r/videos 1d ago

Milton Friedman on Tariffs and Free Trade

https://youtu.be/59YWFR8lCEc?si=b4jSG79TZrE8CHLl
384 Upvotes

138 comments sorted by

178

u/Spiritofhonour 1d ago

Summary of video: Someone asks Friedman about Japanese steel flooding the U.S. market and potentially killing American steel jobs, suggesting that Japan's government is helping their companies sell steel at super low prices. Friedman explains that this argument against free trade has been debunked since 1776 citing Adam Smith, and nearly every economist since then agrees.

Sure, cheap Japanese steel might hurt U.S. steel jobs, but here's the thing - those Japanese companies aren't going to just frame the dollars they get. They'll spend them somewhere, and those dollars will eventually circle back to buy American stuff. So while steel jobs might take a hit, other American jobs will pop up to balance things out. Plus, American consumers get a sweet deal with cheaper steel products.

Why then does the steel industry's protection argument seems to work so well politically? It's all about what you can see versus what you can't - you can point to specific steel workers losing jobs, but it's harder to identify the scattered new jobs that pop up elsewhere. To show how silly protection arguments are, he jokes about building expensive hothouses in Utah to grow bananas - sure, it'd create jobs, but it's obviously a waste. He wraps up by saying if Japan really is subsidizing their steel, hey, that's basically them giving Americans a gift.

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u/1900grs 1d ago

Sure, cheap Japanese steel might hurt U.S. steel jobs, but here's the thing - those Japanese companies aren't going to just frame the dollars they get.

His answer is too simple here partly because of how the question was framed for economics of the time. He doesn't take into account things like national security, like we're seeing now with steel. Not solely because of tariffs, but when a country loses the ability to make its own steel when mills shutter, you can't just start up production and supply lines in times of crisis. We become dependent on the foreign country for something we used to own. It's not just the flow of money. It's the control of resources and ownership of processes.

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u/nickriel 1d ago

You could also say interdependence is a great deterrent to all out war.

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u/Readonkulous 1d ago

I believe that was the aim of Germany and other EU countries in relation to Russia. The problem is that reason and rationality is not the basic operating programme for Russian leaders. 

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u/Olsku_ 1d ago

Only a few countries are as Russia as Russia though. The EU was conceived as a way to tie France and Germany together to prevent future wars and that project has worked out great for the entire continent.

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u/nickriel 1d ago

A great deterrent. An absolute deterrent is impossible.

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u/MumrikDK 1d ago

It was also the aim with what now is called the EU itself.

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u/ratpH1nk 1d ago

or people who routinely declare war.

Boss:HEY JASPER. I am gonna invade the neighbors, god they are terrible!

Jasper: What would that do to the price of coffee, sir? Or wheat?

Boss: Oh drat. Forget it.

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u/ericwphoto 22h ago

I was going to say Russian leaders and Trump, but that would be redundant.

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u/HeadmasterPrimeMnstr 1d ago

Yet, the global economy has discovered that economic interdependence is not and can never be guaranteed.

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u/jspook 1d ago

Nor is economic interdependence a guaranteed deterrent to war. Like all things libertarian, it requires 100% rational actors to work properly.

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u/FourthLife 23h ago

This was unfortunately the predominant idea before world war 1

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u/plummbob 1d ago

He doesn't take into account things like national security

That was the justification for the Jones act.

And nearly 100 years later, we still don't have a large domestic ship building industry

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u/olfert 1d ago

The answer to that is not to grow your own bananas, it’s to not rely on a single exporter

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u/mirage01 1d ago

Nothing hurts national security more than making your allies not trust you. Manufacturing will never come back to America like they want. It's just too expensive to most of it here. I know they are trying to reset global trade but by doing so they are weakening our relationships and put the dollar as the reserve currency at risk.

You don't have to destroy generations of friendship with countries just to fix issues with global trade.

1

u/LeedsFan2442 4h ago

Obviously universal tariffs and protectionism don't work but for certain industries it's not totally unreasonable.

u/mirage01 46m ago

True, and this how it's always been done in the past. Tariffs should be a scalpel and not a chainsaw.

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u/Intendant 1d ago

That's fair. There are targeted options for when you think it's a national security issue

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u/whittlingcanbefatal 15h ago

Haiti's economy was devastated after a hurricane because they were no longer food self sufficient. We flooded them with cheap food and it became economically unviable to produce their own crops. They had no food and couldn't afford to buy it. 

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u/hahnwa 1d ago

You aren't wrong. This is simplistic for a number of reasons: 

  • National security
  • Strategic industry development
  • The, let's call it Wal-Mart effect, of raising margins once competition is reduced.

However, where it's absolutely right is that the baseline rule is "tariffs are bad for people." It's okay to move away from that baseline rule under specific well thought out, strategic reasons. 

That's certainly not what's happening here.

4

u/Ossius 1d ago

Japan isn't allowed to have a military, and the US is their defacto military defense outside of a limited amount.

Japanese steel is not a national security issue. There definitely would be some issue with other industries but Japanese are basically our #1 ally.

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u/1900grs 1d ago

Two months ago, Canada, Denmark, and Panama were allies and now our federal government is openly discussing invading them and/or trying to cripple them economically.

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u/Interesting_Pen_167 11h ago

Yup but it's all being done unlawfully through EOs. Right now the weakness here is the American legal system that allows Trump to act as an autocrat.

