Milton Friedman on free trade and the steel industry

Jun 2011
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On the infant industry hypothesis: the problem with that has historically been that the industries that lobby for those tariffs never stop and most of the time those short-term tariffs end up becoming permanent.
There are dangers with any interventionism, with the concentration of power encouraging all sorts of influence costs. However, in terms of the infant industry hypothesis, I'd suggest that long term inefficient protectionism is more likely with general 'strategic trade policy' (in particular where a trading bloc attempts to skew profits in their favour). Moreover, its actually difficult to find countries that haven't used protectionism to aid economic development: from free trade loving Britain to the recent tiger economies.

But, let's assume that didn't happen and the politicians actually followed through on the original plan to end the tariff- even then by imposing that tariff, you are effectively hurting every other industry in the domestic market that relies on the goods of that industry for their own production.
The infant industry hypothesis is about delivering specialisation according to comparative advantage. By definition with comparative advantage, some industries will suffer. However, that reflects efficiency criteria (with the overall result being an increase in economic activity)

In addition, the infant industry tariffs only apply to those industries which have grown enough to gain a name and lobby the government- what about all the industries that never got big enough to do that or are still only ideas written on paper?
It is the case that there will be asymmetric power between industries. However, why would they bother with the infant industry argument? A country can defend protectionism through social interests (i.e. either by reducing employment losses or by protecting low wage sectors) or through a conservative social welfare approach (i.e. where they attempt to minimise redistribution effects from trade through protectionism).

How does the government choose what industries are right to support with tariffs and which aren't? Naturally, the price mechanism would take care of it in the market, but there is no way any group of people or even modern computers can do that.
But that's the point: we have market failure and the price mechanism fails. Will government make mistakes? Certainly! Can protectionism actually reduce innovation and therefore harm long term competition? Indeed! Despite that, economic history shows considerable success by governments in the generation of economic development. At the same time, we have evidence that trade liberalisation has actually increased absolute poverty
 
Aug 2010
336
60
Cliffside Park, NJ
Trade imbalace's affects upon their nation's GDP's are understated.

MVP, again we find ourselves on opposing sides of an issue. I posted the topic ?Trade deficits are ALLWAYS economically detrimental to their nation? at 6PM, arch 26, 2011. Yes, I?m aware ?always? was misspelled.

Respectfully, Supposn
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

MVP, you and I read references to similar data and similar opinions regarding the data. I and I suppose you and Milton Friedman and other economists all draw our own conclusions from what we read.

You often allude to having read ?empirical studies in academia?. Aside from questioning the data collecting methods and thus the validity of what we read, the logical conclusions each of us reach are OPINIONS NOT FACTS. The merits of opinions are not dependent upon the commentators? reputations.

Each opinion must be able to withstand cross examination and stand or fall upon its own merit.

Respectfully, Supposn
 

myp

Jan 2009
5,841
50
I moved the post to the correct thread. We haven't really had an exchange here, so I just ask what claims of mine do you see as untrue?
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

MVP, actually within this topic you haven?t contended that trade deficits a net contributor to their nations? GDPs.

I contend that they?re NEVER net contributors but they?re generally net detriments to their nations? GDPs.
Are you going to surprise me by concurring with my conclusion?
 

myp

Jan 2009
5,841
50
MVP, actually within this topic you haven?t contended that trade deficits a net contributor to their nations? GDPs.

I contend that they?re NEVER net contributors but they?re generally net detriments to their nations? GDPs.
Are you going to surprise me by concurring with my conclusion?

This thread is more about protectionism, not necessarily trade deficits, so maybe we should make a new thread if you want to discuss that?
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

Originally Posted by Supposn:
MVP, actually within this topic you haven?t contended that trade deficits a net contributor to their nations? GDPs.

I contend that they?re NEVER net contributors but they?re generally net detriments to their nations? GDPs.
Are you going to surprise me by concurring with my conclusion?

Respectfully, Supposn

This thread is more about protectionism, not necessarily trade deficits, so maybe we should make a new thread if you want to discuss that?


MVP, in the case of the USA, which is suffering continuing and increasing annual trade deficits of goods for over a half century, an attack upon protectionism is effectively advocating trade deficits.

I did start topics regarding USA?s global trade policies. I just bumped up the topic ? Reduce the trade deficit; increase GDP & median wage? and I posted the topic ?Trade deficits are ALLWAYS economically detrimental to their nation? that was posted at 6PM, March 26, 2011.



Respectfully, Supposn
 

myp

Jan 2009
5,841
50
MVP, in the case of the USA, which is suffering continuing and increasing annual trade deficits of goods for over a half century, an attack upon protectionism is effectively advocating trade deficits
Absolutely not. Free trade (or the lack of protectionism) could lead to greater production domestically than would otherwise be experienced, potentially to the point where that additional production is greater than net imports. If that new production is then exported, then free trade has effectively lead to a trade surplus.

