As Friedman used to point out, if Japan wants to subsidize its steel at the cost of their own taxpayers, just take the cheap steel and be thankful for it.
There are complex consequences, and the rebound when opportunities re-emerge isn't anywhere as rapid as the fall.
Africa is an interesting case in point - I don't know very much about the average case, but I remember Zimbabwe gutted themselves, going from the Bread Basket of Africa to famine in a very short period of time with no particular effort from outside forces. There is a strong case the Africa's economic problems are more attributable to their struggles to organise politically rather than charity and dumping from external economies (which probably hasn't helped or hindered in the big picture). Maybe we can peg the organisational issues on foreign countries; but it is going to be more complicated than that.
Take China. Their protectionist policies probably have an impact, but most of their advantage is they are organised, politically stable, willing to work more for less pay and have a culture that believes in investment and education. Without government handicaps like Maoist Communism, that is a very formidable set of attributes in a competitor.
So your price ends up at fair market price... when averaged over many decades, maybe, but likely not for long at any particular point in time. And in the meantime workers get screwed over as industries and skillsets lose economic value.
Secondly, you're only looking at the negative consequences for some workers. You're not looking at the benefit to all workers, who pay lower prices as result of cheaper labor from abroad.
Suppose workers had been guaranteed their jobs for life because of protectionist policies. This is called mercantilism. Everybody pays more for everyone else's labor and nobody can benefit from comparative advantage. As a result, everyone is poorer. This has been known for centuries and it has been accepted by economists across the political spectrum. Yet politically, protectionism never ceases to lose appeal.
You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore.
If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that.
Apple tried their best to move even some assembly back to the US, and couldn't even get the simplest custom screws made in the amounts they need. Only a single small company still had the tech to make them, and they couldn't produce enough, fast enough.
It's not just a single monopoly, the problem is that entire industries are gone, and it'd take decades to train workers and regain the institutional knowledge.
And this is just one example.
And your argument has one more flaw: free trade reduces costs of products, and wages. But it won't affect cost of housing (except over a timespan of decades due to cheaper labor and materials, but it still won't solve cost of land). Nor will it affect cost of utilities.
In our household, we're now spending 71% of our budget on rent and utilities. Under more protectionist policies, I might pay 20% more for products, but I'd also be making 20% more wages — and as result, I'd be better off (in fact, my disposable income after rent, utilities and food would almost triple)
Of course not, U.S. labor is far too expensive to do the kind of menial work required to assemble electronics, unless maybe it's a repair shop for certain products.
> You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore.
You don't need "local shops" to purchase parts for assembly lines. Ask Elon Musk if the biggest challenge in building an assembly line is procuring the parts, he will say: No. You have a worldwide integrated economy where you can buy basically anything. The number one challenge is labor cost.
In any event, training people for electronics assembly is trivial. If you can take apart an iPhone and put it back together, you're good.
> If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that.
"China" doesn't decide the costs of electronics, individual businesses do. But even if China was dumb enough to slap tariffs on their own exports, there are plenty of alternatives. There is no monopoly. In fact, China is doing the exact opposite: They are artificially lowering the value of their currency to stay competitive.
You should also really look into how electronics are actually produced, there are numerous countries involved in it, each specialized into particular parts:
http://www.worldstopexports.com/electronic-circuit-component...
> It's not just a single monopoly, the problem is that entire industries are gone, and it'd take decades to train workers and regain the institutional knowledge.
Actually, a lot of institutional knowledge remains with the companies that just use labor abroad. However, it also leaks into the domestic industry, that's why you have a lot of companies complaining about "IP theft" from China.
The broader point remains: There is no monopoly. There is plenty of competition. Even if for a "relatively" short period of time (decades) there where to exist a monopoly, it could only sustain its higher prices for so long as it stays unprofitable to rebuild that infrastructure. At that point the "monopoly pricing" becomes "fair pricing".
> In our household, we're now spending 71% of our budget on rent and utilities.
You should probably look into what building regulation (artificial scarcity) does to the price of rent. You can't blame free trade for that.
> Under more protectionist policies, I might pay 20% more for products, but I'd also be making 20% more wages — and as result, I'd be better off (in fact, my disposable income after rent, utilities and food would almost triple)
First of all, why do you assume that rent and utilities would not rise in tandem with the cost of goods? Why do you believe rent in Silicon Valley is so high? It's the scarcity combined with the high wages of the tech workers.
Secondly, you are losing your competitive advantage. You are worse off.
Not entirely of course, but the ratio of labor to productivity is really large, they don't engage a lot of workers to begin with. Look at how much larger the electricity costs are than labor:
If there is a constant threat of the prices being lowered again, it will be pointless to reinvest in restarting competition - the monopolist at any time can lower the prices back down.
Also, in some fields the monopolistic position gives network effects to the producer that cannot be replicated by an upstart, making a competition unlikely.
They seem to be taking a pretty big loss. Surely Friedman didn't expect them to just "take one for the team." I don't know. Maybe he did? Not sure.
Protecting the local steel industry might be good for the steel workers, but it raises prices for everyone else in the economy who consumes steel. Now certainly every time someone's job is disrupted by competition it is personally tragic, but why do the interests of one particular interest group weigh in larger than the well-being of everyone else?
then, if I interpret this correctly, Friedman's idea truly was that laid-off steelworkers "take one for the team"
What about all the people that lost their jobs as a result of technological progress? What of those poor ice pickers, who lost their livelihood to the invention of the refrigerator?
so, what regulatory or governmental policies and programs did Friedman think could actually help people once they arrive in that state? what can an economist say about policy for workers whose livelihood disappeared?
That must be why economies such as China, Japan, and South Korea stayed economic basket cases in the late 20th century. Because of their protectionism.
This worked quite well for countries building up their own industries (Brazil, Korea, Japan, possible China).
"As Friedman used to point out, if Japan wants to subsidize its steel at the cost of their own taxpayers, just take the cheap steel and be thankful for it."
It becomes a problem if a country like China with state capitalism uses this to systematically destroy other industries.