Free Trade and the Steel Industry

Dr. Milton Friedman gives a concise and lucid argument for international free trade at Utah State University in 1978.

A common belief is that big companies will sell below cost to drive out their competitors and then raise their prices. This is a fallacy and there are few professional economists who believe otherwise. Historian Thomas E. Woods offers a simple explanation in this video:
http://www.youtube.com/watch?v=V6dD-i...

For an example of the steel industry's anti-free enterprise rhetoric listen to Dan DiMicco, CEO of Nucor, one of the largest steel producers in the United States, during this interview with Lesley Stahl of '60 minutes'. In this example, just as Dr. Friedman professed, Nucor benefits at the expense of Caterpillar which relies not only on steel, but exports as well.
http://www.youtube.com/watch?v=lYyrqS...

The anti-free trade protectionists will say we need exports to create American jobs. But, they say, we need tariffs and import quotas to protect American jobs from "unfair" competition. This is another fallacy as Dr. Friedman explains. When you impose tariffs on imports you hurt exports as well! To understand this better read the following:

Debunking the Mercantilist Trade Doctrine
http://mjperry.blogspot.com/2011/04/b...

Another Name for "Trade Deficit" is "Capital Account Surplus," Balance of Payments Always = 0
http://mjperry.blogspot.com/2011/04/a...

Lerner Symmetry Theorem
http://en.wikipedia.org/wiki/Lerner_s...

Balance of Payments
http://www.econlib.org/library/Enc/Ba...

International Capital Flows
http://www.econlib.org/library/Enc/In...

Doubling U.S. Exports = Doubling U.S. Imports
http://mjperry.blogspot.com/2011/01/p...

Trade is Mutually Advantageous -- and Its Advantages, for All Parties, are Measured in Imports
http://cafehayek.com/2011/01/trade-is...

Chapter 12 of Economics in One Lesson by Henry Hazlitt
http://www.fee.org/pdf/books/Economic...

That Which is Seen and That Which is Not Seen by Frédéric Bastiat
http://bastiat.org/en/twisatwins.html

We hear many people constantly lamenting the fact that the American manufacturing sector is dead or dying. (Just read the comments section of this video!) This has been repeated so often that it has become conventional wisdom. This is another myth not supported by any evidence. In fact, the data shows the opposite is true: America is BY FAR the world's largest manufacturing nation. Our output is higher now than it has EVER been in history.
http://mjperry.blogspot.com/2011/06/u...
http://blog.american.com/?p=25164
http://mjperry.blogspot.com/2011/05/a...
http://mjperry.blogspot.com/2011/05/m...

Even though this video focuses on the steel industry, it applies to all others as well. Did you know that American consumers pay, on average, twice the world price for sugar? Once again, special interests benefit at the expense of everyone else. Read:
http://mjperry.blogspot.com/2009/08/b...
http://mjperry.blogspot.com/2010/01/s...
http://mjperry.blogspot.com/2010/02/f...
http://mjperry.blogspot.com/2010/02/b...
http://mjperry.blogspot.com/2010/03/m...
http://mjperry.blogspot.com/2011/01/b...
http://cafehayek.com/2011/01/not-so-s...
http://www.youtube.com/watch?v=8oijbO...

This video is an excerpt from Milton Friedman Speaks: Lecture 02, "Myths That Conceal Reality"
http://www.freetochoose.net/store/pro...

• Category

  Education

[PRINCECOUNTYBEATS]

Im sure you were the one who committed to the "Careful thought of the argument of this Jew". Thats right i am being sarcastic to you, you racist idiot loser.

[Tomasz Rakowski]

Regarding the competitor eliminating your industry: It's unlikely that you and him are the last 2 producers of anything. if he enters the state of global monopoly then yes, he can set his prices at will. However, historically that has never been the case. Even if someone becomes a global monopoly, jacking up prices would lead to creation of competitors. The only circumstance under which monopoly can exploit is by forcing regulation that will block possible competition. Keep gov. out of economy.

[Xylos144]

This won't give you the exact answer you're looking for, but look into the concept of "Natural Monopolies"

Also look into the Airbus vs Boeing issue that's been going on for decades. I'm not saying I encourage subsidies or protections necessarily, or that I think monopolies are so common or enduring that we need protection from them. But there are cases of natural monopolies occurring. Typically these are high-upfront cost, high skill, high specialty industries, like airplane construction.

[Khalif Jones]

what about internet in America? we have slower internet at a higher cost compared to most countries. I'm sort of becoming a libertarian and there are some holes in the ideology i would liked answered before i completely turn libertarian

[LordSantiagor]

But then as prices go down, the outside has incentives to buy and they get a better deal for the dollars they got before.

If you look at goods instead of dollars, you borrow goods, you increase your productive ability for a while, but then you have to pay some kind of interest for what you borrowed.

Again, in an ideal situation, the free market gives the optimal solution.

[Ronnie Burns]

Well, I think that is actually a pretty unfair assessment. His "ideals" aren't new ideas, they are largely ripped out of the Wealth of Nations, which was written by a Scotsman. Milton Friedman was really nothing more than a spokesman for small government and free trade, he didn't create these ideas. As for the Jews at the top, Milton Friedman advocated for basically eliminating the Federal Reserve. And allowing real market competition, instead of cronyism.. He is for freedom, not enslavement.

[asmudeus]

Do you truly support this man's ideals? He'd have you be a jobless or working at slave wages while his Jew buddies get fat at the top. This Jew has you totally fooled, to the point where you willing support your own enslavement. How sad.

[dmowings]

become a "Bananatarian"!