On April 4, in their Notable and Quotable, the Wall Street Journal published the following excerpt from an April 27, 1978 speech by economist Milton Friedman at Kansas State University:
We call a tariff a protective measure. It does protect; it protects the consumer very well against one thing. It protects the consumer against low prices. . . . [W]hen people talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our well-being that’s an unfavorable balance. That means we are sending out more goods and getting fewer in. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. . . .
[I]f you eliminate government from these matters you enable individuals to deal with one another. If you introduce protection, tariffs, restrictions on trade, they become matters for government-to-government wrangling and they are an enormous source of division. So in the name of both prosperity and world peace there are few steps that we could take which would contribute more than a complete move toward free trade.
Milton Friedman was a brilliant, thoughtful economist. However, I would suggest: context, context, context.
First off, this is not 1929. The United States is now quite different, the world is different, everything is different. You have to look at that context. Furthermore, it’s not even 1978, when Friedman’s speech was given and we were coming out of the dreadful economy of 1974 and 1975. So, context… what is the context?
You have to understand who Trump is and what he is. He’s a player, he’s a gamesman, he’s a manager. He’s not a politician (which is probably a strength). He does the deals. He’s shaking things up—I think quite intentionally—and when they come loose, he’s going to make some deals and I think the economy is going to come roaring back. That’s my view. (But please do not invest based on my opinions. 🤣)
Just some thoughts that you might find interesting with all this noise and nonsense about the sky falling. I hope it’s of use to you. I appreciate your comments.
Carl B. Barney
April 7, 2025