Milton Friedman – Free Trade vs. Protectionism

Free to Choose Part 2: The Tyranny of Control (Featuring Milton Friedman

1. Mark J. Perry@Mark_J_Perry

March 5, 2016 9:26 pm | AEIdeas

Some economic lessons about international trade for Donald Trump from Milton Friedman and Henry George

Carpe Diem

Trump vs Friedman – Trade Policy Debate

In the video above Donald Trump’s uninformed, economically illiterate, and childlike views on international trade and trade policy are contrasted with Milton Friedman’s informed, economically sophisticated and mature views on trade. Toward the end of the video, Milton Friedman paraphrases what he considers to be the best argument he’s ever heard for free trade, from 19th century American economist and free trade advocate Henry George, who criticized protectionist trade policies in his 1886 book Protection or Free Trade at a time when President Grover Cleveland was pushing for reductions in US tariffs from an average rate of 47% (very close to the 45% rate Trump has proposed for Chinese imports) at a time when Britain had tariffs of less than 1% and France of 1.5%. Here’s a longer quote from Henry George, Friedman focused mostly on the underlined text below:

Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be a trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless.

Civilized nations, however, do not use their armies and fleets to open one another’s ports to trade. What they use their armies and fleets for, is, when they quarrel, to close one another’s ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things—importing rather than exporting. For a people can be more quickly injured by preventing them from getting things than by preventing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade.The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or inundating another with goods? Goods! what are they but good things—things we are all glad to get? Is it not preposterous to talk of one nation forcing its good things upon another nation? Who individually would wish to be preserved from such invasion? Who would object to being inundated with all the dress goods his wife and daughters could want; deluged with a horse and buggy; overwhelmed with clothing, with groceries, with good cigars, fine pictures, or anything else that has value? And who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things?

Bottom Line: To hear Donald Trump explain international trade in his infantile way and with his “great misuse of language,” China, Japan, and Mexico are currently “deluging, overwhelming, and inundating” Americans with cheap clothing, cars, and smartphones, and US consumers and businesses somehow need his protection from such an “overwhelming foreign invasion” of low-cost, affordable goods with his 45% tariffs/taxes?? And to use Henry George’s insight, if Donald Trump is elected president and is able to advance his protectionist agenda with tariffs and trade barriers, he would be doing to the US during a time of peace what our worst enemies would do to us in time of war, i.e. waging a war on American consumers and businesses who purchase goods produced outside the country. To further paraphrase George, Americans shouldn’t take it kindly that Trump seeks to protect us consumers by driving off, or raising prices on, the “invasion” of foreign goods that help us stretch our paychecks and significantly improve our standard of living.

Related posts:

__________