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-ifIr8s

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=lYyrqSmhals

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/best-trade-policy-being-free-to-choose.html

Another Name for "Trade Deficit" is "Capital Account Surplus," Balance of Payments Always = 0
http://mjperry.blogspot.com/2011/04/another-name-for-trade-deficit-capital.html#

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

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

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

Doubling U.S. Exports = Doubling U.S. Imports
http://mjperry.blogspot.com/2011/01/pathological-plan-to-double-exports.html

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

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

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/us-manufactuing-germany-italy-france.html
http://blog.american.com/?p=25164
http://mjperry.blogspot.com/2011/05/americas-amazing-manufacturing.html
http://mjperry.blogspot.com/2011/05/made-in-usa-again-manufacturing-is.html

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/big-sugars-sickeningly-sweet-deal.html
http://mjperry.blogspot.com/2010/01/sugar-tariffs-cost-americans-25-billion.html
http://mjperry.blogspot.com/2010/02/few-days-ago-i-posted-about-tariffs.html
http://mjperry.blogspot.com/2010/02/blog-post.html
http://mjperry.blogspot.com/2010/03/more-on-sickeningly-sweet-deal-for-big.html
http://mjperry.blogspot.com/2011/01/big-sugar-cartel-cost-consumers-45b.html
http://cafehayek.com/2011/01/not-so-sweet-sugar-program.html

This video is an excerpt from Milton Friedman Speaks: Lecture 02, "Myths That Conceal Reality"
http://www.freetochoose.net/store/product_info.php?products_id=42

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[droppertrental]

@migkillertwo because it's the manufacturing, production sectors that fuel the service sector... with out the trade surplus the only funding the service sector IS debt or govt which is taxes and debt, so with out a trade surplus you must have a shrinking standard of living and of services to keep a balanced budget, OR you must acquire more debt to make it function... but of course at the end of that road driven by debt is eventual destruction. You can't have it both ways, you cant JUST consume.

[migkillertwo]

My problem is if the Japanese finance our trade deficit with purchases of our sovereign debt. It's good for everyone if they financed it through foreign direct investment or by buying American services (trade deficit figures typically do not account for services, which when factored makes the trade deficit considerably smaller), but it's bad for us if they finance it through buying of sovereign debt. that just makes us poorer in the long run.

[SkepticThink]

@lvll138inrs Define "play fair"

[ASTEagle]

@lvll138inrs let their governments run into huge amounts of debts through subsidies. Hey if America gets cheaper goods from overseas it would drive down the cost of living substantially, let them fuck themselves over if they play trade wars.

[dfg93353]

NAFTA=EPICFAIL

[LogicalFlawDetector]

@rickyp32

Idiot, did you watch the entire video? Free trade doesn't cost us jobs. All economists support free trade. The science of free trade was established by David Ricardo in 1817.

[lvll138inrs]

i understand the benfits of free trade but the reality is that most countries don't play fair. why should the u.s give other countries free access to its markets when they don't do the same?

[jewls323]

@vdinh2 your a fn moron ,get the f@ck out of my country!!!

[rickyp32]

i do agree with a lot of what he says but not all of it goggle Bethlehem steel you'll see my point but it,s more than just the steel industry other manufacturing industry's and even farmers can,t con peat with cheap labor

[vdinh2]

@rickyp32 In case you have not noticed, he did not ask you to agree with his "opinion". He was stating facts that are empirically and theoritically proven. Because it is not an "opinion" but a "fact", you disagreeing with it constitutes ignorance, and a costly one at that. You have to look at the long run that realize that in the end free trade benefits all of us.