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u/veerKg_CSS_Geologist 1d ago

National security concerns are always overblown.

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u/Nyther53 1d ago

Ukraine might beg to differ.

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u/ricardoconqueso 1d ago

Right. Ukraine should have never made the agreement that Russia reneged on.

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u/eipotttatsch 1d ago

Ukraine isn't oceans removed from any potential enemy

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u/karldrogo88 1d ago

Then we should probably stop making an enemy out of our landlocked neighbors

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u/veerKg_CSS_Geologist 1d ago

Ukraine wanted to join the EU. Its problem wasn’t trade, but persistent corruption.

0

u/1900grs 1d ago

A key in wartimes is controlling supply lines. It's like military 101. And with something like steel, you don't just set up a blast furnace and oxygen furnace with the snap of your fingers. Do we really need to discuss resources and means of production during WWII?

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u/veerKg_CSS_Geologist 1d ago

The more trade you have the less likely war is. One isn’t going to go to war with a major trading partner. WW2 was preceded by autarky. That’s why the entire post WW2 system was designed.

Also, considering nukes are a thing no future war will be like WW2 anyway.

1

u/LeedsFan2442 4h ago

Unless your country is run by someone intent on dominating others

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u/AwwChrist 1d ago

If this is what you think, you’re not paying attention. At all.

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u/the__distance 1d ago

Until they arent

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u/gulligaankan 1d ago

And that’s the good thing, when depending on other countries you are less likely to start a war with that country.

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u/Circuit_Guy 1d ago

This is a really good answer. I want to point out that I'm no fan of Trump, but Biden kept the steel tariffs.

The risk is that China overbuilt steel for the Three Gorges dam, but they're not going to keep that capacity forever. Their mills don't need to make a profit - they were built for a specific purpose and are now "free". They won't last long either, they weren't built to last and they're not reinvesting the profit.

It's not just a "National Security" concern (it's also that). Steel is a heavy industry that could take 20 years or more to bring online. If a country loses steel production it loses basic infrastructure - bridges, roads, buildings, plumbing, electricity. It could be really bad.

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u/Interesting_Pen_167 11h ago

I think the national security argument is a powerful one but this idea of creating an economic autarky has almost always led to war. When one country either doesn't want to cooperate or provides a 'my way or the highway' approach you get situations like Imperial China where everyone around them has to kowtow and you have a generally unequal relationship. That breeds resentment and discontent among neighbours, in this case the world. Why would you invite so much animosity?

Ultimately I think it's been proven that free trade with allies is more secure than trying to do it all on your own.

1

u/Fighterhayabusa 5h ago

That's correct, but it's still inefficient. It's just that sometimes we're okay with that. This is a short talk; getting into the intricacies of when tariffs make sense was definitely not his point.

To your point, yes, sometimes it does make sense to use tariffs in a very targeted manner to protect nationally essential industries, such as defense. However, in the context of the current events, where blanket tariffs are being utilized, his answer is entirely correct.

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u/ekjohnson9 1d ago

Ricardo's comparative advantage theory assumes fixed capital stock per country. Modern economies do not have fixed capital stocks. There was no such thing as offshoring when Ricardo was alive. It's a very old theory because it's very out of date.

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u/Ok-Echo-6711 1h ago

what he doesn't tell you is 2 things assuming he's aware of it. We've lived through free trade and now have the empirical data that shows us. 1. true, overall, the country has gotten wealthier at a good rate. BUT the wealth has NOT been distributed across all of society. It had been concentrated on those already wealthy and those with the relevant education. Free Trade has hollowed out our middle class. for our society to be fair we need to grow our middle class so more people get a piece of the pie. Free trade has shrunk our middle class! 2. as covid has taught us, we can't depend on other countries to make what is vital to our well being and security. like the time china withheld masks, gloves, ventilators, and other medical goods during the rise of covid. is our well being and security not worth paying a little more for those goods that will be vital in our time of needs like during a pandemic or war? let's not be "Penny-wise and pound-foolish".

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u/MasterDefibrillator 1d ago

This has all been very well studied and Friedman is wrong. He's also not talking about what trump is doing. He's talking about specific targetted protectionist measures; which yes, have a history of helping develop and maintain local manufacturing and industry. Very different to Trump's blanket tariffs. 

Without Reagan's huge steel and computer tariffs, I'm sure the US industry would be even worse off. 

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u/snazztasticmatt 1d ago

Yeah, because what trump is doing is worse. He's not only being protectionist, he's being isolationist. He has guaranteed that virtually every trading partner will be looking for new sources for the products they used to buy from us. That's not speculation, the same fucking thing happened last time around when soy farmers lost 10%+ of their market to Brazil. Not only that, but he is weakening the dollar as the global reserve currency, pushing our allies to look at BRICS as a stable reserve instead.

This is hurting American businesses too - where are manufacturers supposed to buy computer trips now that we're taxing trade with Vietnam and Taiwan? The US isn't even close to getting chip fabrication even close to competitive and won't be for another decade

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u/ricardoconqueso 1d ago

Trumps also just being antagonizing for the sake of ego and arrogance. It’s possible to implement targeted tariffs on specific goods in a sensible. measured, and calculated way that doesn’t burn the fields and salt the earth of our global relations.

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u/gooie 1d ago

Being isolationist would require not trying to get Greenland, Canada and the Panama canal.

