Milton Friedman Defends Free Trade
February 8th 2010 23:34
It's a short video (6 mins) of the great economist Milton Friedman speaking of the U.S. steel industry and trade. He makes several great points:
1. The steel industry does not support free enterprise, but rather protection of their own interests, which in this case is tariffs on imported steel.
2. By Japan subsidizing their own steel industry, the U.S.:
a. receives a subsidy for cleaner air, since less steel needs to be produced in the U.S.
b. will see a decrease in steel-industry jobs, but will see an increase in other jobs. This occurs because the dollars the U.S. sends to Japan for steel must then be used, eventually, to purchase U.S. goods (or invest in the U.S.). This will create employment wherever those dollars end up.
c. essentially receives foreign aid from the Japanese. Thank you Japanese taxpayers for the cheap steel!
3. U.S. consumers are harmed by tariffs on steel, because it makes the steel (and products made from steel) more expensive than they would be otherwise.
4. Why do tariffs on steel (and other products) find political success? The Visible vs. the Invisible problem: U.S. citizens can see the people who lose their jobs to Japanese steel imports, but it is much harder/impossible to see the created/never allowed to happen export jobs.
HT: Don Boudreaux
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