How Does 'Capitalism And Freedom' Critique Government Intervention?

Friedman's 'Capitalism and Freedom' argues government intervention often does more harm than good. He claims markets regulate themselves better than bureaucrats ever could. When governments set prices or control industries, they disrupt natural supply and demand. Minimum wage laws sound noble but actually increase unemployment, especially for young workers. Licensing requirements protect established businesses instead of fostering competition. Even welfare programs create dependency rather than empowerment. Friedman shows how good intentions lead to unintended consequences—rent controls cause housing shortages, farm subsidies waste resources. His solution is limited government focused solely on protecting property rights and enforcing contracts, letting voluntary exchange solve most problems.

Reading 'Capitalism and Freedom' feels like watching someone dismantle a house of cards. Friedman systematically exposes how government intervention backfires. Take education—public schools monopolize funding but stagnate without competition. Vouchers would let parents choose, forcing schools to improve. Healthcare gets worse when regulated; FDA drug approvals delay life-saving treatments. Even the Federal Reserve’s monetary tinkering worsens recessions by distorting interest rates.

Friedman doesn’t just criticize—he offers alternatives. Negative income tax could replace bloated welfare bureaucracies. Floating exchange rates prevent currency crises better than central bank manipulations. His reasoning is airtight: interventions assume officials know better than millions of individuals making daily choices. History proves they don’t. The book’s brilliance lies in showing how freedom isn’t just moral—it’s practical. Societies flourish when governments step back.

What struck me about 'Capitalism and Freedom' is how Friedman frames intervention as arrogance. Politicians assume they can outsmart collective human ingenuity. Tariffs 'protect' industries but make everyone poorer by raising prices. Social Security forces savings instead of letting people invest wisely. Even anti-discrimination laws, while well-meaning, can be circumvented by prejudiced employers.

Friedman’s most compelling argument is about knowledge dispersal. No central planner can process the information scattered across millions of minds. Markets aggregate this through prices—when wheat shortages hit, prices spike, signaling farmers to plant more. Government price caps disrupt that signal, guaranteeing shortages persist. The book’s power comes from concrete examples: postwar Germany thrived by rejecting controls, while India’s license raj strangled growth. Freedom isn’t chaos—it’s the ultimate organizational principle.