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I like Milton Friedman's explanation or ideas behind supporting free trade. https://www.youtube.com/watch?v=zk3ruapRQZk https://www.youtube.com/watch?v=zk3ruap

I like Milton Friedman's explanation or ideas behind supporting free trade. https://www.youtube.com/watch?v=zk3ruapRQZk https://www.youtube.com/watch?v=zk3ruapRQZk Of course, reality and practicality can change the implementation or feasibility of an idea, but the mere concept of restricted trade being more economically efficient is non-sensical to me. As an example, if restricting trade were positive, would you say that it would be a good policy to restrict trade between states in the US? And then withing cities? I like one of MF's arguments that restricted trade is what you do to your enemies in war, or to yourself in peace. What does happen is that the profits of such movement are globalized, so even though at world-level its more efficient, there could be locals that dont profit from it. Free trade increases economic efficiency, but it represents different people, and it doesnt distribute that wealth in a controlled manner. Bear in mind that world-wide poverty has decreased at an unprecedented pace and theres little doubt that it was globalization that catalyzed that. I also relate this to what Varoufakis speaks about with Greece and Germany: Greece will never have trade surplus because it's not a productive country like Germany, and reducing taxes and salaries don't necesarily fix the problem: but Germany investing in Greece in products and services that serve Germans can compensate the deficit and maintain economic efficiencies. That is, what I think the failed promise of free trade is that the gains of globalization did not benefit a huge part of the population, but if some of that did then the situation would stabilize.

RyanZAG 10y ago
> but the mere concept of restricted trade being more economically efficient is non-sensical to me. If everyone is free trade, and nobody tries to cheat, then free trade is better for everyone. However, when you add in state actors, taxation, arbitrage, high speed trading, and many other real world issues, then non-free trade can be more efficient if it distributes economic output better. This is really simple if you stop and look at the individual pieces: if you have free trade, but your trading partner uses the money they get from taxation to subsidize weak parts of their economy that you would normally have an advantage in, then you're going to lose that advantage when businesses in that area go bankrupt as they can no longer compete. Your trading partner can then move the subsidy to other businesses and repeat the process until they have destroyed all of your local business. Free trade doesn't work if others are cheating and you're doing nothing to stop them. There are many other cases besides subsidies where free trade can be easily abused by actors in your own country as well - such as moving their tax debt to other countries while continuing to operate in your country. Free trade is a two way street that has to be managed to prevent selfish actions. Not to say that free trade isn't still the best option, but you have to make sure both partners in the free trade agreement are working to the benefit of both partners. EDIT: Ah, I'm from South Africa so I forgot it's the USA election and this website is liberal, which means you'll all lose your regular sense and downvote this post because it appears to support Trump or something. Carry on then, I'll be back in a few weeks when you guys have calmed down!
- crdoconnor 10y ago
  >If everyone is free trade, and nobody tries to cheat, then free trade is better for everyone. ...is precisely the justification the British made for exporting food from Ireland during the potato famine. Well, they didn't exactly claim it was better for everybody but they claimed that it was a good pretext for letting the Irish starve while Ireland exported food.
  - snrplfth 10y ago
    Except that those exports of high-price-per-calorie food (meats, dairy, wheat) were what paid for large imports of low-price-per-calorie food (rye, corn). If they'd shut down exports, those imports would not have come and the famine would have been worse.
    - crdoconnor 10y ago
      Ireland was perfectly capable of farming all the rye & corn it needed. It was just more profitable to farm meat/dairy/etc for export to England. Those profits were not used to feed the starving, either. They largely went to rich landowners. Amazing that even today people defend this.
      - snrplfth 10y ago
        Here's some citations for you: https://pseudoerasmus.files.wordpress.com/2015/06/irish-famine.jpg?w=640&h=267 https://pseudoerasmus.files.wordpress.com/2015/06/irish-fami... https://pseudoerasmus.files.wordpress.com/2015/06/ograda-figure-3-1.jpg?w=640 https://pseudoerasmus.files.wordpress.com/2015/06/ograda-fig... As you can see, domestic Irish production of all foods, in calories, just about halved. Food production absolutely cratered, due to weather and blight. They eminently were not able to farm "all the rye and corn they needed", and such imports were also in shorter supply than usual, because famine/scarcity conditions were occurring all across Europe (helping to spark the 1848 Revolutions, notably.) But these imports still had to be paid for somehow, and in an era of largely subsistence farming and thus small savings, this had to be paid for in large part by exports - of what? Of highest-value agricultural goods. You see from the graph that Ireland, during the depths of the famine, was a net importer of every grain except oats, where their exports had also fallen from normal levels. And, you see from the chart that, in total calories, Ireland had gone from being a net exporter to a net importer - bringing in over one-quarter of their total food supply in the Famine years, and going from typically exporting around 240,000 tons of grain a year, to importing up to 750,000 tons. Stopping exports from Ireland would have meant more dairy, oats, meat in Ireland, true - and less of the cheap imported grains that people really needed. It's true that the landowners were part of the overall problem, but no export limits would have caused new food supply to spring into existence or be imported.
mjohn 10y ago
> What does happen is that the profits of such movement are globalized, so even though at world-level its more efficient, there could be locals that dont profit from it. It's not just globally more efficient, usually each country benefits (although I wouldn't want to over commit by saying each country always benefits). But the gains from trade are often not distributed evenly within a country, for example manufacturing employees might lose their jobs while the owners have higher profit margins and/or consumers benefit from lower prices. Furthermore, diffuse gains such as lower prices are felt less than acute costs like losing a job. Time and transition costs are also very important. In some cases transition costs may be very high, e.g. a whole generation of miners might not be able to transition to other types of work such as software development. In the long run the economy as a whole should benefit, but those miners are unlikely to be convinced.
- conanbatt 10y ago
  Right, this is what I meant with local vs global, but you are correct, it even is better for some part of the locals and worse for the other.
soVeryTired 10y ago
What's special about goods that they get free movement though? Couldn't I make the same argument about free movement of people? You wouldn't restrict their movement across state lines or between cities, so why restrict movement between countries? Any idea what MF thought about migration?
- dumbmatter 10y ago
  Libertarians do make exactly that argument about immigration. And people who disagree make exactly the same counter-argument - that even if it is a net benefit globally, some people might not like the result locally.
- snrplfth 10y ago
  Milton Friedman was largely in favour of freedom of movement, but he famously noted that you can have either a welfare state or open borders - but not both. (And note also that in a broad interpretation, things paid out of tax money and given away for free, like public highways, public schooling, etc., can also count as part of a "welfare state".) The main difference between goods/services and people is that goods don't have rights, but people do. So if people are obligated to pay for the 'positive rights' of people - the "right to food", "right to shelter", and so on, then migration imposes genuine costs. (Of course, this is different from 'negative rights' - the "right to free speech", the "right to freedom of association", and so on.)
  - soVeryTired 10y ago
    Interesting, thanks
eli_gottlieb 10y ago
>Of course, reality and practicality can change the implementation or feasibility of an idea, but the mere concept of restricted trade being more economically efficient is non-sensical to me. The problem is unrestricted trade without a surplus-recycling mechanism. https://yanisvaroufakis.eu/2011/02/09/what-is-a-surplus-recycling-mechanism-an-idea-going-back-to-bretton-woods/ https://yanisvaroufakis.eu/2011/02/09/what-is-a-surplus-recy...

