Feb 102010
The irrepressible Milton Friedman speaking about tariffs. Common sense for more than 200 years that periodically needs repeating. As the political class discusses jobs and their creation, watch for free trade to come under attack. Send your representative this short video.
[youtube]http://www.youtube.com/watch?v=j0pl_FXt0eM[/youtube]
Greetings,
What may have been true with regards to trade in 1978 is no longer true today. Friedman assumes that the money sent out of the country would return to this country when foreigners purchased our exports. This return of our money would employ the Americans that would otherwise be unemployed as a consequence of free trade competition. I think this is a very very simplistic view of the problems associated with free trade.
Consider the following:
1. What if the foreign entity holding our currency invests it in something unproductive like government debt or equity markets? I do not see how that helps those that have lost their jobs due to free trade competition.
2. What happens when one nation can not produce ANYTHING competitively due to such things as minimum wage, environmental regulations, OSHA and high taxes? In order to compete with China, we would have to be willing to compete with them in a way that would make working conditions in this country nothing short of unbearable. I, for one, am not willing to work for $3 a day.
3. I do not believe that Friedman would have approved of outsourcing. His speech would have looked much different in a world where everything thing and everybody are so interconnected and the cheapest possible labor is only a mouse click away.
Free Market Libertarians may disagree with me but were not comparing apples to apples anymore. If you want to live in a global economy without any rules, then you must be ready and willing to lower the wages of your working class to that of your most aggressive competitor.