Calling it isolationist as if it is just a political difference is making Trump sound like he is sane.

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u/snazztasticmatt 1d ago

I mean, it is isolationist. Stupid isolationist, but isolationist nonetheless

Also, no one ever accused Republicans of being ideologically consistent

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u/veerKg_CSS_Geologist 1d ago

Not really. Reagan's steel protection measures (continued by subsequent admins) just meant the US steel industry fell futher and further behind foreign firms in terms of technology and efficiency. Protected from competition they had no need to innovate or stay at the cutting edge. So they've fallen further behind, requiring even greater taxpayer subsidies to stay afloat.

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u/DangerousCyclone 1d ago

Exactly, US Steel was consistently making the wrong calls on emerging innovations in Steel manufacturing. The tariffs helped shield them from the consequences of these decisions in the short term, which is why they now needed the huge investment from Nippon Steel to modernise their steel plants. 

They're nowhere near the largest producer of American steel anymore because multiple other companies arose and were more innovative. US Steel isn't in dire straits because of Japan but because they were stubborn and would rather lobby for tariffs than build new steel plants.

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u/ricardoconqueso 1d ago

This. People unfortunately don’t talk about the other down side of tariffs: quality of goods. With little no competition, manufacturers have zero incentive to invest in their companies in new technology or methods. They raise prices and profit margins by decreasing quality. The manufacturer hamstrings itself on purpose to go slower and justify its own existence.

1

u/MasterDefibrillator 22h ago edited 22h ago

This is another free market myth contradicted by the actual historical record. Competition does not create innovation. It's mostly state funding that drives innovation. In terms of markets, what little innovation there is, tends to come from near monopoly sectors.

If the US steel manufacturing fell behind, it's got nothing at all to do with protectionism, and more to do with stuff like NAFTA and China destroying the US manufacturing base, and lack of government investment into research and procurement.

0

u/SsurebreC 1d ago

Here's the issue though. Let's say this is true. What would happen to that steel worker? They'd be fired. They have bills to pay and kids to raise. Fuck them since they can just find jobs writing software or something. Right?

When industries die, it means people lose jobs. They lose whatever scraps of assets they have, they lose homes, marriages are strained. Generational trauma.

Protection arguments are silly because if you wanted to favor your own home grown industry over foreign competition then make sure you have that industry in the first place. If you don't have it - the US can't just manufacture chips on Monday - then it's not going to help anyone.

If cheap goods in one country help one industry in the US while hurting another then you'll still have all those people being fired and an entire career choice for a few generation is no longer needed. What happens to them? Job losses come very quickly. Changing careers doesn't. Fixing your life is hard because someone made a few decisions.

And, unlike before, you don't have that safety net anymore. 401k is a joke compared to actual pensions of old. One-worker per household that supported a spouse and kids is replaced by two fully employed adults barely scraping by. If one - possibly both - now have no careers then what happens? You can't even flip burgers since those jobs are filled by others already and I don't mean teenagers. Fully grown adults are flipping burgers now.

I'm not in favor of tariffs or anything since, as I said, they might help if you already have this industry and various countries protect some key industries. I'm only talking about how if you remove any industry in one country by buying cheaper goods/services made elsewhere then you're destroying lives in those careers from that country which can't easily recover.

0

u/CankleSteve 1d ago

I think you have a good point. I think this is also why populist wings and ideas in today’s Republican Party helped shift large voting blocs in the Midwest.

You can’t tell a coal miner or steel mill specialist to “go code”, there are only so many jobs for that until demand rises. Even then automation requires less human interaction to be successful and with AI that need will only lower further. I would say that therefore the loss of manufacturing and jobs not related to the service sector cannot directly translate.

Friedman spoke during a time before this Digital Revolution so he may have changed his mind from purely theoretical waxes and wanes to consider realities on the ground.

3

u/SsurebreC 1d ago

That's exactly right - populism sits well with people even though it might not offer any actual solutions. It feels nice and when those hollow promises don't turn out then it's clearly the fault of someone else.

Friedman is definitely pretty smart but not only is he just a regular person but he's an economist. As the ole joke goes: economists have predicted 10 out of the last 3 recessions. It's more art than science and they're often wrong without any objective answers to serious questions. The usual solution is a mix of this and that rather than do everything what one of them says while ignoring the opposing point of view. I'm a big fan of the economist rap. I think Friedman might have counted somewhat on globalization but I don't know how much he counted on the greed. Just the abject greed of a handful of people.

Since the economy is mostly consumer spending - around two thirds - it means that people, not extremely wealthy people, are the ones that are the driving force of the economy. A rich person can buy an extremely expensive car once a year but that doesn't compare to how many poor and middle class people buy eggs every week. Instead of helping those - who would grow the economy - the focus for decades seems to be to help people who don't need any help, as if the investor class is the driving force of the economy.

0

u/CankleSteve 1d ago

Economics is trying to apply a science to an open system of irrational forces, which agrees to your point.

I am not an economist nor do I have any experience in the area so the idea of reciprocal tariffs specifically in response to tariffs preexisting from another nation as a tool in diplomatic exchange could be very effective in specific industries. Vietnam’s manufacturing is a fair target to get them to come to the table, but industries the US doesn’t naturally compete in or are critical to Vietnams stability (ie rice production) seem to be less useful.

