Trying to make sense of the sustainable logic of Goldman Sachs and Milton Friedman?

Goldman Sachs sells a particular type of wisdom to its clients, many of whom are convinced it’s the only wisdom that counts: the science of profitability. At the end of the day, it’s all math, even when the object of the analysis is people’s health.

In an internal report on the prospects of pharmaceutical companies poised to launch gene-editing products that actually cure chronic illness, the Goldman experts deliver their invaluable advice: “While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.” The value to patients’ lives would be sustainability.

Here is today’s 3D definition as Goldman Sachs understands it:

Sustained:

Kept active at a consistent level to ensure the same level of profit with little supplementary effort over the longest period of time

Sustainable:

Remaining viable and stable, permitting continuous benefits over time

Contextual note

It’s all a question of what is worth sustaining: life or profits. The financial wizards at Goldman Sachs know what their clients want: guidance in being profitable. The interest of their clients’ clients plays no role in making the most important decisions.

Historical note

Financial capitalism has its iron-clad rules observed by its greatest practitioners and theoreticians, the most notable of which is Milton Friedman, the man who firmly believed that no lunch could be free so long as the market remained free.

Friedman and Goldman Sachs understand the reality of the economy and don’t need to waste time on the distraction that consideration of the good of actual people might imply. When a student at Cornell University challenged Friedman with the problem of Ford producing a car whose lack of a $13 safety feature led to hundreds of fatal accidents, Friedman refused to see it as a choice with a moral dimension, because the “principle” is, as everyone knows, that you get what you pay for.

In this video, we are treated to the infallible logic of “relative cost” that derives from a “fundamental principle … that people individually should be free to decide how much people are willing to pay to reduce the chances of their death.” Friedman then quickly reminds us that, “People mostly aren’t willing to pay very much,” which of course means they are responsible for the consequences of Ford’s decision to save money on their safety.

His logic is indeed infallible, just like Goldman’s concerning the genetic cures. As Friedman explains in another sequence with the same student who recounted the death of a man who couldn’t pay his electric bill and died, “The electric company is a non-human institution” and is doing what makes economic sense. “The responsibility lies on those who are not charitable enough to enable him as an individual to meet the electric bill. You’re blaming the wrong person.”

Apart from noticing that corporations are “non-human institutions” when the question concerns human welfare — but as Friedman loyalist Mitt Romney and the US Supreme Court have famously affirmed, “corporations are people” when it comes to allowing them to “vote” with their money — this tells us that the “fundamental principles” of the capitalist system make it easier to provoke death and more difficult to cure diseases.

Of these two cases, one is the result of the vaunted “innovation” that we are told capitalism alone encourages. The other is the result of understanding the “fundamental principles” Friedman is teaching us. Ford “innovated” by producing a car $13 cheaper, which had a positive impact on sales and profits. The electricity company showed its discipline and respected the needs of its shareholders by observing the “fundamental principle” — i.e. never allowing a free lunch.

Friedman appeared to win the debate with the gutsy student. But critics may be tempted to wonder about the viability of a system that, through its application of logical principles and calculations of profitability, discourages the kind of innovation that can improve human welfare while creating and promoting situations that increase human suffering.

The great thing about the logical principles of the economy and their attendant calculations is that they take us beyond human emotions… and guarantee the welfare and psychological comfort of those — like Friedman and Ford’s shareholders — who know how to apply them.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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