Donny and his magic Sharpie are rolling out tariff after tariff all in the name of protecting America’s jobs and manufacturing….but we can debate their effectiveness but first how many actually know the history of protectionism?
I can help…..I am a bit of a history buff and want my readers to understand protectionism and the history behind it…..
While Britain has for the most part had a strong commitment to free trade, it’s a very different story in the US, which has a long history of protectionism. This means that President Donald Trump’s tariff wars are playing out very differently politically on his side of the Atlantic. And there is no certainty that domestic opposition will be strong enough to curb his enthusiasm for using tariffs as a weapon.
Britain’s political economy is still shaped by the battle over free trade that took place nearly 200 years ago. The bitter debate over the Corn Laws, which put high tariffs on imported food to protect UK landowners, led to a political triumph for the new Liberal party. It also led to wide support among working people and manufacturers for a policy of free trade.
Britain’s domination of the world economy in the 19th century owed much to the triumph of free trade. And the British public still largely backs free trade today.
In contrast, many American politicians in the 19th century believed that US industry needed protection from its more efficient rivals. It was Alexander Hamilton, one of the authors of the US constitution and America’s first treasury secretary, who introduced tariffs in 1789. Hamilton cited the need to protect America’s “infant industries” from foreign competition.
By the end of the 19th century, US manufacturers had surpassed their British rivals. Protectionism, however, remained a cornerstone of American international economic policy. It was the expanding US domestic market and not exports to foreign countries that was driving the growth of America’s giant corporations – which were closely allied with the ruling Republican party.
Between 1861 and 1933, US tariffs on foreign imports averaged 50% – among the highest in the world. Tariffs also contributed nearly half of all government revenues. Federal income taxes were only introduced, after much opposition, in 1913.
To help further….is protectionism good or bad?
Key Takeaways: Protectionism
- Protectionism is a government-imposed trade policy by which countries attempt to protect their industries and workers from foreign competition.
- Protectionism is commonly implemented by the imposition of tariffs, quotas on import and exports, product standard, and government subsidies.
- While it may be of temporary benefit in developing countries, total protectionism typically harms the country’s economy, industries, workers, and consumers.
Protectionism is a type of trade policy by which governments attempt to prevent or limit competition from other countries. While it may provide some short-term benefit, particularly in poor or developing nations, unlimited protectionism eventually harms the country’s ability to compete in international trade. This article examines the tools of protectionism, how they are applied in the real world, and the advantages and disadvantages of limiting free trade.
https://www.thoughtco.com/protectionism-definition-and-examples-4571027
In reality (you knows that thing that the Trumpites do not want you to understand.) is really bad historically….
Protectionism is currently in vogue, gaining support from both the left and the right. This isn’t the first time. As protectionism’s popularity ebbs and flows, it remains a constant presence. Each resurgence is driven by variations of the same argument, particularly the infant industry argument.
The argument is straightforward: protectionism, through tariffs or subsidies, helps young industries grow by shielding them from foreign competition until they can compete on their own, ultimately leading to more economic growth than would have occurred otherwise. As right-wing public intellectual Oren Cass recently summarized, “the way America went from colonial backwater to this globe-spanning industrial colossus was not free markets and free trade. It was aggressive protection of our domestic market.”
The problem is that, with each resurgence, the same replies can be made: the increase in domestic production of protected industries is not worth the lost welfare of consumers. In fact, there is not a bit of the statement made by Cass that squares with American economic history.
The great American economist, Henry George, has some interesting take on protectionism…
Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.
More on George’s thoughts….
Henry George wrote one of the best critiques of protectionist trade policies in 1886 at a time when President Grover Cleveland was pushing for tariff reductions from a very high average rate in the US of 47% at a time when free trade Britain had tariff rates of less than 1% and France of 1.5%. Central to his argument was that protectionism was a form of coercion or force which prevented two parties divided by a line drawn on a map from benefitting from mutually beneficial exchanges. Those who did benefit from tariffs and other forms of protection were the powerful lobby groups who controlled the political parties (in this case the Republican Party) and were successful in lobbying Congress for favourable legislation. George also pointed out the bellicose nature of protection, noting that it was a domestic form of economic warfare which was usually reserved for times of war to blockade one’s enemy’s ports in order to harm them economically. The domestic protectionists were in effect “blockading” their own citizens from the benefits of external trade. One could turn the argument on its head by arguing that trade “sanctions” (a euphemism for a blockade) designed to hurt an enemy also harmed one’s own domestic consumers who wished to trade with foreigners. Since both parties to a trade benefit from the transaction, by preventing trade from taking place across borders there is an equal or greater harm imposed upon one’s own domestic consumers for every harm inflicted upon the enemy. A final observation is that George objects to the use of martial language in describing trade, such as an “invasion”of foreign goods, or language used to describe natural disasters, such as “floods”, to an activity which is in essence peaceful, voluntary, and productive.
Donny and his magic Sharpie are doing more damage than good….and people are too damn ignorant to see the damage being done.
I hope this post was a bit of help for those that are struggling to understand all this protectionism stuff.
Class Dismissed!
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