We brought a sledgehammer into a surgery and the markets reflect that. I don’t think direct linkage to the 20s is useful due to the difference in the basis of economies domestically and worldwide but I understand the caution.

-1

u/2BrothersInaVan 1d ago

Or they will take the dollars and instead of spending them, buy a piece of America (property and stock market), essentially we are selling our own future to consume more now through trade imbalances.

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u/pomod 1d ago

Friedman is one of the architects of the disastrous neo-liberal economics that emerged in the mid 80's that has exasperated wealth disparity since. The economy needs guard rails else people get unnecessarily or excessively exploited; the environment gets polluted, wealth gets syphoned out of the middle and lower classes etc.

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u/czarczm 1d ago

What's interesting is that there are a lot of policies he was in favor of that probably would've been popular with the left. He was in favor of carbon taxation to stop companies from polluting. He pushed for a negative income tax to help the poor. NIT is basically a form of universal basic income. He believed in giving everyone a catastrophic health insurance plan to help against major medical costs a la Singapore's universal healthcare system. The right just tends to ignore these guard rail policy suggestions and just push his ideas for lower taxation, lower regulations, and less government.

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u/Sergio_Bravo 1d ago

Exacerbated?

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u/AVeryFineUsername 1d ago

It bated something 

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u/ricardoconqueso 1d ago

Go away! Bate’n!

1

u/Helmdacil 1d ago

Friedman does not consider in this video the national security concern of the US being unable to produce steel. If we outsourced all of our steel to china, and a war broke out, which imperiled the shipping relationship between china and the US, the US would be unable to make steel for a few months. A disaster.

With respect to batteries, raw materials and battery tech, the present moment is almost exactly described by that first paragraph.

Friedman also fails to consider the value of having the money directly in the USA vs "being sent to japan". An american worker who gets paid by american consumers will turn around and spend their american dollars in american restaurants, groceries, car dealerships, barbershops, houses, and so on. When a japanese employee gets paid by american consumers, the money goes to the same facilities in JAPAN, not the USA. The japanese probably spend a portion of the money on american services; but it will be less than if the money were kept in the USA.

Now, the Japanese are simply going to be so much more efficient at making some things, like rice cookers, and there is no point in america trying to outcompete the world on all production. We just can't. But there are a lot of things we ought to keep in-house. Be it for national security concerns. Be it for general raw materials like copper we can mine perfectly well in the states, with better safety and environmental regulations than places like Africa. And just because Americans should have some things that it makes exceedingly well for which we obtain a reputation. There was once a time when construction and power tools were predominantly made in the USA. We used to make things in this country for the country's consumers and life was better for it.

Blanket tariffs bad. Targeted tariffs for national security, are a tool that ought to be wielded to protect certain industries from being shipped overseas.

15

u/ricardoconqueso 1d ago

Or maybe we just don’t put all the steel eggs in the Japan basket. It’s advantageous to have multiple suppliers of goods

5

u/mirage01 1d ago

Or maybe we don't piss off our long-standing allies?

u/Ok-Echo-6711 1h ago

“We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

1

u/ricardoconqueso 1d ago

yeah, this. It'd be one thing if we said "Canada. Love you bro. Hey, I know we import lumber from you but we currently have a distressed domestic lumber industry and some of our people in the industry are hurting a bit, so we need to be a bit more competitive at home with a tariff to incentivize domestic purchasing on lumber. Times change, strategies change but know that we are firm friends and allies. Not trying to fuck with you"

Instead, Trump went "fuck you canada, and your drugs and illegals! You're not even a country, you're a vassal state you'd be nothing with out us. We are going to make you our 51st state, it will happen and your Prime Minister is just a governor. Eat a dick, take our tariffs and if you retaliate, we'll tariff you harder, and if you try and form alliances with other countries, we will tariff you even harder than that"

2

u/mirage01 23h ago

This is Trump's world view. He thinks it all as a zero sum game and the only way to negotiate is to bully someone into it.

1

u/Interesting_Pen_167 11h ago

Exactly I'm Canadian and if you guys just negotiated a deal that would be fine. In fact we did negotiate a deal with your President but he just flip-flopped and says it's bad now. I find it interesting that he is wanting us to bend but isn't willing to give us anything, merely the stick. Next step will be us throwing export fees on things and massively fining the Mag 7.

4

u/plummbob 1d ago

You can't use dollars in Japan.

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u/thebigpleb 1d ago

Yeah people don’t understand it’s a closed system excess dollars have to go somewhere either buying American products or investing in US dollar stocks and bonds

2

u/thebigpleb 1d ago

Question what do the Japanese do with the extra US dollars ? No one will accept them in Japan they have no use. So the only thing they can do is 1 buy American products or 2 invest in American denominated stocks or bonds.

1

u/coneconeconeconecone 3h ago

If Japan declared war, they wouldn't be able to use the green paper we gave them anymore. Also what will the Japanese do with the dollars they don't spend on American goods and services?

1

u/Helmdacil 3h ago

You guys seem to think that banks dont exist. The banks need to hold JPY and USD, they are neutral. When a US bank sets up in Japan, it has to obtain a pile of JPY. when they transfer a bunch of JPY to someone for USD, they have to replenish their JPY stores.

The point of my previous post is that purchasing power is transferred from american workers to japanese workers when you transfer say, shoe companies, to japan from the USA. That's just a fact. I agree with Friedman, that the visible vs invisible workers issue is a problem.

