Friedman Was Right, Part MLXVIII

Professor Henry Manne, from George Mason University, has a great guest editorial in the Wall Street Journal today entitled Milton Friedman Was Right

It seems the two tangled on the execution of "socially responsible" corporate behavior. And that Penne has now come around to the Friedmanite position:

Milton Friedman famously declared that the sole business of the managers of a publicly held corporation was to maximize the value of its outstanding shares. Any effort to use corporate resources for purely altruistic purposes he equated to socialism. He proposed that corporation law should prevent managers from straying off the reservation to join the altruists, a power now almost universally granted them by state legislation.

It's a great article. While it is directed more at public utilities and altruistic behavior in the consumer staples, retail, and utilities sectors, I choose to hide behind Friedman in one of my old assertions: That Google should represent its shareholders' fiduciary interests -- even at the expense of standing up to Chinese Communists censors.

The blogosphere had a little boomlet of Google-bashing last January when Google capitulated to ChiCom pressure to censor truly dangerous concepts like freedom, democracy, and falun gong from its searches.

I had few assenters when I suggested that they should worry about shareholder value.

Friedman's points extrapolate well to cover this interest. If Google exists to serve the public good, we the people can make any demands of it we like. Maybe a quota to link to more minority and women owned businesses.

Google made the decision it did and its share price is up more than 25% in ten months. Let the Marines spread Democracy, let Google create wealth for its shareholders.

Now I realize (I should have known) he was absolutely correct about the significance of proposals for socially responsible corporate behavior, whether they emanated from within or outside the corporation. These proposals reflect, as well as anything else happening today, the inability of many commentators to distinguish between private and public property -- in other words, between a free enterprise system and socialism. Somehow large-scale business success, usually resulting in a publicly held company, seems mysteriously to transform the nature of numerous individuals' private investments into assets affected with a public interest. And once these corporate behemoths are "affected with a public interest," they must either be regulated by the state or they must act as though they are owned by the public, and are therefore inferentially a part of the state. This attitude is reflected not merely by corporate activists, but by many "modern" corporate managers.

Google Posted by jk at November 24, 2006 4:10 PM