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.
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.
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.
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.
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.
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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.