And I will add one more problem. the spigot of money is flowing out of the US economy somewhat, and the owners of the company are lapping at the spigot taking as much as they can drink in. For a company like apple, thats a gross margin of 50%, and a profit margin of 25%. The money shifts from getting paid to workers to getting paid to owners, aka, the top 10% of the country. The workers get fucked and the owners make bank. Thus contributing to our income inequality ever more. So it has been since the 1980s.

0

u/rchive 1d ago

If there were only one country in the world that produced steel, the concern about sourcing steel in the event that one producer turns hostile would be more legitimate. But that's not the world we live in. Many countries produce steel (including the US, so I'm not sure why we're talking about steel specifically, but anyway). Most of those countries are not hostile to the US.

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u/Really_McNamington 1d ago

I also came here to say fuck Milton Friedman.

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u/the_ranting_swede 1d ago

It can't be said enough. Fuck Milton Friedman.

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u/oddible 1d ago

Friedman economics is the enshittification of capitalism. Capitalism before Friedman was viable, after Friedman it has removed all the humanity from the market. The market exists to serve humans.

-1

u/RockSolidJ 1d ago

Yep. He didn't know at the time was that money would end up being held by billionaires and used to purchase assets like houses and stocks instead of goods and services being produced. His shareholder theory has become the dominant ethics of business. Friedman expected the government to put in rules to keep competition high but instead we got competitors merging together and regulatory capture so corporations could squeeze the people further.

6

u/A1ienspacebats 1d ago

Let's say USA is 100. Other super powers are 95, 90, 80, 70 etc. The USA is at the top but others are close behind propped up by the trade deficits with the States. Trump wants the USA to be so much more powerful than these other countries by taxing the trade defecits but they don't seem to realize that will take the USA down to a 70 and other countries to a 60, 50, 40 etc. Sure they are now more powerful by a higher percentage, but the wealth has decreased for the USA, as well as everyone else. And who actually wants to have decreased wealth even if you are "more powerful" than the other countries by a bit more. It's like going to war with someone who had no issue with you and chopping their legs off but now you're blind in one eye and missing some fingers. Sure, you're better off than they are but now you're much worse off than you were before.

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u/Firedup2015 1d ago

Friedman, Pinochet, Reagan, Thatcher and that ruling class generation's collective destruction of working class agency built the tower of shit Trump's isolationist alienation lives in. If there is a hell that bastard is right in the lowest circle, a traitor to his entire fucking species.

4

u/DangerousCyclone 1d ago

Not really. Manufacturing output has increased since the 90's while manufacturing employment has decreased. The reason those jobs went away was due to automation. This happens all the time, technological innovation gets rid of whole sectors of the economy and so far the only way out is to wait until that generation dies while the next grows up getting a job in the new growing sectors. 

That's why AI is such a threat.

2

u/Caspica 22h ago

Not really. Manufacturing output has increased since the 90's while manufacturing employment has decreased. The reason those jobs went away was due to automation. This happens all the time, technological innovation gets rid of whole sectors of the economy and so far the only way out is to wait until that generation dies while the next grows up getting a job in the new growing sectors. 

The far bigger hit against manufacturing employment is outsourcing. Factories in India, China, Vietnam, Bangladesh etc are not at all as efficient but they're cheaper and easier to build at scale. 

-6

u/AlphaTangoFoxtrt 1d ago

Seriously, this is just how innovation works. Like are people mad that the cotton gin took away jobs from plantations? Of course not.

Times change, and the work force needs to adapt. As manufacturing becomes more efficient, there's fewer manufacturing jobs. But new sectors open up.

Again going way back, the cotton gin removed plantation jobs, but opened up more textile mills.

1

u/1138thSword 7h ago

The cotton gin did not reduce work on plantations. It reduced the number of people required to remove the seeds from the cotton, thereby allowing the plantation to produce more cotton, requiring more people to pick that cotton. The cotton gin helped slavery continue.

I see your point though.

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u/Vesemir668 1d ago

Friedman was the main guy justifying trickle down economics in the 80s, that gave rise to the massive wealth inequality and techno oligopolies with great power today.

He was also a buddy of Chile's brutal dictator Pinochet and helped him create a neoliberal economy.

Not a man I would follow for advice.

4

u/idreamofdouche 20h ago

He wasn't a buddy of Pinochet.

3

u/Interesting_Pen_167 11h ago

Friedman might have been wrong at times for sure but he is just an academic he really wasn't a bad guy IMO. I don't think he had a very close relationship with Pinochet and merely advised them on economic matters. If you have any evidence of the contrary please post it here.

1

u/Trepeld 1d ago

Yeah a piece of shit through and through. Still, I think it’s valuable if only to demonstrate that literally nobody across the ideological spectrum thinks massive tariffs are anything but beyond damaging

1

u/Kundrew1 3h ago

Friedman was incredibly free market in the way that Adam Smith was. He actually believed in the invisible hand. What both really failed to account for would be how corporations would get laws passed to not make it a free market and only seem like one.

Whats interesting is how the modern republican is so far removed from the republican party of Reagan.

