To start with I have not read any of Friedman's work and am not familiar with a lot of his views, but I recently came across this video where he discusses free trade and tariffs, my issue is specifically with this part of the argument (emphasis by me):
"Let us suppose for a moment that the Japanese flood us with steel that will reduce employment in the American steel industry no doubt however it will increase employment elsewhere in America we will pay for that steel with dollars what will the Japanese do with the dollars they get for the steel they aren't going to burn them they aren't going to tear them up if they would that would be best of all because there's nothing we can produce more cheaply than green pieces of paper and if they were willing to send us steel and just take back green pieces of paper I can't imagine a better deal but they're not going to do that they're not stupid they're smart people they're going to use those dollars to buy goods and services they're going to spend them in the process of spending them they may spend them directly in the United States then that directly provides employment in the United States things they may spend them in Brazil or in Germany or in China or anywhere else but whoever gets them in turn is going to spend them so the dollars that we spend for the steel will find their way back to the us as demand for U.S. goods and services you will have less employment in the steel industry you will have more employment in the industries producing the goods we export"
How did he come to the conclusion that they'd spend the money on specifically other goods and services made in the United States? He says the word "may" initially but later asserts it more definitively as so. Let's say the Japanese spend their money in China or wherever, like Friedman said, who's to say the people in China won't buy commodities from their own countries or countries other than the United States that make it for cheaper?
Also, what are the limits of this approach? The idea here is basically that sacrificing the U.S. steel industry is well and good because it benefits the consumers (since the steel would be cheaper) which sort of makes sense but the argument that it would create a net positive of jobs in other sectors seems to be of limited value, because it's based on the (seemingly baseless) assumption that foreigners will buy more goods and services from the U.S., but what if a foreign country also intrudes on these other industries producing commodities in America that supposedly saw job growth with cheaper alternatives? What other industries aside from steel is it a-okay to sacrifice because other commodity-production industries will do better? What if there's no productive industries to see a net positive in job gains from anymore because foreign companies keep flooding the market in these "safe" industries with far cheaper alternatives? If we grant the U.S. steel industry collapsing might give to a rise of jobs in printer manufacturing in America or whatever since foreigners with more money would buy printers specifically from America, what happens when that same industry that saw job growth also get overrun with say cheaper printers? At a certain point wouldn't the country just be sacrificing various industries and the argument that it would benefit some other industry stop holding water since they might be able to make cheaper versions of whatever else they can think of in the new "safe" industry it shifts to?
My final issue is that even if job growth is seen in other industries I feel like this might sort of create antagonisms between people with vastly different skills or have different areas of expertise. If it's fine to sacrifice the U.S. steel industry because it might create more jobs in the printer manufacturing industry, it creates a sort of instability/volatility/job insecurity that at any moment one's industry might be thrown to the wolves (foreign companies) and the only people who'll see benefits are people trained in vastly different areas of expertise or people who live closer to regions with industries that saw job growth, rendering their specific expertise (like of people who worked in steel mills) they trained years for/paid for useless and requiring them to do like double the work to gain new expertise in the fields that saw job growth though the cycle might repeat again even when they enter into the new "safe" industry. I feel like this might create a stark divide or hostility between people working in different environments (i.e if people working in industrial jobs in urban areas are made superfluous because of cheaper commodities from abroad, but rural farmers get a boost because foreigners now buy more American fruit, that just feels like an area of unnecessary stratification/polarization/inequality despite all of them doing important and similarly laborious work. )
Looking forward for any answers to my questions or for anybody to point out errors in my thinking or add onto it.
