4.9 Economic Challenges and Opportunities


To what extent does globalization contribute to sustainable prosperity for all people?

Globalization provides the people of the world with both challenges and opportunities in their abilities to prosper.


Milton Friedman


Milton Friedman was born in 1912 in New York City. He went on to become a famous economist, earning the Nobel Prize in economic sciences in 1976.
Like Adam Smith and Frederick Hayek, Milton Friedman was a strong advocate for capitalism and free trade. He had very strong ideas about how capitalism should work.

  • He opposed any kind of protectionism.

  • Governments should not interfere with the economy of a nation.

  • Governments should reduce spending, lower taxes, and eliminate tariffs.

  • Countries should not protect their industries for any reason, including the protection of jobs or industries vital to survival or to support new start-up businesses.

  • If a business is viable, its owners should be willing to take start-up losses with the idea of making more money later.

  • The invisible hand will put everything right.

His ideas were extremely popular with a number of governments, especially in the 1980s.

Friedman believed so strongly in economic freedom that he thought most government-run agencies such as a federal post office should be replaced by private companies. He did not think that public education was cost effective.

He believed that freer markets led to freer people—that greater freedom of choice in economic matters led to greater freedom in all areas.

Competition in the marketplace is the best and fastest way to get the best products and services to the most people at the best possible price, according to Smith, Hayek, and Friedman. They agreed that governments should stay out of economic matters and let people choose for themselves what works best. If countries, just like people, are forced to compete with one another to sell and purchase their goods and services, those same goods and services would become better and less expensive for everyone. With increased competition would come increased wealth, and while a handful of people would become very wealthy, that wealth would trickle down to the middle income workers and the poor. Although some people might be displaced from their jobs in the short run, people would find other jobs and other places to live in the long run. They believed that this kind of economic freedom would lead to greater prosperity for all people. On a global scale, this means worldwide prosperity.

Hayek and Friedman believed that governments should not place any controls over the economy. They thought that the market would regulate itself. Following their rules, all nations would have lower taxes and less government. This would encourage corporations from all nations to set up factories and do business in nations around the globe without restrictions. The world has seen unprecedented economic growth over the past few years, but it is not equally distributed. Rich and powerful nations, corporations, and individuals are becoming more powerful and wealthy while others are becoming poorer. As well, this uncontrolled economic growth has created environmental damage with long term effects. In addition, the nations of the world can't seem to agree on a united solution to deal with this issue.