-17

u/noxx1234567 1d ago

Chile is the wealthiest economy in south america by a wide margin

If you want to discredit him at least give a better example

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u/ikenjake 1d ago

Chile’s entire economy crashed in 1982 under Pinochet because they had horrific wealth inequality and overreliance on foreign capital coming in and buying formerly nationalized industries. The middle class was crushed and unemployment reached almost 1/4 of the country. The Chicago boys could have only existed in a brutal authoritarian fascist state like Pinochet had, in which dissidents were killed or imprisoned, because it needed violence to quell the mass civil unrest as a result of his policies. Their economy is not “booming” because of changes made 40 years ago

8

u/Vesemir668 1d ago

If Chile got to be the wealthiest economy in South America by re-instating slavery, I would not view that positively.

Same thing applies here. Getting rich by doing the wrong thing and buddying up with world's richest country is no virtue.

2

u/manticore124 1d ago

This is the problem with these economists people that fail to see people as people an instead see them as numbers in a spreadsheet. "But their numbers say they are the wealthiest" At what cost? At what cost today? Who is benefiting from that "wealth"?

2

u/KofOaks 1d ago

Libertarians usually have the foresight and wisdom of 3 kids in a trench coat.

15

u/CaptainApathy419 1d ago

I’m far from a Friedman fan, but his I, Pencil speech is a great encapsulation of how interdependent the modern world is and why that’s a good thing. 

https://m.youtube.com/watch?v=67tHtpac5ws&pp=0gcJCdgAo7VqN5tD

14

u/SenHeffy 1d ago

I Pencil is Leonard Read, not Friedman

2

u/rchive 1d ago

As you can see in the linked video, Friedman did do a segment based on the essay even though he didn't write the original.

2

u/NUMBERS2357 22h ago

Couple of problems with this:

  • doesn't take into account the possibility that Japan (or whoever else) is subsidizing their steel exports and selling at a loss to put the US's steel industry out of business, and then once that happens they'll take away the subsidies, charge us more, and we'll be stuck buying expensive steel. This wouldn't work if you could easily ramp up/down steel production as easily as turning a dial, but ... you can't.

  • Japan won't necessarily pay for US made products with the dollars we give them for the steel. If it were so, and all the dollars that we sent over there for stuff they sent back for other stuff, then by definition there wouldn't be a trade deficit. But there has been for decades now.

  • The reason people care about the steelworkers isn't just visible vs invisible harm. It's more thinly spread harm. Tariffs wouldn't necessarily make an equal number of people lose work, they would make things slightly more expensive and give lots of people a slightly lower standard of living. Might still be net positive jobs and net negative economically, whether that's worth it, depends on what you value.

  • It's possible that having a thriving steel industry keeps institutional manufacturing knowledge in America that in the long run is needed for a healthy manufacturing economy. If we stop making steel at scale because Japan will sell it to us cheap, maybe one day we'll find we can't efficiently make steel anymore.

That said, trump's tariffs are stupid. Tariffs could have some targeted uses, but also real drawbacks and on net makes the economy less efficient. Tariffing the whole world at random levels is Very Bad.

2

u/peshkatari 13h ago

He did not know it at the time, but there is little that people want to recycle their dollars in the US for, other then the stock market, of course. That is the main reason why the rich got richer, the flow back went to the rich owning stocks. To his defense, he could not have predicted what a monster the capital markets have become. They not only are in need of foreign inflows to work but every couple of years the governments should tithe a couple of trillions too.

16

u/enviropsych 1d ago

Milton Friedman is the father of Supply Side economics. He is not to be listened to about anything. Find a better spokesperson for your point.

5

u/DOUBLEnsS 1d ago

Milton Friedman on immigration tells us exactly why we are in this current hellscape.

3

u/shanehiltonward 1d ago

And then you lose your steel industry, and you lose your microchip industry, and you lose your memory fabrication industry, and clothing industry, and heavy equipment industry...

And then you must import everything and become a debtor nation.

2

u/idreamofdouche 19h ago

A debtor nation? Do you think it's the state that's buying thise things?

There's nothing wrong with having a trade imbalance. You have a trade imbalance with almost every single person you buy something from.

3

u/TimHuntsman 1d ago

Mr “Trickle-Down”.

3

u/Akira282 1d ago

Tariffs ultimately hurt those dishing it out. It says "hey, I don't want to compete elsewhere, I want folks in the US to buy my thing, even at higher prices and possibly inferior quality.

1

u/Silly-Match1953 9h ago

“Very often you bring out the logic by carrying it to its extreme” I believe is absolutely the most prescient thing he says in this video.

Think of the logic of the trump organization’s moves.

The media has failed to paint an adequate picture of what will occur if Trump’s logic is brought to its extreme. If it were to paint a picture adequately of what is to come, people would be furious at the inherent risks to democracy and free speech the direction of Trump’s logic will inevitably lead us toward.

1

u/LeedsFan2442 4h ago

He's correct in the economic sense but certain industries have strategic value as well. You need a domestic steel for example in case foreign supply is threatened in a war.

COVID is another example where it showed the need for a domestic supply of essential products like PPE

1

u/McMonty 1h ago

> those Japanese companies aren't going to just frame the dollars they get. They'll spend them somewhere, and those dollars will eventually circle back to buy American stuff.

This is the problem. They aren't circling back. Others are hoarding them to function as the global reserve currency. This has gone on for a while, can go on a bit longer, but it is fundamentally unsustainable. The only thing working for them right now is that China's monetary policy of devaluing the yen is also fundamentally unsustainable. Gonna be a bit bumpy during the period when these two balance out...

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u/ikenjake 1d ago

Evil vile man.

