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.
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.
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
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.
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.
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.
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.
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.
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u/Spiritofhonour 2d 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.