Milton Freidman: Work Ethic and Pursuit of Wealth

Milton Freidman observed that Americans usually self-describe as individualists but it would be more accurate to describe Americans as a family-oriented culture. He pointed to the self-sacrifice that parents often make on behalf of children, which would not make sense unless you valued your children more than yourself.

“You know, the thing that is amazing, that people don’t really recognize, is the extent to which the market system has in fact encouraged people and enabled people to work hard and sacrifice in what I must confess I often regard as an irrational way, for the benefit of their children. One of the most curious things to me, in observation, is that almost all people value the utility which their children will get from consumption higher than they value their own. Here are parents, who have every reason to expect that their children will have a higher income than they ever had, and they scrimp and save in order to be able to leave something for their children.”

I wish Freidman would have carried that observation to the next question, namely, what is lost when someone else does for you that which you ought to do for yourself.

More often than not, those who are the most motivated to maximize production from their own labor and delay gratification are those who did not have significant material abundance handed to them. And yet, they think that providing material abundance to their children will improve their lives, and of course in terms of available health care and education and other social opportunities it does, but it often comes with the very high cost of a diminished work ethic.

Significant resources among the wealthy are now being dedicated to figuring out how to create a work ethic for those that resist it. All of this is grappling with the proverb: “You can lead a horse to water but not make it drink.”  

UBS, at their Young Successors’ Program for the children of the rich, provided materials with its finding that 82% of $10+ million dollar fortunes will be worth less than $250,00 within three generations. The short-hand description of why is that consumption and expenditures greatly exceed production from labor and investment selections.

Generally, I believe the answer is to teach children from a very young age that their decisions in life do not only affect themselves but also those who love them most. The phrase “it’s my life, I can do what I want” should carry little currency beyond a rock concert because the inference that your decisions do not affect others is false. If you destroy yourself, you can cause many others pain. So it goes with work ethic. If you become less than who you are capable of becoming, you diminish those whose sense of meaning is tied to you.

Freidman’s observation understood these motivations and consequences, leaving it up to us to figure out how to manage them along the way.