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.
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.
You're not relying on a single exporter of steel, though. You're just buying from the best value supplier. There's plenty of others to buy from if that deal soured.
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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.