Where Friedman Made a Mistake in Regards to Free Markets

Milton Friedman was a brillant economist, well-read and informed academic.

He brought forth a number of incredible, essential arguments to defend free enterprise and domestic economic liberty for businesses large and small. Don't get me wrong–I am all for free enterprise. Domestic economic freedom is an absolute must in any country, so that individuals can enjoy the highest standard of living possible.

BUT … there is a place for government intervention in a number of issues.

1. Tariffs play an important role in securing the national security and interest of a country.

2. Illegal immigration and mass immigration are a bane for any country. No group of people, no mass movement of people should be permitted to overrun a country and complete change the contour and constitutional character of the nation.

This video exposes what the problem became for Milton Friedman's free market views–and Friedman himself admitted to the failure of one of his many tenets.

Check out this video from Reason Magazine here.

Friedman was convinced that the people of Hong Kong, China, elsewhere would rise up and oppose the taxpayer-funded subsidies for national businesses.

However, that never happened. Authoritarian regimes do not listen to the people whom they are supposed to care for. They do what they want. subsidize whatever businesses and interests they please. The pro-tariff arguments are stronger in these cases. Granted, tariffs can amount to a tax, but that only occurs if individuals purchase the goods from the other countries.

If authoritarian countries are subsidizing their goods and dumping them into other nations to undercut their industries, tariffs have to be imposed.

Friedman's argument in "Free to Choose" was not satisfactory for dealing with this problem. If a country lowers its tariffs in the face of countries with cheaper goods based on nationalized policies of currency manipulation and subsidies, the businesses in our country will fail and falter.

This problem occurs in Sub-Saharan countries, as well, in which Western nations offer a bunch of goods as "charity." For example, many countries will send in a bunch of free shoes to help an impoverished area. What happens, though? The local merchants go out of business, because they cannot compete with free."

Hence, the need for tariffs. The same idea is pervasive around the world. The United States was right to enact key tariffs to protect local industries against predatory policies from other countries. Open borders and open international markets can become problematic when these concerns are not taken into account.