Milton Friedman - Free Trade vs. Protectionism

[IBloodSweatTears]

I freaking LOVE Milton. But he is just wrong on the issue of Trade... Look where Free Trade has gotten us. Near trillion dollar trade deficits, We've exported or jobs & have becoem a nation of made in China.

I advocate a balanced trade account. But were so deep in a hole, it's going to take tariffs and a massive increase in manufacturing output, which can be achieved threw inviteing more capital back into this country. In addition to 30-40 percent tariffs on all imports, excluding Food.

[IBloodSweatTears]

If countries wan't to trade on our markets, wonderful. We need more trade, i'd like to talk & trade with Cuba, Iran, among others. Freetective Trade. Trade with all, while protecting our own industry. The WTO restricts us from doing whats in our best interests. We regulate our own trade, not an international organization.

[IBloodSweatTears]

I dont want to have all my jobs shipped overseas & let our country become a dubping ground for the worlds products. And I don't want our manufacturing bae to be completely obliderated due to all of these trade agreements. I'd rather have 30-40% tariffs then an income tax. Tariff & Excise tax's funded this nation for more then a century, 30-40 percent tariffs would raise over 1.0 trillion, all but eliminating the income tax.

Free Trade is piracy. Commerce & Trade with all!

[midgetman8888]

1:55 the man got TOLD!!! hahahahha

[midgetman8888]

You make a good point. The advantage these companies have to enter these industries, is the vast amount of capital the have at their disposal, and definately political contacts. But what is a company? It is who owns the capital, the stock, so it is up to a few wealthy individuals that access a far more favourable market than the guy by himself, through political contacts, money, and industry know how. A monopoly of people if you will.

[midgetman8888]

nothing wrong with the free market, it's the access to this market that is the problem

[WBeez]

@midgetman8888 With all due respect, access to this market, assuming you mean the United States free market, is not difficult. We have very low licensing and registration fees, an extremely accessible credit system, not to mention risk-sharing ability, high liquidity in markets, and incredibly available information.

[midgetman8888]

@WBeez thats now what i meant, i was addressing the growing gap between rich and poor

example apple traders A and B. trader A has been around for a while and has access to 40 suppliers, B just entered and has access to 5. trader A obviously can buy apples at a cheaper rate, meaning he has an access to a more favourable market, while B will have to make a smaller profit or a loss on selling apples compared to A. This analogy can be used to compare a rich country to a poor one. Thats the problem.

[WBeez]

@midgetman8888 But wouldn't you agree that entry varies for different industries? For example, the costs of entry associated with the manufacturing of steel or developing a railroad line are extremely high, and for those industries your point is accurate. The costs of entry associated with starting an advertising company, however, are rather low and feasible to virtually anyone with the creative ability to attract customers.

[IBloodSweatTears]

@WBeez Yes access may be easy. But why isn't industry coming here? Because it get's punished for doing so with high tax's/regulation, ect... And for the people who are here, you will be lucky to start a business in 3 years, in China you can start one in 3 weeks. There is no credit here, because of the artificually low interest rates by the Federal Reserve System. And regardless of the liquidity, the currency is being destroyed! Liquiding capital if you have a worthless currency.

[WBeez]

@IBloodSweatTears Sorry to say, you're mistaken. Starting a business depends on the state of course, however, I started my restaurant and got all of my licenses in 5 months, and that's with a use review. There is definitely credit here. In fact, it's better than most nations. The Fed can only influence interest rates, either by changes in discount lending or buying and selling government securities. Generally those actions (monetary policy), affect the federal funds rate for banks.

[IBloodSweatTears]

@WBeez If everyone could start a business in 5 months here, and there was Capital available! That would be a dream, we wouldn't have 0 economic growth right now! I'v taken surveys in public events of over 200 individual persons, 88% say they have a good idea, but there is no funding available. 3 percent say they started there dream business, but there was alot of red tape & it was hard to get funding. The rest said other various things.

Interest Rates are an important part of economic policy.

[WBeez]

@IBloodSweatTears First of all, we don't have zero economic growth "right now" and you have to keep in mind that smaller developing economies are expected to have higher growth rates because they're starting with a much smaller number. (i.e. if you start with a dollar, it's quite easy to get 100% growth). Second of all, I think your survey has left out some very important questions. Not in any economy can every person start their own business with ease. Who's the judge of "a good idea?"

[IBloodSweatTears]

@WBeez So, if that was the case for everyone, we would be bustling with new small businesses. Interest Rates from the federal Reserve influence a great deal, they effect savings, return on bonds, and when rates are artificially low, banks have no incentive to lend.

The Fed can create depressions at the snap of a finger, and they are the cause of inflation. Let the market determine interest rates and they would be, 8 percent roughly.

