There is an old joke that goes something like this:
Originally Posted by Orangey
Man - Would you have sex with me for one million dollars?
Woman - Sure!
Man - Hold on, how about for fifty dollars?
Woman - Just what kind of girl do you think I am?!
Man - We've already established that. Now we're just haggling about price.
The student said the following, after describing Ford's decision to not fix the defect and just pay compensation because fixing the defect would cost more:
So no, the student didn't argue, "no matter what cost." Rather, he argued two points: 1) that Ford did the "right thing according to [Friedman's] policy," and 2) that it was "very wrong" that Ford did so.
Seems to me that Ford did what would be the right thing according to your policy, and yet that seems to me to be very wrong.
If anything, it's the student that's using the strawman, here: implying that Friedman's policy would result in "very wrong" choices such as Ford made. Friedman's argument is not against your reported strawman of the student supposing infinite value to life, but rather his actual point (1). Friedman's policy is not "do the wrong thing if it's cheaper than doing the right thing."
I can see how you might perceive a strawman in Friedman's argument, especially with the student and the audience saying out loud that the argument isn't about cost, while Friedman insists that it is. Friedman isn't trying to misrepresent the student's point, but their perspectives deeply differ. To say "we're arguing about cost" in a moral/economic argument such as this is deeply offensive to anyone mostly looking at the moral side, because it seems to discount the moral aspects, that there is no moral dimension.
BUT Ford could just as well have weighed that the fix was worth the cost, even if it cost more than paying compensation for death and injuries. They didn't, and their reputation suffered, and they paid economically in other unforeseen ways. Their mistake, it could be argued, wasn't that they decided to weigh costs, but rather which costs they decided to weigh. In the end, it's just arguing [i.e., making value judgments, moral and otherwise] about cost [i.e., the economic trade-offs].