-9

u/Jipptomilly 1d ago

Ah, yes. Milton Friedman. The 80s were great, man. Please do me a favor and come back to life and try living on a school teacher's salary. Feel the trickle.

I won't deny the man is a Nobel prize winning genius - but he set us on this course.

16

u/enviropsych 1d ago

Genius? No. I deny that.

0

u/Swizzy88 1d ago

Is this some kind of trickle down economics on a global scale?

-11

u/evilfollowingmb 1d ago

If only Reddit were interested in Friedman’s ideas that weren’t opposed to one Trump policy…

8

u/Ghost_man23 1d ago

It's bizarre to see all the comments posted immediately on this video unanimously dismissing him. I lean left, but Friedman was a genius and intellectually honest and worth listening to, even if you disagree with him (and I disagree with him plenty). Just a good reminder how warped some of these subreddits are that we are dismissing Milton Friedman entirely. In this same Q&A he goes on to talk about the rights of gay people and legalizing drugs in the 60s/70s.

7

u/nieht 1d ago

I think the sentiment in here is they are focusing on the results of the policy he’s discussing, which in my opinion are not independently responsible. In the clip, he is right about other industries filling the gaps… but what this and most conservative policy ignores is what happens in the interim.

Industry doesn’t appear overnight, and when a bunch of people lose not just jobs, but careers, the transition is very difficult, at times impossible. My opinion is you need to pair this global economic theory with robust social safety nets, to which the US seems to be allergic. You need something to bridge the gap between transitions otherwise people will fall through the cracks.

4

u/Inamanlyfashion 1d ago

Watching Friedman on Donahue is such a wonderful experience. When Donahue welcomes him on the show he says something along the lines of "We may not always agree, but every time we talk, I always understand exactly what you mean." He very clearly respected Friedman because he realized that he was both intelligent and honest. 

1

u/Spiritofhonour 1d ago

I find it interesting few of those comments actually address specifically what he is talking about in the video but instead cite other things or just attack him as a whole.

0

u/jspook 1d ago

A broken right-wing-economic clock, being right only two minutes per day, can be dismissed at every moment of the day.

Right-wing economic doctrine got us into this mess. If your point is that even bonkers right-wing economists think using tariffs like this is foolish, then great. If your point is that Trump's complete mishandling of the economy means we need to double down on right-wing economic doctrine, then yeah, people will feel the need to push back against that.

6

u/zlex 1d ago

The US has generally been dominated by Keynes economic theories…

Also tariffs, protectionism and command and control economics is generally an ethos of more left wing economic policy do of course anyone right of centre would disagree.

0

u/manticore124 1d ago

Genius? The only worth in listening to him is to show people what a soulless ghoul is and to teach them to not be like him, nothing more.

0

u/rchive 1d ago

He's a soulless ghoul because he wanted an economy that made everyone wealthier and freer?

-1

u/manticore124 1d ago

No, he's a soulless ghoul because in the name of the "economy" he couldn't care less about his fellow man. Endorsing Pinochet and his massacre only because he was doing the "right thing" (A.K.A following MY ideas) economy wise is just the conclusion of his philosophy, a philosophy were people are just numbers and if a third have to die in the gutter just so "the economy" can do fine then so be it.

3

u/idreamofdouche 19h ago

He never endorsed Pinochet.

-1

u/manticore124 18h ago

Oh no, he just went to Chile to give talks, got a reunion one on one with the guy, praised his economic reforms in the press, blamed all of his problems (economic wise) to destabilizing marxists actors and kept saying that he was a nice chap until his dying breath. But at least he wasn't endorsing him.

The only reason why he didn't openly endorsed him was because of pressure from his peers and because it threatened his nobel prize.

2

u/idreamofdouche 18h ago

He was asked for economic advice by Pinochet so he gave it. He praised the moving towards a free market. He didn't like Pinochet and did not support him but obviously he supported mving towards a more liberal economy which is what he spent his entire life promoting.

You can be opposed to someone and still say that certain policy changes are good.

-1

u/kahmos 1d ago

Have you considered that the reason why Reddit is so warped is because some entity is trying to shape opinions based on group mindset?

1

u/Ghost_man23 1d ago

I was essentially alluding to that. Every social media platform is riddled with bots, I suspect mostly from Russia and other adversaries. I stay away from social media in general and try to heavily curate my reddit feed to avoid them. But obviously, I’m not always successful. 

1

u/kahmos 1d ago

There's a rumor that a large amount of reddit users are from Eglan Airforce Base, which only employs 5,000 people but represent 100,000 accounts.

-4

u/manticore124 1d ago

Fuck Milton Friedman!

-2

u/tfalm 1d ago

This dude is basically Mister Trickle-Down, the guy responsible for the idea that companies' sole responsibility is to make shareholders money, period. He's single-handedly done more harm for US wealth disparity and unethical corporate practices than virtually any other human being.

No offense if I dgaf what he has to say about tariffs.

-5

u/nyc-will 1d ago

This dude deserves to burn in hell for eternity and his videos should only be shown as examples of horrible policy.

-3

u/garlicroastedpotato 1d ago

It's crazy that people are trying to present neo-conservatism as an alternative to Trump. It turns out, Milton Friedman was wrong. At the time it was German and Japanese steal. Today, it's Chinese steel. And Chinese steel is so cheap that no other steal industry in the world can survive without tariffs or subsidies.