I wish your experience was everyone's. but that's not so

[WBeez]

@IBloodSweatTears Now you're looking at the other side of the equation. Before it was the borrowers, now the lenders. Let's continue to look at it from the borrowers perspective. The entrepreneur can have a better chance of success, and businesses that already exist can have a better chance for expansion, when the cost of borrowing is cheap. (or, in other words, when interest rates are low.)  It seems as though you're basing your assumptions off the first chapters of Econ 101.

[IBloodSweatTears]

@WBeez The Federal Reserve has interest rates at 0 to 0.25%. Main street can't borrow att those rates. The only people who benifit are Wall Street Banks & The government, because they can borrow from the Fed at low rates. Main Street Savers, Lenders & borrowers all lose. If you let the market determaine interest rates, they would be higher. Cheap borrowing helps only a few set of people, but Main-Street can't borrow at those artificually low rates. What is needed if reasonable interest rates.

[IBloodSweatTears]

@WBeez You have to have reasonable, Mutually benificial interest rates. The entreprenuer can't find capital if it's consolidated in the hands of a few. 2nd, I don't know what kind of growth your looking at, but even the worst indicator for economic growth (GDP) only rose 2% last year, and it's not even a viable way of judging growth!

I didn't mention all the questions in the survey, but, the point remains, there was no funding available, maybe because there is no savings!

[IBloodSweatTears]

@WBeez And a question. If there was no minimum wage, how much would you pay your workers?

[WBeez]

@IBloodSweatTears As little as they would accept for the job.

[IBloodSweatTears]

@WBeez I think the 8.25 minimum wage benifits the business person more then the employee really. But no minimum wage would be mutually benificial. You, as a business man, don't need to compete for labor, you don't have to give raises, because government mandates you pay a floored rate. But an $100 minimum wage would cause you to fire everyone.

No minimum wage would cause you to have to compete for labor and low skilled workers could get jobs. What do you think?

[WBeez]

@IBloodSweatTears You might consider reading the entirety of one of Milton Friedman's books. I recommend doing so with all due respect.

[IBloodSweatTears]

@WBeez Thanks for your recomendation. But Milton was not exaclly a Monetary policy, Federal Reserve, Interest Rates, expert. Disagree with him on Trade Policy, And the Great Depression.

May I reccomend to your any and all books by Henry Hazlitt, Ludwig Von Mises. Economic's in One lesson is good.

But borrowers don't benifits from 0.25 interest loans, because credit markets will be frozen with those type of low rates. Low interest rates caused the housing bubble.

[mujaku]

America’s rise to economic greatness had nothing whatsoever to do with free trade or the malarkey of Adam Smith who one day absentmindedly tried to steep a crust of bread in his teapot! It had everything to do with America’s own version of mercantilism which is far from capitalism or free trade.

[mujaku]

Kevin Phillips has observed that the vested interest in behalf of free trade was "obviously beneficial to perhaps 10 to 15 percent of the population, detrimental to some 30 to 50 percent." [Opening America's Market: U. S. Foreign Trade Policy since 1776 by Alfred E. Eckes Jr, 283.]

[mujaku]

Karl Marx advocated free trade because tariffs builds up the nation-state while free trade breaks it down. Also keep in mind what President McKinley said: "Free trade results in giving our money, our manufactures, and our markets to other nations."

[LouieDaProtectionist]

where are the jobs Uncle Milt? I thought we'd let the world in and prices would be cheaper. 2 BIG LIES. the profit goes to the CEO's, and prices aren't lower than the 80's adjusted with inflation.

[39sumer]

This is the only libertian view i disagree with. The tariffs sole purpose is not to protect society it is also made to gather taxes. lets say that a tax increase is needed to pay for government spending(which should almost never happen) do you put a income tax on people which would displace anyways. Or you can put a tariff which would reduce the trade deficit and I believe helping the economy

[BelieversinThings]

@39sumer Any tax imposed anywhere in the economy will eventually be paid by the general population. Taxing the people never helps the economy.

[39sumer]

@BelieversinThings exactly so if a tax is need then it might as well be a tariff because it at least does some good

[BelieversinThings]

@39sumer Give me an example of a tariff doing good.

[39sumer]

@BelieversinThings give me a example of a tariff doing bad

[BelieversinThings]

@39sumer There are sugar tariffs designed to help protect American sugar farmers from competition from South American sugar farmers. The result is that Americans pay three times as much for sugar than the rest of the world. This also leads to high fructose corn syrup behind used instead which misallocates corn production and drives up the price of corn. The Smoot Hawley tariff led to higher unemployment, and after more regulation, the great depression.

