Of tariffs, quotas, Utopian free market consumerism, the nation state, and the "most efficient allocation of resources" including those that used to weave in the cotton mills of my hometown
Never thought much about tariffs, despite having matriculated my way to a B.A. in economics in a Southern hometown arguably ravaged by the lack of same for textiles. After all, my family worked for union railroad wages, their sons became lawyers and professors and the mere threat of a union raised the starting pay at the new BMW plant and even garnered "lint head" friends of mine another $1.50/hour due to the new "free market" competition. Then came the Reagan-Clinton boom years and even a recovery after 911.
No worries, right? Microsoft and Apple made constant communication and the Googling of minutia (that even Seinfeld wouldn't plumb the depths of) possible on a minute-by-minute basis. And have you seen the low prices at Wal-Mart? Yes, Jimmy Carter, Bill Clinton, Barney Frank and George W. Bush screwed up this Nirvana with a housing bubble, but other than that, the "fundamentals were sound". Right?
Just return to those Reaganite conservative supply side principles. It will take time to balance the budget and pay down the debt, but all it will take is courageous leadership and patriotic austerity. Right?
Never thought much about trade policy as being part of the problem that lead to the Great Recession and the Anemic Obama "recovery". After all, if liberal Hillary's Bill and a conservative Newt birthed NAFTA and everybody in Washington, D.C. save labor unions and Pat Buchanan favor GATT and a U.S. domestic market as wide open to consumer goods in 2012 as Pearl Harbor was open to attacks from the Imperial Japanese Navy in 1941, who am I to complain?
You did see those low prices at the Wal-Mart, right? Those free market low prices have been a Godsend greater than food stamps and non-work Obama welfare, especially for those of us non-government employees nor dependents on said government, no longer able to afford luxury Le Sueur peas since the end of prosperity after TARP and the "stimulus".
But what has all this got to do with trade?
TV sabbatical leads to a second "conservative epiphany" and rejection of free-trade Utopianism
We lost real property when the housing bubble burst. Our new living arrangements and financial condition made having a television in my bedroom unpractical. Over time we have come to prefer radio and internet to commercial television anyway and we can always join roommates in the parlor for Braves baseball, SEC football and the NFL, so that some six months ago we began a non-sports TV sabbatical. This led to some resort to C-Span archives for visual relief, which further led to a reviewing of Brian Lamb's Booknotes interview with Pat Buchanan concerning his 1998 book, The Great Betrayal; and the summa cum laude, Phi Beta Kappa econ major from the John C. Calhoun South finally got schooled on trade policy and had vague nagging doubts about the virtues of globalization answered.
What I learned:
- Liberty and prosperity are achieved via nation state competition and not via a "free" world market for consumers who happen to speak different languages.
- All of the Founding Fathers eventually rejected the notion of "free trade" and embraced the Hamiltonian-inspired "American System" of Henry Clay that induced patriotism among the investor class with tariffs that encouraged the building of the Arsenal of Democracy and the most powerful and prosperous nation in world history.
- John Adams and Thomas Jefferson entertained the notion of free trade until they had to remove rose-colored glasses upon assuming the Presidency. All of the great American leaders of the 19th Century favored tariffs as conservative common sense based upon history' lessons, especially including their own colonial history with Britain. Even John C. Calhoun favored protectionism as the wisest national policy and only switched sides to support the South's peculiar circumstance born of slavery. Lincoln? Rabid protectionist.
- In fact, during the Republican Party-dominated post-Civil War years through the 1920s, i.e. the decades when the United States of America surpassed Britain, Germany and the memory of ancient Rome to become the preeminent economic and military super-power the world has ever seen; the tariff was the centerpiece of U.S. foreign policy. Clearly the tariff didn't prevent the prosperity that occurred and clearly it was not employed only to foster "infant" industries of a budding young nation.
There was nothing conservative about foreign trade policies that allowed the destruction of America's industrial base and the middle class jobs that went with them.
So why did the U.S. move away from tariffs?
The first attempted move was inspired by President Grover Cleveland's "embarrassment" over massive budget surpluses fueled by tariff revenue. Cleveland eventually managed to secure a reduction in tariffs with an emphasis on funding over protectionism; as well as an ill-fated income tax that was struck down by the U.S. Supreme Court. The change gained momentum via liberal progressives, their income tax constitutional amendment and a bigger federal government requiring more money than even draconian tariffs could produce.
Free trade ideologues permeated the Wilson Administration, including FDR, and then came the Smoot-Hawley tariff which got wrongfully blamed by many historians for either causing or extending the Great Depression. Wrongfully? Yes, because the stock market crash and first Federal Reserve tightening of the money supply occurred before Smoot-Hawley. The volume of trade as a percentage of the overall economy was too small to have admitted of a great impact, and our trading partners placed tariffs on our goods as well.
Then came WWII; the devastation of trading partners, allies and enemies alike; and the Cold War. These circumstance afforded the United States, as the lone super-power with a modern economy still standing, the "luxury" of magnanimous Marshall Plans and access to the U.S. consumer market as an inducement to eschew Soviet alliances. Japan and Germany recover, but U.S. trade policy remains mostly tariff averse. Slowly, the effects of free trade hand over large chunks of Detroit's auto industry to the Mercedes-Toyota axis. Fruits of the Looms get woven nearer Asian mangoes than Georgia peaches. But no worries, the GDP numbers from the Reagan-Clinton boom are historic.
The TV sabbatical continues, and with it a massive increase in library-borrowed reading. It is amazing how much one can do when not zombied out over the latest droid ads. Eventually we discover via Charles Murray what happened to all those former cloth doffers, whose former plants are now yuppie studio apartments and who some arrogant lawyers assumed could just get a laptop and make a living competing with other laptops in Mumbai: The U.S. working class is and has beenComing Apart.
We come now to the end of part one of our anti-free trade apologetic. We expect to go into more detail periodically but suffice to say that any notions of free trade as conservative, are dashed. One of the main components of my 2000 conservative epiphany after 18 years an activist Democrat, is that conservatism forms policies based upon experience, not ideology.
The domestic U.S. market is not the global market. The "most efficient allocation of resources" must take into account the reality of the differences in the respective markets and what builds, not just low prices for goods and services, but also a prosperous citizenry. Why fear retaliation from nations whose current policies imposing tariffs on the U.S. are what retaliation would look like if the U.S. were not, at present, bent over and grabbing the ankles cheering on "free" trade", i.e. treating Lockheed-killing foreign monopolies and foreign nations with the same unfettered right to sell widgets in Peoria as widget-makers in Peoria. Except that U.S. manufacturers are subject to anti-trust laws and Obama regulations.
Until next time, let me close with this: Foreign trade is not a game for the driving down of Jos. A. Bank shirts by a nickel a piece. This is real life. People's lives matter. Their jobs matter. And they aren't failures just because they aren't willing to live in Chinese caves and take the train to the factory.
And by the way, just to tie all this together. Hadn't been to Wal-Mart much to buy clothes in more than a year or so until yesterday and I noticed that Hanes briefs cost about 25% more than they used to and generic brand peas cost what Le Sueur's did in 2009.
How's that "efficient allocation of resources" working out for you now?
Next time: We will address inevitable Red Herrings that attempt to exempt trade policy as the cause of any of our problems as the blame gets placed solely on labor unions, educational deficiencies and technology that kills manufacturing jobs.
Atlanta Law & Politics columnist – Examiner.com
Editor - Hillbilly Politics
Co-Founder and Editor - Political Daily
“One man with courage makes a majority.” – Andrew Jackson