Milton Friedman debates a protectionist

Summary

In this debate, Linda Chavez moderates a discussion on free trade with Michael Walker and Steven Cohen. Walker argues that government intervention in the economy is inevitable and points to historical examples like Alexander Hamilton's support for tariffs. Cohen counters that protectionism is a political issue, not an economic one, and that free trade benefits consumers, despite the short-term challenges it may pose to producers. The conversation touches on Japan's economic rise with government involvement and the potential drawbacks of protectionist policies.

Takeaways

• 😐 The debate revolves around the role of government in free trade and whether it should be minimal or active.
• 🤔 Dr. Cohen argues that complete government non-intervention in the economy is impossible and that history shows attempts to reduce government involvement have increased it.
• 🏭 Historically, industries like steel received government support as infant industries, suggesting government involvement can be beneficial.
• 🌏 Dr. Cohen points out that countries like Japan have been successful with active government involvement in their economy.
• 🚗 The discussion uses the automobile industry as a case study to illustrate the impact of government policies on trade and industry development.
• 🛒 Dr. Cohen criticizes the idea that consumers always make the right choice and suggests that government intervention can protect industries and jobs.
• 📉 There's a concern that short-term consumer gains from cheaper imports can lead to long-term job losses and industry decline.
• 💼 Dr. Cohen suggests that Japan's success is due to strategic government policies, not just free markets.
• 🛡 Dr. Freedman argues that protectionism is often used as an excuse for poor economic performance and that free trade works in theory and practice.
• 🌾 The conversation touches on how protectionist policies can artificially inflate prices for goods like rice and sugar, harming consumers.
• 🏛️ The debate highlights that protectionism is more of a political issue than an economic one, as it often persists due to the lack of political will to change.

Q & A

What is the main topic of discussion in the transcript?

The main topic of discussion in the transcript is free trade, with a focus on whether government intervention is necessary or if markets should be left to operate freely.

What is Dr. Cohen's stance on government involvement in the economy?

Dr. Cohen believes that complete government withdrawal from the economy is impossible and that some level of government involvement is necessary, citing historical examples such as Alexander Hamilton's support for tariffs.

How does Dr. Cohen view Japan's economic success?

Dr. Cohen sees Japan's economic success as being due to active government involvement, contrasting it with the ideology that government should stay out of the economy.

What is Dr. Freedman's opinion on the 'invisible hand' of the market?

Dr. Freedman suggests that the idea of completely free markets is an unrealistic ideal and that government intervention is often a practical necessity.

What does Dr. Cohen argue about the nature of trade competition?

Dr. Cohen argues that trade competition is not a zero-sum game where one side wins and the other loses; instead, it can be a situation where everyone benefits.

What is the example Dr. Cohen uses to illustrate the short-term gains and long-term losses due to foreign competition?

Dr. Cohen uses the example of Japanese semiconductors flooding the US market, which might provide short-term gains for consumers but could lead to long-term job losses and industry decline.

How does Dr. Cohen view the argument that consumers always make the right choices?

Dr. Cohen disagrees with the notion that consumers always make the right choices, suggesting that sometimes government intervention is needed to protect consumers from making unwise choices, such as purchasing imported goods that could harm domestic industries.

What is Dr. Freedman's counterargument to the idea that protectionism is always harmful?

Dr. Freedman argues that protectionism can be beneficial in certain strategic cases, such as the development of key industries, and that it's not inherently bad but rather depends on how and where it's applied.

What historical example does Dr. Cohen use to argue against free trade?

Dr. Cohen uses the example of Japan's post-World War II economic policies, suggesting that Japan's success was due to strategic development policies rather than free trade.

What does Dr. Cohen suggest is the root of protectionism?

Dr. Cohen suggests that protectionism is a political disease that benefits certain industries at the expense of consumers, and that it's maintained because consumers have little incentive to fight against it politically.

How does Dr. Cohen view the argument that free trade works in theory but not in practice?

Dr. Cohen asserts that free trade does not work in practice and, contrary to popular belief, also fails in theory because it's based on assumptions that have been proven wrong.