The Era of the Business Idiot

This quote is taken totally out of context from the chapter of the book it's from and is clipped to make it appear in the worst light.

Earlier in the chapter he says:

> On the contrary, I believe strongly that the color of a man's skin or the religion of his parents is, by itself, no reason to treat him differently; that a man should be judged by what he is and what he does and not by these external characteristics. I deplore what seem to me the prejudice and narrowness of outlook of those whose tastes differ from mine in this respect and I think the less of them for it

The chapter is discussing the appropriateness of government regulating negative versus positive harms and he makes the case that regulating negative harms is a short-sighted and ineffective means of achieving the policy aim of protecting minorities and that "fair employment" as imposed by the majority is not "free employment". In the same chapter he argues that "right to work" laws interfere with the freedom to engage in contracts. The arguments are far more subtle than Edward Zitron is making them out to be.

Importantly Friedman here and elsewhere refers to people who discriminate on the basis of skin as ignorant racists.

Throughout the book he makes the argument that if you remove the legal frameworks that enforced segregation, that people would over time choose to integrate as they found mutual advantage in doing so. Reasonable people can disagree with this assessment.

He finishes the chapter with this quote:

> On the other side of the picture, we should not be so naive as to suppose that deep-seated values and beliefs can be uprooted in short measure by law.

If anyone thinks that Friedman was a racist, they haven't honestly engaged with his writing.

If we replaced the grocery store in the example with a Hooters and we replaced white and black grocers with female and male servers, it's easier to see the point being made. This is not to say that it is economically (or morally) sensible in the long term (e.g. Hooters), but it is certainly rational to appeal to a customer's discriminatory preferences for so long as it generates recurring revenue or until some other more profitable avenue opens up. A similar strategy is at play with "Made in USA" marketing (whether or not such claims are true) over the past two decades in its appeal to discrimination/patriotism over financial soundness. In many cases it works.

> If just that one owner practices race-blind hiring out of their own personal beliefs they would definitely be harmed. If the law requires every store to practice race-blind hiring and the law is strictly enforced, racist customers will just have to get over themselves or stop buying groceries.

The harm is to the agency of the owners. The entire point of a free market is voluntary terms of entry, association, and exit notwithstanding contractual obligations to the contrary. There is no harm to a grocery owner who voluntarily chooses to defy the trend set by his competitors except economic self-harm should he suffer a net loss of customers over the decision. It's the freedom of the consumer to consciously or unconsciously boycott a store that doesn't appeal to his preferences (whether for or against racial discrimination), however petty such preferences are or irrelevant to his purpose (i.e. buying food). It is also the consumer's freedom to patronize a store that does. Conversely, the owner may find new consumers and thus a new of source revenue that outperforms that of his competitors through the practice of race-blind hiring.

> If the law requires every store to practice race-blind hiring and the law is strictly enforced, racist customers will just have to get over themselves or stop buying groceries.

Or the customers can move out to the countryside, a suburb, or a small town where they can only find white grocers. They can also look for farmers' cooperatives or food clubs unlikely to be staffed by any other race.

> brilliant economist

There's the problem. Economics is the science of explaining tomorrow why the predictions you made yesterday didn't come true today.

We don't call people who successfully predict things "economists", we call them planners.

Maybe people would just stop shopping as much if everyone was forced to participate? Is the solution to force everyone to engage in mandatory diversity shopping? Or is that what taxes are for?

>Nadella does one thing and he does it well: he makes number go up.

I'm unconvinced that it's him so much as MS' entrenched position as a contractor, and ZIRP. There are a lot of companies whose number go up for whom number should no no go up, but it did, because they had first dibs at the money printer trough.

> We have redefined competence

Thanks for that! I'll definitely use that one...

> > We live in the era of the symbolic executive, when "being good at stuff" matters far less than the appearance of doing stuff, where "what's useful" is dictated not by outputs or metrics that one can measure but rather the vibes passed between managers and executives that have worked their entire careers to escape the world of work.

> We have redefined competence, but we haven't redefined it to be measured in nebulous ways. Far from it. Nadella does one thing and he does it well: he makes number go up. And that's all that matters.

