decentralized and dispersed. What allows this to occur is free market economy; it keeps the government at bay and is the key to our freedom.
Friedman argues that the government must act as an umpire, overseeing the economy and ensuring the conditions are set for optimal operation of the free market. In principle, Obama is doing that through the stimulus and bailouts. He is putting money into the system to make the system run more efficiently. Whether or not it has achieved its goal is debatable. Writers Rich Miller and Matthew Benjamin explain in their article, "The S&P 500 Index ended the week on April 24 up more that 28 percent from this year's low on March 9; shares of banks that have taken goverment money have soared almost three times as much during that period. Rates on 30-year mortgages have fallen below 5 percent, the lowest in records going back to 1971, as strains in credit markets have eased. Consumer confidence is up and a plunge in retail sales is abating." In this respect, Obama is helping right the economic ship.
One element of this story I am questioning in relation to Friedman is if it was right to bailout these big businesses. I am not sure it was right to give these CEO's a free pass for running their companies into the ground because of irresponsibility and greed. According to Friedman, the only way a society can achieve real political freedom is through competitive capitalism. By bailing out these corporations, it makes me think competition is being eliminated, the foundation of capitalism. If this is the case, are we Americans free? I'm not sure we are.
I agree with the point you made about the ethical issue at hand with regard to Friedman. I believe he would argue that any company, regardless of its size, should be allowed to fail. One of the first things we read in class was an article by Friedman about how the social responsibility of business was to increase its profits. The fact that these companies made decisions that severely impacted their bottom line and crippled them and their stakeholders means that they were not being socially responsible. We all heard about AIG and how it was “too big to fail”, but with respect to Friedman, is any corporation ever to big to fail? Or is this a prime example of the market regulating itself? It’s hard to imagine what the financial situation of the country might look like today without the bailout and TARP, etc., and because of that it’s hard to decide what Friedman might argue. Part of me thinks he would hate that the taxpayers are being coerced into supporting companies that failed them, but I also think that he might support the government being a “lender of last result” in order to aid a troubled economy. Anyway, it’s a good issue with respect to Friedman, and I agree with your thoughts on it.
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