Blog Post

AEIdeas

In 1979, Milton Friedman released a ten-part economic documentary series that was broadcast on public television (and later released as a ten-chapter book in 1980) titled “Free to Choose: A Personal Statement.” The video above titled “The Tyranny of Controls” is Part 2 of the series, and at about 20:20 of the segment (you can also view it at that point here), Milton Friedman provides the response below to a complaint from a US steel industry spokesman earlier in the segment about “unfair competition” in the form of “unfair subsidies” that some foreign steel producers were allegedly receiving from their governments/taxpayers.

When anyone complains about unfair competition, consumers beware. That is really a cry for special privilege, always at the expense of the consumer. What we need in this country is free competition. As consumers buying in an international market, the more unfair the competition the better. That means lower prices and better quality for us. If foreign governments want to use their taxpayers’ money to sell people in the United States goods below cost, why should we complain? Their own taxpayers will complain soon enough, and it will not last for very long. History provides lots of evidence on what happens when government protected industries compete with industries who have to operate in an open and free market. It’s almost always the government-protected industries that come out second best. Nothing would promote the long-run health of the steel industry and make it into a more efficient profitable and productive industry than for the US government to keep its hands off, neither providing special privileges, nor imposing special restraints. And what is true for the steel industry is true for every other industry in the country.

MP: Earlier in the segment, Milton Friedman also referred to foreign government subsidies to producers that then provide low-cost goods to Americans as a form of “philanthropy.” As Don Boudreaux pointed out recently on Cafe Hayek, if Team Trump and their supporters are really serious about “making America great again,” we should then enthusiastically welcome, not discourage, the philanthropic redistribution of wealth from foreign countries and their citizens to Americans in the form of government subsidies that lower prices and raise our standard of living. Just like we don’t complain about the free light and heat we receive from the sun every day (and the huge trade deficit with the sun that results from those daily imports of free light that are not offset by exports going in the opposite direction, see Venn diagram below), we likewise shouldn’t complain about low-cost products from abroad. The more foreign subsidies that lower prices for Americans and the more dumping into the US of imports sold to Americans below the cost of production, the greater the foreign aid/philanthropy/wealth transfers from foreigners to Americans, and the higher our standard of living. As Friedman asks,”why should we complain” about that generous philanthropy?