Friedman on Businesses and Markets

Many have noted an apparent paradox of businesses that demand freedom from government taxation, regulation, social engineering are begging for government bailouts. Today, we read that Bank of America will bet an additional $20 billion in taxpayer money on their bold investments (HT Drudge). Does anyone smell a moral hazard? In an episode of porn gone wild, Larry Flynt and Joe Francis are asking for a $5 billion bailout of the porn industry. It seems like the demand for porn is more elastic (responsive to changes in price) than porn executives believed and anti-porn leaders had feared. And who will forget the specter of auto executives driving to DC and eventually winning a $17.4 billion bailout.

In an EconTalk podcast of Milton Friedman hosted by Russ Roberts, Friedman explains that there is no paradox in business behavior. They are doing what's best for them.

[I]t's always been true that business is not a friend of a free market...It's in the self-interest of the business community to get government on its side. It's in the self-interest of a particular business...But the real puzzle—puzzle isn't quite the right word—the real problem here is where do you find the support for free markets? If free markets weren't so damn efficient, they could never have survived because they have so many enemies and so few friends. People think of capitalism or free markets as something that obviously is supported by business. People think that if a business party is a party in politics, it will promote free market. But that's wrong. It will be in the self-interest of individual businesses to promote a tariff here and a tariff there…