https://www.conservativereview.com/commentary/2016/07/milton-friedman-schools-trump-on-trade-tariffs In a debate in February, Trump claimed: I don't mind trade wars when we're losing $58 billion a year," in response to the trade deficit with Mexico. But this is exactly Friedmans point: The U.S. Isn't losing any money in the sense of it being an actual deficit. Instead, Mexico sent us $58 billion more of their goods than we sent them. In Friedmans mind, this is a win for the U.S. Still, Trump wants to play into the common misperceptions that this constitutes a loss for the US; in doing so, he wants to levy large tariffs on a number of imported goods, particularly those coming from China and Mexico. Under that scenario, Trump believes that we would benefit more by sending more goods and services abroad, while limiting the goods and services foreign nations can sell us. Trumps tariffs can only protect some industries and jobs at the expense of others. According to Friedman, this would make us worse off. Tariffs hurt profitability. Whatever an industry gains from tariffs is more than offset by losses to other industries and consumers. Its always easy to see an industry that is reduced because of trade, but often times attention to industries that flourish from trade are overlooked. Today, roughly 25 percent of all manufacturing jobs are supported by trade (exports) and nearly one million agricultural jobs. Rather than being helped, domestic industries are harmed by trade barriers like tariffs. Instead of accepting a tariff on goods, foreign nations will impose retaliatory measures on U.S. goods. The tariff prescriptions lead to fewer goods for Americans, and perhaps fewer foreign dollars, which currently amounts to more than $2.3 trillion a figure that supports tens of millions of U.S. jobs. The US Trade Office estimates that every billion dollars in goods or services exported equals more than 5,600 U.S. Jobs. Therefore, Trumps tariffs can only protect some industries and jobs at the expense of others. Tariffs are a terrible idea. They hurt poor and middle class citizens by making goods more expensive. They hurt small mom and pop businesses because the poor and middle class have less money to spend on their niche products or services. In the final analysis tariffs hurt everyone accept for the industry being "protected" and are almost always a NET negative for society. So please, donald, get off twitter and focus your toddler attention span on tax and regulation reform. Forget this protectionist nonsense.
People who talk about trade "deficits" boggle my mind. There is no deficit. We trade X amount of currency and goods to Mexico and receive X amount of currency and goods in return. The ratios of goods and currency may vary, but THAT DOES NOT MATTER. The amount is still equal. People who talk about currency outflows as if they are bad are mercantilists. Adam Smith proved mercantilism false more than two centuries ago. If you want a better example: think about the massive trade deficit you have with your local supermarket. I mean you trade them currency in exchange for goods every week but they never give you currency in exchange for your goods. Clearly what you should do is put a massive tax on yourself to stop you from buying things from the supermarket and force yourself to make them at home.
"Does" apparently means "uses crony capitalism and bought government officials to give him land under the auspices of eminent domain for him to build private for-profit businesses on while bilking contractors out of money he owes them and using bankruptcy laws to absolve himself of debt and avoid paying taxes for decades"
Lack of response noted. The funny thing is that trump either 1: doesn't understand trade or 2: Does understand it but is appealing to the, ummm, less informed American's emotional response. And I thought that was the realm of the typical dem politician.
Trump operates in the real world, milton and other pundits read about it. Trump does, pundits talk. - - - Updated - - - Trump does, Milton talks about people that do.
Trump engages in the kind of capitalism Fritz Todt would be proud of. He's not an example of a real free market capitalist.
Do you have anything at all to add? Do you think tariffs would be a net good policy for Americans? Or are you just reflexively defending trump (poorly) ?
The problem with this analogy is that a supermarket is not interested in your goods, a supermarket is NEVER interested in your goods but in your currency. With your currency(income) as barter, you are able to purchase goods from a supermarket. In the case of trades, I think the argument is being misunderstood here. I don't completely deny all trade, for clearly every nation has benefited from trade. But the reason I prefer Balanced Trade is right there in the article: The goal of trades is to import(as much as possible) while exporting as little as possible. The result of the strength of the US Economy(hell, even Hillary noted it in her book) is that we're doing FAR more exporting, relative to importing. It's not the other way around. Of course, other nations would like to maintain their own profitability and they should. So, how do we balance this? The interests of the US to maintain healthy balance, and every other nation's interest in doing so? The key isn't to focus on one individual country, but on the total balance of goods coming in vs goods coming out. So for example, if the trade is unbalanced between the US And China, I'd like to go from 75/25, to 60/45. We'd still be at a deficit, but we'd have closed the margin significantly. And we should take that same line of approach with every country we have a deficit with. If we can get to a 50/50 great, but I'm willing to accept deals within a margin of 15%. With the cumulative gains, the US would have a healthy trade margin again and thus doing more to protect jobs in America.
And Trump loves to use the government to make himself rich. Don't you guys usually hate people like that? Isn't that your beef with Soros?
The goal of MERCANTILISM is to import as little as possible. Have you ever read Wealth of Nations? The goal of trade is for people to get goods and services they demand. Full stop. It doesn't matter if we import more than we export.
It matters for those #fightfor15 people. The more we use our economic collateral for short term gains(cheap goods), the more we'll be unable to produce for ourselves. Or we'll "produce" in order to spend more overseas. The world's bank: The United States. We exist to be the world's charity, and thus no longer a world power.
Umm, what? How is importing goods that can be produced cheaper abroad using our "economic collateral" (what does that even mean?) for short term gain? How would this harm us long term?
Why should consumers not be allowed to buy cheap goods? Nearly every American is a consumer. Only a small percentage of them comparatively produce goods threatened by imports from other countries. Why should nearly every American be taxed to subsidize the small number of producers who are inefficient in producing their goods in the global market?
Simply put: Every job that is outsourced, is a job loss. Every banana, every winery, etc. Everything that you're outsourcing is something the country could have consumed. So when a country is a majority exporting country(like ours), that means we're using our resources that much more. And what we're getting back, is not nearly proportional to what we're sending outside. It's called dead money(and in this case, we can say it's destroying our labor force.) The end result, is that we'll have to produce for the world's consumers, and we'll have to produce for ourselves as well. It is a easily losing proposition once you look at it logically. Free trade was the greatest lie in the 21st century, and people still don't understand it. Importing goods isn't the problem. Exporting(paying the cost) at a rate essentially double of what it would've been otherwise has been, will always be a bad proposition for ANY country, not just the United States.
It would be funny if liberals started quoting Friedman to combat Trump. No ideology is more anti-Friedman than modern day American liberalism.
https://www.cato.org/publications/congressional-testimony/americas-misunderstood-trade-deficit Read up. You seem to have a gross misunderstanding of trade.
Are you saying the donald is infallible? Do you suppose he knows more on the subject than Freidman did? Are you saying that it's impossible that trumps (who tweets like a teenage girl) trade policies might actually be damaging to Americans in total? Jesus, if you really think the donald is right why don't you defend him instead of pointing out the obvious (who the president elect is is not in question!)?