And what does China do with that steal? Do they just make it and give it to people out of charity? No, China uses it to build products which they also sell us. The steal we're buying is just the excess steel they're not using that year in building washing machines, dryers, cars, consumer electronics, basically they've become the world's manufacturer and over time they've taken over every single dominant market.

And what if America had no steel industry and relied entirely on Chinese steel? Could China not send defective steel to America for building its navy, tanks and airplanes?

I'm not saying tariffs on absolutely everything. But there are things a real country should be making themselves. In an absolute free trade countries that have centralized economies gain monopoly control over the price negotiations for their people and can offer other nations lower and can manipulate price on other countries. Maybe this year we want Germany to be more powerful so we'll give them a discount, and maybe we'll make France better this month.

Just imagine Hitler invades Poland and Chamblerlain declares, well if we put a tariff on Germany it's really just us taxing ourselves!

1

u/Issoloc 18h ago

You know, I read stuff like this all the time. And its correct, in the details. Its correct, in a world that hasnt existed for a century.

Let me solve your conundrum. What happens if China cuts off us steel as a preperation for an invasion? Well, the US drops a nuke on Beijing.

Or the Chinese could just keep selling steel. Which do you think works out better for the Chinese in the long run?

1

u/garlicroastedpotato 11h ago

And here we are and maximum neo-liberal agenda. If a country is not willing to comply with American demands they just get invaded and have a puppet government installed. Except that didn't work so well for the US in practice. The wars in Afghanistan and Iraq caused countries to turn trade away from the US and created the very situation we're in now.

0

u/ratpH1nk 1d ago

It seems in retrospect to be a very myopic interpretation of the market. Japan is deflating the price of steel, making it cheaper to sell abroad with market interventions. Japan knows steel is important. Steel jobs are important good paying jobs. The steel industry is the bedrock building material of the modern world. It is an industry that has a looong life ahead of it still.

So these free market idealogues (who has Smith on a tie, its like a religion) say, in reply NO! We in this case need to DOUBLE DOWN on free market principles. Jettison the steel industry and wealth and prosperity it brings to the US. All of that collective expertise in the search of CHEAP GOODS FOR BUSINESS (and maybe your car a a little bit cheaper. But make no mistake, either intentionally or not those cost saving (materials costs etc..) were NOT passed on. The BOM was X dollars cheaper and the MSRP was unchanged. Profit margin increaased. Lather rinse and repeat with EVERY manufacturing sector in the US.

What he does not say when he says this doesn't effect unemployment numbers is the types of jobs that replaced these steel jobs and the auto jobs, and the furniture making jobs and many other manufacturing jobs. What we have seen is indeed unemployment is low but the QUALITY and SALARY of the jobs that replaced those manufacturing jobs SUCKS. Full STOP.

In every way this has made the US WORSE -- competitively, national security, wages (that trickle down to service industry like diners and cafes and bars etc..), lack of income security which depresses travel and hospitality industries. FOR WHAT? Increased profits and lower costs for industry as a whole.

0

u/idreamofdouche 19h ago

What we have seen is indeed unemployment is low but the QUALITY and SALARY of the jobs that replaced those manufacturing jobs SUCKS. Full STOP.

And you base this on what?

Also, cheaper goods help helps not only corporation. Just like it's the consumer that has to pay more when goods get more expensive because bussinesses prices, consumers pay less when goods are cheaper as bussineses lower their prices.

A strong economy benefits everyone. You ideas are built on populism, not reason.

1

u/ratpH1nk 9h ago

On data, my random internet commenter. Like 30+ years of economic data.

https://www.jec.senate.gov/public/_cache/files/94bf8985-1e87-438b-9a3a-e3334489dd30/background-on-issues-in-us-manufacturing-and-supply-chains-final.pdf

https://www.citizen.org/wp-content/uploads/nafta_factsheet_deficit_jobs_wages_feb_2018_final.pdf

https://www.epi.org/publication/botched-policy-responses-to-globalization/

https://www.upjohn.org/research-highlights/understanding-decline-manufacturing-employment#

https://tcf.org/content/report/manufacturing-jobs-worth-saving/

https://www.visualcapitalist.com/the-decline-of-u-s-manufacturing-by-sector/

TL;DR: From EPI in 2022

The decline in manufacturing employment and simultaneous rise in service industry employment means good middle-class jobs in America are being replaced by jobs with lower pay and benefits. Average wages and benefits in manufacturing are $40.71 per hour, 13.9% higher than in service industries.

-4

u/PatriotsAndTyrants 1d ago

For anyone wondering which side of the Class spectrum Milton was on.

https://en.wikipedia.org/wiki/Milton_Friedman

Friedman served as an advisor to Republican U.S. president Ronald Reagan and Conservative British prime minister Margaret Thatcher.[18] His political philosophy extolled the virtues of a free market economic system with minimal government intervention in social matters.

Also,

His ideas concerning monetary policy, taxation, privatization, and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve's monetary policy in response to the 2007–2008 financial crisis.[16]

This guy was definitely a capitalist apologist and if he were alive today he would definitely be supporting all the cuts the Republicans are making.

-1

u/WEFairbairn 1d ago

In the video he doesn't address what happens if the country sending you subsidised goods enacts protectionist barriers to trade that prevent your country selling in their markets. This is basically what China has leveraged to become the second largest economy, be it tariffs, anti-foreign regulations or straight up prohibition