Monday, October 15, 2012

Clyde N. Wilson's Argument in Favor of Real Free Trade

"Tariffs were the cause of American economic might and would restore our industrial strength and workers’ welfare if we would re-adopt them and get rid of 'free trade'" is but one of the ideas debunked by the great professor — Doubtful Notions. His argument:
    The nostalgia for taxes on foreign goods is understandable among those worried about American decline. However, it is mistaken for all sorts of reasons. Tariffs, like every other government action, cannot create wealth—they can only redistribute it. To credit tariffs with American economic might is rather to neglect the intelligence, hard work, enterprise, entrepreneurship, creativity, and incomparably immense treasure of natural resources that Americans displayed and enjoyed during the growth of our wealth and strength in the 19th and 20th centuries. There is no real evidence that tariffs enhanced American prosperity—quite the contrary. Tariff advocates like to condemn the present government-managed trade as somehow the product of a mistaken belief in free-trade theory. The present system is not free trade, which is the exchange of goods without the added costs of government interference. The present system is slave trade, resting on the trading of people, which was never a part of free trade. In the tariff era the law was arranged to profit the dominant interests of industrial capital—at the expense of everyone else. In the “free trade” era legislation is arranged to profit the dominant interests of financial capital—at the expense of everyone else. “Free trade” advocates of the present regime are not devoted to a beautiful theory—they are serving their masters. Blaming “free trade” merely detracts from the real issue, which is one of power, not of economic theory. Were a tariff policy adopted, who can doubt that the interests that own Congress would work it to their advantage? How can tariffs help American workers—unless you consider as “American” all the imported cheap labour that is coming and will come. In fact, the high tariff era was also the era of high immigration—the industrialists imported contract gangs of impoverished workers from Europe to keep down the wages of native Americans. Tariff advocates imagine that their policy will bring an America independent of foreigners. In fact, a high tariff policy is historically associated with militarism and imperialism. Countries that hamper foreign imports discourage reciprocal trade. They need to go abroad to find coerced markets. This was a major factor in American leaders adopting imperialism in the late 19th century—controlling colonial markets. Matthew Carey, who was the foremost American spokesman for “tariff protection” in the 19th century was also the spokesman for a large navy to compete with Britain for control of markets around the world. (He was not even a native American but an Irish immigrant who wanted to use U.S. power to damage Britain.) Carey, thirty years before the War Between the States, wanted the North to invade the South and force it to accept the tariff. If it is necessary to build or strengthen certain industries, a direct subsidy would me more honest and effective than a tariff or any of the indirect subsidies (tax breaks, etc.) now used. Of course, you would still have the corruption, incompetence, and colossal wastefulness of federal bureaucrats.

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Blogger Mark D. said...

I became convinced of the position Wilson assails after reading Pat Buchanan's books on foreign policy and economics. The tariff and an American First economic policy were essential to the growth our country. If one looks at other promising 19th century nations in this hemisphere that followed the path lauded by Wilson, one sees countries falling into economic decay and corruption -- Argentina and Brazil first and foremost.

Even Jefferson when he was president saw the wisdom of tariffs and embraced them.

October 16, 2012 at 1:31 AM  

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