I think Ziton would argue that this statement was supposed to be one level below "number going up". His argument seems to be not that number shouldn't go up, but that the number that goes up used to be based on "being good at stuff" but now isn't.

His argument isn't that executives shouldn't focus on the money, but rather that the money has last track of what they were supposed to track. It's not the executive themselves, it's the economy. The executives would then be the outcome of skewed incentives by an economy that has disconnected from "useful stuff".

This also happens to be my favorite take. So I may just be confirmation biased.

While I agree with your post, I don't really think that goes counter to the original meaning of the argument as a whole. He even mentions some paragraphs later that CEOs are only fired when line does not go up:

> While CEOs do get fired when things go badly, it's often after a prolonged period of decline and stagnancy, and almost always comes with some sort of payoff — and when I say "badly," I mean that growth has slowed to the point that even firing masses of people doesn't make things better.

And I think that's what he was gesturing at in the beginning when ranting about Satya. He knows Satya is not an imbecile, he would not survive the cutthroat sociopathic business environment if he was.

The logical conclusion is that Satya is just bullshitting on a softball interview to prop up Microsoft's copilot thing. That is a marketing piece, not a proper interview.

And on bullshit, it is always important to keep something in mind:

"bullshit is speech intended to persuade without regard for truth. The liar cares about the truth and attempts to hide it; the bullshitter doesn't care whether what they say is true or false."

> measure the worth of investment and expenditures of capital by their holistic benefit to society.

This seems specious, I mean, when? And how?

The article seems to contradict you, given that it is mostly focused on tech companies that do in fact spend billions in product development and tend to delay huge profits. Amazon, famously, was universally praised for its various innovations in e-commerce (i.e. benefit to society) while not making a profit for what, 25 years? The current business press gushes over "big data", the metaverse, AI, whatever, despite many such projects actually losing billions of dollars before being shut down or vastly reduced.

I'm not claiming these companies do actually benefit society, but Wall Street and the press is often willing to overlook immediate profit for the promise of long-term dominance (and the rewards that come with that) and in the meantime, they will at least promote the possibility of future societal benefit to justify their position.

Oh wow, what an amazingly skilled businessman for getting money during the era of ZIRP. For a shitty file hosting service, nonetheless. How dare Ed besmirch him.

> Maximizing shareholder values can include treating your workers well if you think happy workers are more productive and therefore help with profits.

The capital class finds it very icky when peasants are fairly treated. They typically punish ir by making like go down.

You don't need to have red skin and horns to take great pleasure in making those less powerful suffer.

Ed writes a lot of good stuff, but yeah, they're usually a slog. His diatribes seem to be getting longer lately too.

Except Friedman wasn't a racist, and the quote is cut specifically to make it appear that way. In the very same chapter Friedman argues that discrimination based on skin color is irrational and wrong. Edward Zitron is lying in his framing.

In the same chapter Friedman literally says:

> On the contrary, I believe strongly that the color of a man's skin or the religion of his parents is, by itself, no reason to treat him differently; that a man should be judged by what he is and what he does and not by these external characteristics. I deplore what seem to me the prejudice and narrowness of outlook of those whose tastes differ from mine in this respect and I think the less of them for it.

> pointing out that this one is based on the thoughts of a blatant racist

Actually this is a pretty weak point. We have plenty of historical examples where a terrible person came up with a brilliant idea. So Friedman being racist or not (he was categorically not, Zitron is being unfair here) is kind of a non-issue. The philosophical problem is that favoring shareholder value above moral value or social value (or whatever you want to call it: the betterment of society; or Socrates' "flourishing" [εὐδαιμονία]) just doesn't seem to have any positive externalities.

"Line go up," sure, but what does that actually do? "Line go up" teleology is trivially a dead end moral philosophy. In fact, if history is much of a teacher, any economic teleology seems to be pretty morally bankrupt—from concrete jungle capitalism to Bolshevik communism to bartering. I'm extrapolating, but here, I do agree with Ed.

optimizing business value in the manner perpetuated by Friedman assumes you know more than you do and can adapt to things because of that knowledge, ultimately no one can actually do this because the world is chaotic and difficult to anything and everything that tries to master that chaos

I imagine that an interviewer who suddenly put out an “emperor has no clothes” interview could short the stock and do quite well. It would also be a public service.