RyanZAG 10y ago

> but the mere concept of restricted trade being more economically efficient is non-sensical to me. If everyone is free trade, and nobody tries to cheat, then free trade is better for everyone. However, when you add in state actors, taxation, arbitrage, high speed trading, and many other real world issues, then non-free trade can be more efficient if it distributes economic output better. This is really simple if you stop and look at the individual pieces: if you have free trade, but your trading partner uses the money they get from taxation to subsidize weak parts of their economy that you would normally have an advantage in, then you're going to lose that advantage when businesses in that area go bankrupt as they can no longer compete. Your trading partner can then move the subsidy to other businesses and repeat the process until they have destroyed all of your local business. Free trade doesn't work if others are cheating and you're doing nothing to stop them. There are many other cases besides subsidies where free trade can be easily abused by actors in your own country as well - such as moving their tax debt to other countries while continuing to operate in your country. Free trade is a two way street that has to be managed to prevent selfish actions. Not to say that free trade isn't still the best option, but you have to make sure both partners in the free trade agreement are working to the benefit of both partners. EDIT: Ah, I'm from South Africa so I forgot it's the USA election and this website is liberal, which means you'll all lose your regular sense and downvote this post because it appears to support Trump or something. Carry on then, I'll be back in a few weeks when you guys have calmed down!

