Milton Friedman Expectation Gap Analysis

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Milton Friedman maintained that the principal concern of any commercial occupation it to make the highest profit possible. Friedman argued that companies that did in excess of what the law required (e.g. spent more money on environmental mitigation that was required by law) would make less profit, making them less competitive than companies who did not do more than the law required.

The text attempts to soften Friedman 's views by acknowledging that Friedman did expect companies to follow the laws of society, but I do not agree with Friedman 's philosophy. Making money is an important business purpose because making money is necessary to keep the business afloat, but the need to make a profit should always be tempered with a sense of decency
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The "credibility gap" was defined in the text as the amount of distance between the actual trustworthiness of corporate executives and the amount of trustworthiness the public places in the corporate executives.

Both the expectation gap and credibility gap appear to be about the distance between the amount of trustworthiness the public places accounting firms and reality. However, the credibility gap sounds more focused on the public 's mistrust of the individuals involved in the preparation of financial statements; whereas, the expectations gap sounds more focused on the final end work product – the financial
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For example, if the American government had not deregulated the mortgage industry, it would have been difficult for lenders to make sub-prime loans to borrowers who could not afford the loans, and it would have been difficult for borrowers to receive a loan they could not afford. If lenders had not encouraged the borrowers to overstate their income, or if the borrowers had refused to overstate their income and acknowledge they could not afford the loan, then there would have a lower rate of default. If lenders did not package and sell mortgages like securities, or if lenders had divulged the high-risk natures of these packaged mortgages, then credit rating agencies would have given these packaged mortgages the low rating they deserved, and investors would not have purchased the packaged mortgage securities as frequently. Finally, if lenders had been willing to work with borrowers to get part of the loans repaid or part of a loan payment, borrowers would likely have walked away at a less alarming rate, and perhaps some of the decline in the housing market could have been mitigated. And something that was not discussed in the text, if the American government had chosen to bail out the actual economy and not Wall Street, then perhaps the text would not be referring to this period in American history as the "great
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