Sunday, June 19, 2016

Power of the Market

At first sight this post seems to have nothing in common with IT. On the contrary, IT is a part of the following idea: the less people and enterprises are controlled by a bureau or a government, the more desirable or advantageous position in financial terms they have.

This concept was presented in 1980 by Doc. Milton Friedman in his TV series "Free to choose". He is an economist, winner of the Nobel Prize (so called the Nobel Prize for economic achievements). In his first episode Friedman talks about "The power of the market". Here is the short description of the episode:

Some may be appalled by his ideas, others can be enthusiastic about them. In the early years of the foundation of the USA settlers were free to pursue their own objectives. America was a land of opportunities. People came here from all over the world to settle down in a new place. There were no permits, no tariffs, no red tape to restrict them, and many people thrived on a new market.


To show modern example of a free market Doc. Friedman visits Hong Kong. There are many overcrowded, sticky, hot factories and shops. It might be seen as an appalled place to work, however, for the workers it is the best place they can find at their current position. If they do not agree they can always change their job, nobody forces them to work at these factories. They know that these conditions are not forever, they will find something better after learning new skills. Hong Kong is a special economic zone, there is no duties on imports or exports. The goods are coming to the port from all over the world. Thousands of people try to escape from Communist China, cross the border and come to Hong Kong for the real opportunities, better wages and freedom to speak, freedom to write, freedom to buy what they want. The number of permits to visit Hong Kong is restricted for the Chinese, and consequently many of them risk their lives and die in attempt to get a better life.

Milton states that from the historical point of view "The freer the system has been, the better off the ordinary people have been".

As an example of voluntary collaboration Friedman takes a lead pencil and states that there is not a single person in the world who can make the same pencil. Remarkable? Just watch how he proves this statement in the first episode.

In the second part of the video the leading businessmen (including the Motorola CEO) and the leading politicians (including a Congressman and a Governor of Delaware) discuss Friedman's ideas.

I genuinely recommend to watch this video. Enjoy it!



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