Conventional Wisdom: Arguing with Milton Friedman

In his most sustained attempt at political philosophy, Milton Friedman outlined “competitive capitalism,” the system of economic exchange underwriting his highly decentralized vision of government. Provided both parties to a transaction are equally informed and acting voluntarily, he wrote in Capitalism and Freedom, the “possibility of coordination through voluntary cooperation rests on the elementary—yet frequently denied—proposition that both parties to an economic transaction benefit from it.”

If it is “frequently denied” that instances of free exchange do not necessarily result in both parties benefiting from a transaction, it may be because the sting of getting the short end of a bargain feels more like a moral violation than an economic one. Especially when such violations seem systematic, they lend credence to the notion that there is something awry or even rotten in the very system that permitted them in the first place.

“Bad deals” is the catchall phrase that Donald Trump uses to describe the systematic failure, as he sees it, of American trade policy.  “I have made billions of dollars in business making deals,” he boasted during his Thursday night speech to the Republican National Convention. “I am going to turn our bad trade agreements into great ones.”

To that end, Trump made Hillary Clinton’s support of free trade a central line of attack in the single most important speech of his presidential campaign. Deriding her for backing “virtually every trade agreement that has been destroying our middle class,” Trump called out Clinton’s support for the North American Free Trade Agreement, the Trans-Pacific Partnership, and even China’s admission to the World Trade Organization.  “[H]orrible trade agreements” will be “totally renegotiated,” he declared, “and we’ll walk away if we don’t get the deal that we want.”

Trump’s rhetoric took, in the crudest sense, the tone of moral imperative.  “I have visited the laid-off factory workers, and the communities crushed by our horrible and unfair trade deals,” he said. “These are the forgotten men and women of our country. People who work hard but no longer have a voice. I am your voice.”

It seems only decent to acknowledge the practical consequences of deals like NAFTA—which were once described to me as “everybody gets a discount and some people lose their jobs”—and even to consider measures that assist those communities disproportionately hurt by them. But as evidenced by his convention speech, Donald Trump seems either unaware of, uninterested in, or simply unconvinced by the broader benefits of free trade. Commercial exchange, as he sees it, is a zero-sum game of winners and losers, which is to say, it is a vision that rejects Friedman’s “elementary” proposition that “that both parties to an economic transaction benefit from it.”

The Conventional Wisdom series features John Paul Rollert’s dispatches from the 2016 Republican and Democratic national conventions. You can see more Conventional Wisdom posts here. If you want to engage the discussion, tweet John Paul @jprollert.