crdoconnor 10y ago
>If everyone is free trade, and nobody tries to cheat, then free trade is better for everyone. ...is precisely the justification the British made for exporting food from Ireland during the potato famine. Well, they didn't exactly claim it was better for everybody but they claimed that it was a good pretext for letting the Irish starve while Ireland exported food.
- snrplfth 10y ago
  Except that those exports of high-price-per-calorie food (meats, dairy, wheat) were what paid for large imports of low-price-per-calorie food (rye, corn). If they'd shut down exports, those imports would not have come and the famine would have been worse.
  - crdoconnor 10y ago
    Ireland was perfectly capable of farming all the rye & corn it needed. It was just more profitable to farm meat/dairy/etc for export to England. Those profits were not used to feed the starving, either. They largely went to rich landowners. Amazing that even today people defend this.
    - snrplfth 10y ago
      Here's some citations for you: https://pseudoerasmus.files.wordpress.com/2015/06/irish-famine.jpg?w=640&h=267 https://pseudoerasmus.files.wordpress.com/2015/06/irish-fami... https://pseudoerasmus.files.wordpress.com/2015/06/ograda-figure-3-1.jpg?w=640 https://pseudoerasmus.files.wordpress.com/2015/06/ograda-fig... As you can see, domestic Irish production of all foods, in calories, just about halved. Food production absolutely cratered, due to weather and blight. They eminently were not able to farm "all the rye and corn they needed", and such imports were also in shorter supply than usual, because famine/scarcity conditions were occurring all across Europe (helping to spark the 1848 Revolutions, notably.) But these imports still had to be paid for somehow, and in an era of largely subsistence farming and thus small savings, this had to be paid for in large part by exports - of what? Of highest-value agricultural goods. You see from the graph that Ireland, during the depths of the famine, was a net importer of every grain except oats, where their exports had also fallen from normal levels. And, you see from the chart that, in total calories, Ireland had gone from being a net exporter to a net importer - bringing in over one-quarter of their total food supply in the Famine years, and going from typically exporting around 240,000 tons of grain a year, to importing up to 750,000 tons. Stopping exports from Ireland would have meant more dairy, oats, meat in Ireland, true - and less of the cheap imported grains that people really needed. It's true that the landowners were part of the overall problem, but no export limits would have caused new food supply to spring into existence or be imported.

mjohn 10y ago

> What does happen is that the profits of such movement are globalized, so even though at world-level its more efficient, there could be locals that dont profit from it. It's not just globally more efficient, usually each country benefits (although I wouldn't want to over commit by saying each country always benefits). But the gains from trade are often not distributed evenly within a country, for example manufacturing employees might lose their jobs while the owners have higher profit margins and/or consumers benefit from lower prices. Furthermore, diffuse gains such as lower prices are felt less than acute costs like losing a job. Time and transition costs are also very important. In some cases transition costs may be very high, e.g. a whole generation of miners might not be able to transition to other types of work such as software development. In the long run the economy as a whole should benefit, but those miners are unlikely to be convinced.

conanbatt 10y ago
Right, this is what I meant with local vs global, but you are correct, it even is better for some part of the locals and worse for the other.

soVeryTired 10y ago

What's special about goods that they get free movement though? Couldn't I make the same argument about free movement of people? You wouldn't restrict their movement across state lines or between cities, so why restrict movement between countries? Any idea what MF thought about migration?

dumbmatter 10y ago
Libertarians do make exactly that argument about immigration. And people who disagree make exactly the same counter-argument - that even if it is a net benefit globally, some people might not like the result locally.
snrplfth 10y ago
Milton Friedman was largely in favour of freedom of movement, but he famously noted that you can have either a welfare state or open borders - but not both. (And note also that in a broad interpretation, things paid out of tax money and given away for free, like public highways, public schooling, etc., can also count as part of a "welfare state".) The main difference between goods/services and people is that goods don't have rights, but people do. So if people are obligated to pay for the 'positive rights' of people - the "right to food", "right to shelter", and so on, then migration imposes genuine costs. (Of course, this is different from 'negative rights' - the "right to free speech", the "right to freedom of association", and so on.)
- soVeryTired 10y ago
  Interesting, thanks

eli_gottlieb 10y ago

>Of course, reality and practicality can change the implementation or feasibility of an idea, but the mere concept of restricted trade being more economically efficient is non-sensical to me. The problem is unrestricted trade without a surplus-recycling mechanism. https://yanisvaroufakis.eu/2011/02/09/what-is-a-surplus-recycling-mechanism-an-idea-going-back-to-bretton-woods/ https://yanisvaroufakis.eu/2011/02/09/what-is-a-surplus-recy...