2nd Chapter - The Tyranny of Controls
From Free to Choose - Milton Friedman
On this chapter (you can read the book or see the PBS series or both) Friedman present his claim for:
1. The need for an international free trade framework and its importance for economic development/growth and to avoid the fallacious dichotomy that export are good & Imports are bad.
2. How tariffs and trade barrier hinder economic development for the country that deploys them and by protecting some national industries are in effecting pushing a significant toll into the overall consumers- picking winners and losers, most of the time motivated by political interests.
3. The empirical evidence against a centralized economic plan observed in every economy where it was adopted vs. a liberal one where the pursuit of self-interests by the individuals based on a free market and price mechanism allows to a significant economic growth and improved standards of living.
4. The direct relation between the roll-out of controls by any government and the impacts that it has on any society freedom (economic, political, human rights).
Although the book was written in 1979 this topic is as actual as ever, just look what is happening with the Intro on car tariffs (US and EU), the promised tariff policy that will be implemented in case of a 2nd Trump term, the subsidizing of the chip industry and the protection of the steel industry by the current US administration (vs a Japanese take-over), and look, within the European Union, at the commotion that a take-over bid by an Italian bank over a German one is creating, etc, etc…
As in all principles and economic policy, the degree of fundamentalism in applying them is as important as the policies in itself.
Although, i agree with the laid-out principles I believe that there are some shades/hues that should be considered while implementing them (Friedman is definitely more aggressive that i would be).
Each context should be considered for the situation under analysis, however, having always into consideration the key goals that the principles pursue and strive to achieve them in their purest form.
In the video, the end-debate, with antagonistic opinions, is also very instructive and illustrative to help you generate your own view on the subject.
"... Government planning and detailed control of economic activity lessens productive innovation, and consumer choice. Good, better, best, are replaced by ''approved'' or ''authorized.'' Friedman shows how 'established' industries or methods, seek government protection or subsidization in their attempts to stop or limit product improvements which they don’t control. Friedman visits India, Japan and U.S. Discussion Participants: Robert McKenzie, Moderator; Milton Friedman; Richard Deason, International Brotherhood of Electrical Workers; Donald Rumsfeld, President, G.D. Searle & Company; Helen Hughes, Director of Economic Studies, World Bank; Jagdish Bhagwati, Professor of Economics, MIT. ..."
https://youtu.be/CWgNe8v6KFc?si=5nUrVCZX6X5t-muZ
- Pedro
Read on Substack
