Letter to The Wall Street Journal
Reading the five letters to the Editor (May 18) deployed to counter my lonely missive (May 12) celebrating the Protectionist Era (1865-1913) and rebutting the Smoot-Hawley myth, I am persuaded that remedial history should be a required course for all economists.
Prof. Kent Jones writes that my tariff ideas represent “government intervention in the manner of an unrepentant socialist.” But from 1789 to 1913 tariffs produced from 50% to 90% of all federal revenue. Were those tarifites-Washington, Hamilton, Madison, Clay, Webster, Jackson, Lincoln, McKinley and Theodore Roosevelt-all “unrepentant socialists”?
“Tariffs are taxes,” storms Prof. Jones, “Repeat after me”, Mr. Buchanan: big tariffs are big taxes.” Well, yes, tariffs are taxes, but they are indirect, non-intrusive and discretionary taxes; you don’t have to pay them, professor, if you Buy American.
As an unrepentant socialist named Abe Lincoln put it, “The Tariff is the cheaper System,-while by the direct-tax system the land must be literally covered with assessors and collectors going forth like swarms of Egyptian locusts. By the tariff system the whole revenue is paid by the consumers of foreign goods….By this system the man who contents himself to live upon the product of his own country pay nothing at all.” Old Abe anticipated the IRS.
Prof. Michael Oldfather writes that Milton Friedman may agree with me that Smoot-Hawley was in no way responsible for the Depression, but adds that “it is obvious that he did not consult Prof. Friedman on the benefits of high tariffs.”
To the contrary, I wrote Milton twice. While he said that I am doing the “devil’s work,” he conceded to Peter Brimelow of Forbes that I am in the conservative tradition. Said Milton, “historically, the American Right has always been protectionist.” Thus, it is not I who am the conservative impersonator on these pages.
John Steele Gordon credits me with “tendentious twaddle” in suggesting that the free-trade stance of the GOP was related to the twin routs of 1992 and ’96. Protectionist Ross Perot got only 18.8% and 8.4% of the vote, reports Mr. Gordon. Brilliant. And out of whose natural base does this political Clauswitz think those votes came? The “swing vote” in national elections is now anti-NAFTA and anti-GATT, as is a plurality of the Republican Party, which is why the troubadours of fast track got their clocks cleaned in 1997.
Joshua Feinman says high immigration, not protective tariffs, explains the “eye-popping” economic growth of 4% a year between 1986 and 1913. But Harding and Coolidge slammed the door shut on immigration; and economic growth streaked to 7% a year. How do you explain that one, Mr. Feinman?
From reading the Journal letters, it appears that none of the authors read my book. For in “The Great Betrayal” I do not call for wall-building, but recommended the following trade and tax ideas:
* Free trade with Canada.
* Strengthened regional trading bloc like Mercour and the EU, without surrenders of sovereignty.
* Revenue tariffs of 15% between comparable trading zones like the EU and Canada-U.S.
* Equalization tariffs on low-wage nations like China to give U.S. industrial workers a level of playing field.
* Use of every tariff dollar to slash taxes on the income, investment and savings of American workers and businesses.
I am against raising taxes, but favor shifting part of the tax burden off of work and onto consumption of foreign goods, as we move toward the lowest, flattest tax rates in the industrial world.
It’s called Economic Nationalism. It worked the mightiest miracle the world had ever seen, and will do so again when this utopian experiment of global free trade comes crashing down in the upheavals it is even now engendering on every continent.