[39sumer]

@BelieversinThings with the sugar, the tariffs did what the were suppose to though they were a bit drastic. They made american businesses, that are leaders in food production, buy american goods. It also gained the government revenue which if it had to take though a different tax such as income the consiqunces would have been much worse. I am against the government doing anything that isn't supporting a national DEFENSE or protecting liberty. This method of revenue gainin does the least harm

[BelieversinThings]

@39sumer The sugar tariffs raised the cost of living for all Americans. It did what it was supposed to, but at what price? Diminishing all Americans' standard of living for the sake of a few select industries is the wrong answer. A federal sales tax is the fairest, best way for the government to collect revenues, and does no harm.

[39sumer]

@BelieversinThings a sales tax does harm it raises prices just as a tariffs do only it does nothing to protect american companies. A sales tax discourages consumption of all items not foreign. Both diminish the standard of living

[BelieversinThings]

@39sumer Sales tax taxes everything equally without playing favorites. Does it protect a candy company to make their cost of production higher so they have to raise prices and cut employment. Higher sugar prices only help sugar companies at the cost of everyone else. If sugar is one third of the price in south america, that creates an incentive for companies that use a lot of sugar to outsource. Central giovernment planning always results in the opposite of the desired effect.

[IBloodSweatTears]

@39sumer And what about a Payroll & Income Tax? A 23% sales tax in this country, could replace the Corporate Tax, Income Tax, Payroll Tax, Capital gains, Dividends, Savings Tax, Repatriation Tax, Death Tax, Inharitance Tax, Gift Tax, and Estate Tax. That easily offsets the increase in costs at the register, that gives consumers loads more disposable income. It's much more conducive to ta people when they spend there wealth, not when they accumulate it.

[IBloodSweatTears]

@39sumer I mean, the Payroll Tax hurts the poor about... 100x more then a national sales tax could. In regard to tariffs & the rise in prices with tariffs & a national sales tax:

Prices rise much more due to the Federal Reserve. The Fed prints the money, the value of the money in circulation goes down, prices go up. The Inflation Tax is a much more deadly tax then a tariffs or a sales tax. Stabalize & strength the currency & stop inflation and it offsets tariffs.

[IBloodSweatTears]

@BelieversinThings I agree with you on the sales tax completely, but, in regard to tariffs. A Sales Tax & Tariffs could completely fund the government in full, and fully eliminate the Income Tax, Payroll Tax, among others. In addition. What comes first, standard of living, or a job? the job creates a high standard of living, therefore, by lowering protections and allowing the market to become a dumping ground, jobs will be exported offshore! How many jobs did NAFTA kill? Millions!

[IBloodSweatTears]

@BelieversinThings Example of tariffs doing good you ask? Moderate-high tariffs, 1790 - 95% of government revenue from tariffs, over the next 100 years, that trend continued, while, over that time period, The United States became an industrial powerhouse as it's at home industry grew. 1913 hits, the year the income tax is created, Tariff Revenue's as a percentage of the budget fall rapidly.

We subsited & thrived on tariffs & excise tax's for the better part of our history.

[IBloodSweatTears]

@39sumer Free Traders don't like Tariffs, but when you ask them Tariffs or the Income tax, they are stuck. Moderate tariffs could all but kill the income tax. I propose, as future president of the united states:

We eliminate the Income Tax, Payroll Tax, Corporate Tax, Savings Tax, Capital gains & Dividends tax's, Repatriation Tax, Death, Inheritance, gift, and Estate tax's.

Fund a small government with a 23% National Sales Tax, Tariffs, excise tax's, and a Value Added Tax.

[michaelvargo80]

Free Trade is good as long as it is free trade, it is impossible though when other countries manipulate their currencies, subsidize their industries etc. Right now we have multinational companies moving business wherever they can get their near slave labor, why not move all the jobs to Asia than? If all countries and companies played the same game free trade would be the answer.

[PenguinProseMedia]

@michaelvargo80 If someone from another country wants to sell me a (legal) good or service which I want to buy, what gives you the right to interfere in that exchange? What gives you the right to force that seller to lose my business and force me to pay a higher price somewhere else? Your disapproval of some foreign gov'ts domestic industrial policy empowers you to force down the living standards of anyone that doesn't share your opinion?

[manoman0]

@PenguinProseMedia try to explain that a broad public.......

[billsurlatete]

@michaelvargo80 i wouldn't worry about the chinese keeping their currency cheap if thats what your referring too. it makes their exports cheap.

[IBloodSweatTears]

@billsurlatete Cheap goods from China mean nothing if it's building up our deficits & making us dependent on tehre production, while there goods are dumped on our markets thus destroying our at home jobs. We need Tariffs now.

[billsurlatete]

@IBloodSweatTears complete and utter nonsense. in what way could it possibly build up our deficits. besides, you cant deny people good value. telling someone where they have to buy something only drives prices up and makes things unaffordable for the ordinary person. in the words of milton " what you said was just fallacy from beginning to end"

[pratatat99]

The logics are undeniable.

[jwka2001]

FIRSTIES!!!