Also, ironically over that same half century, protectionism has drastically increased and along with it the trade deficit. Correlationary, yes (and personally I don't see trade deficits as always or inherently a bad thing), but true nonetheless.
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

MVP, actually within this topic you haven’t contended that trade deficits a net contributor to their nations’ GDPs.

I contend that they’re NEVER net contributors but they’re generally net detriments to their nations’ GDPs.
Are you going to surprise me by concurring with my conclusion?


MVP, in the last half century extremely few solid state electronic products sold in the USA were manufactured in the USA. We’re told that our economy will be driven by new “green” products. What they’re not mentioning is that most of such products are now being developed beyond our borders and when any such U.S. or foreign developed products enter the U.S. markets, (under USA’s present global trade policies) those products will be almost entirely imported products.

MVP, you haven’t answered my question. Are you going to surprise me or are you in denial?

Refer to: www.USA-Trade-n.Blogspot.com ,
http://en.wikipedia.org/wiki/Import_Certificates
or Google: Wikipedia, import certificates
Respectfully, Supposn

Refer to: www.USA-Trade-Deficit.Blogspot.com and
http://en.wikipedia.org/wiki/Import_Certificates
Respectfully, Supposn
 
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Aug 2010
336
60
Cliffside Park, NJ
.................Also, ironically over that same half century, protectionism has drastically increased and along with it the trade deficit. Correlationary, yes (and personally I don't see trade deficits as always or inherently a bad thing), but true nonetheless.

MVP, U.S. protectionism has increased and it?s the cause of USA?s half century of continuing and increasing annual trade deficits of goods?
You ?don't see trade deficits as always or inherently a bad thing??

Beyond simply BS, your message?s nonsensical BS.

Respectfully, Supposn
 

myp

Jan 2009
5,841
50
MVP, U.S. protectionism has increased and it’s the cause of USA’s half century of continuing and increasing annual trade deficits of goods?
You “don't see trade deficits as always or inherently a bad thing”?

Beyond simply BS, your message’s nonsensical BS.
Respectfully, Supposn

So you respond to my claim by saying it is BS without any logical argument? And what question of yours have I not answered (referring to the post before)?

Also, why is your formatting so "off"- it makes it hard to read/understand your posts sometimes. Are you copy/pasting from another program? If so, try putting it in notepad first and then here- it makes it look cleaner.
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

So you respond to my claim by saying it is BS without any logical argument?
And what question of yours have I not answered (referring to the post before)?

MVP, If you have a logical argument to support your statement ? Also, ironically over that same half century, protectionism has drastically increased and along with it the trade deficit? or your opinion that you ?don't see trade deficits as always or inherently a bad thing?, why not make the argument rather than discussing how I?m treating you unfairly?

I contend that trade deficits are NEVER net contributors but they?re generally net detriments to their nations? GDPs.
Are you going to surprise me by concurring with my conclusion?

Respectfully, Supposn
 

myp

Jan 2009
5,841
50
MVP, If you have a logical argument to support your statement ? Also, ironically over that same half century, protectionism has drastically increased and along with it the trade deficit? or your opinion that you ?don't see trade deficits as always or inherently a bad thing?, why not make the argument rather than discussing how I?m treating you unfairly?

I contend that trade deficits are NEVER net contributors but they?re generally net detriments to their nations? GDPs.
Are you going to surprise me by concurring with my conclusion?

Respectfully, Supposn
I never said you were treating me "unfairly" :p

As for why trade deficits can be good and not necessarily a net negative on GDP- I already gave you an example in your other thread: http://www.politicalfray.com/showthread.php?t=1883
 
Aug 2010
336
60
Cliffside Park, NJ
...............Also, why is your formatting so "off"- it makes it hard to read/understand your posts sometimes. Are you copy/pasting from another program? If so, try putting it in notepad first and then here- it makes it look cleaner.

MVP, I use Microsoft Word when I text, cut and paste.

What appears on the forum?s web site doesn?t appear less legible to me. I don?t know if I have Notepad, or if it would be an improvement.

Do any of you other members have difficulty reading my messages?

Respectfully, Supposn
 
Aug 2010
336
60
Cliffside Park, NJ
Trade deficits

I never said you were treating me "unfairly" :p
As for why trade deficits can be good and not necessarily a net negative on GDP- I already gave you an example in your other thread: http://www.politicalfray.com/showthread.php?t=1883

MVP, I may not for some reason received notification of your post within the topic of ? Reduce the trade deficit; increase GDP & median wage?.


After reading this message I immediately responded to your post in that discussion thread.
I believe it completely responded to the examples you provided. Your comments indicated that you did not look at any referred web site.

Respectfully, Supposn
 
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