4.3.6 Milton Friedman
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4.3.6 Milton Friedman
What are the origins of contemporary economic globalization?
Milton Friedman was born in 1912 in New York City. He became a famous economist, earning the Nobel Prize in economic sciences in 1976. He died in 2006.
An advocate for capitalism: Similar to Adam Smith and Frederick Hayek, Milton Friedman was a strong advocate of capitalism and free trade. He believed that countries should not protect their industries with high tariffs. To him, high tariffs were unnecessary for a country trying to protect jobs or industries vital to its survival, such as agriculture (food) or steel (defence).
Also, government cannot be excused for using tariffs to protect new businesses that are not ready to compete with the world. If the business was viable, its owners would be willing to take start-up losses with the idea of making more money later. He rejected the idea that without tariffs some countries would monopolize the production of a certain good and sell it at any price. Friedman said that no excuse can be made for tariffs because the market place, the invisible hand, will put everything right. Supply will equal demand.
An advocate for capitalism: Similar to Adam Smith and Frederick Hayek, Milton Friedman was a strong advocate of capitalism and free trade. He believed that countries should not protect their industries with high tariffs. To him, high tariffs were unnecessary for a country trying to protect jobs or industries vital to its survival, such as agriculture (food) or steel (defence).
Also, government cannot be excused for using tariffs to protect new businesses that are not ready to compete with the world. If the business was viable, its owners would be willing to take start-up losses with the idea of making more money later. He rejected the idea that without tariffs some countries would monopolize the production of a certain good and sell it at any price. Friedman said that no excuse can be made for tariffs because the market place, the invisible hand, will put everything right. Supply will equal demand.
| Watch this short video of Milton Friedman explaining how the free market promotes harmony and economic stability. | |
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According to Smith, Hayek, and Friedman, competition is the best and fastest way to get the best products and services to people at the best possible prices. If countries, similar to people, are forced to compete with one another to sell and buy their goods and services, those same goods and services will become better and less expensive for everyone. Some problems may be experienced by people displaced from their jobs in the short-term, but over an extended period, people will find other jobs, other places to live, or both.
This is the argument for globalization.
Digging Deeper
To find out more about Mr. Friedman's theories, read the lengthy Case for Free Trade, here.