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Protection or Free Trade

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Author Topic: Protection or Free Trade  (Read 4999 times)
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« on: October 26, 2010, 02:43:59 pm »



TO understand a thing it is often well to begin by looking at it, as it were, from the outside and observing its relations, before examining it in detail. Let us do this with the protective theory.

Protection, as the term has come to signify a certain national policy, means the levying of duties upon imported commodities for the purpose of protecting from competition the home producers of such commodities. Protectionists contend that to secure the highest prosperity of each nation it should produce for itself everything it is capable of producing, and that to this end its home industries should be protected against the competition of foreign industries. They also contend (in the United States at least) that to enable workmen to obtain as high wages as possible they should be protected by tariff duties against the competition of goods produced in countries where wages are lower. Without disputing the correctness of this theory, let us consider its larger relations.

The protective theory, it is to be observed, asserts a general law, as true in one country as in another. However protectionists in the United States may talk of "American protection" and "British free trade," protection is, and of necessity, must be, advocated as of universal application. American protectionists use the arguments of foreign protectionists, and even where they complain that the protective policy of other countries is injurious to us, commend it as an example which we should follow. They contend that (at least up to a certain point in national development) protection is everywhere beneficial to a nation, and free trade everywhere injurious; that the prosperous nations have built up their prosperity by protection, and that all nations that would be prosperous must adopt that policy. And their arguments must be universal to have any plausibility, for it would be absurd to assert that a theory of national growth and prosperity applies to some countries and not to others.

Let me ask the reader who has hitherto accepted the protective theory to consider what its necessarily universal character involves. It was the realization of this that first led me to question that theory. I was for a number of years after I had come of age a protectionist, or rather, I supposed I was, for, without real examination, I had accepted the belief, as in the first place we all accept our beliefs, on the authority of others. So far, however, as I thought at all on the subject, I was logical, and I well remember how when the Florida and Alabama were sinking American ships at sea, I thought their depredations, after all, a good thing for the state in which I lived—California—since the increased risk and cost of ocean carriage in American ships (then the only way of bringing goods from the Eastern States to California) would give to her infant industries something of that needed protection against the lower wages and better established industries of the Eastern States which the Federal Constitution prevented her from securing by a State tariff. The full bearing of such notions never occurred to me till I happened to hear the protective theory elaborately expounded by an able man. As he urged that American industries must be protected from the competition of foreign countries, that we ought to work up our own raw materials and allow nothing to be imported that we could produce for ourselves, I began to realize that these propositions, if true, must be universally true, and that not only should every nation shut itself out from every other nation; not only should the various sections of every large country institute tariffs of their own to shelter their industries from the competition of other sections, but that the reason given why no people should obtain from abroad anything they might make at home, must apply as well to the family. It was this that led me to weigh arguments I had before accepted without real examination.

It seems to me impossible to consider the necessarily universal character of the protective theory without feeling it to be repugnant to moral perceptions and inconsistent with the simplicity and harmony which we everywhere discover in natural law. What should we think of human laws framed for the government of a country which should compel each family to keep constantly on their guard against every other family, to expend a large part of their time and labor in preventing exchanges with their neighbors, and to seek their own prosperity by opposing the natural efforts of other families to become prosperous? Yet the protective theory implies that laws such as these have been imposed by the Creator upon the families of men who tenant this earth. It implies that by virtue of social laws, as immutable as the physical laws, each nation must stand jealously on guard against every other nation and erect artificial obstacles to national intercourse. It implies that a federation of mankind, such as that which prevents the establishment of tariffs between the states of the American Union, would be a disaster to the race, and that in an ideal world each nation would be protected from every other nation by a cordon of tax collectors, with their attendant spies and informers.

Such a theory might consort with that form of polytheism which assigned to each nation a separate and hostile God; but it is hard to reconcile it with the idea of the unity of the Creative Mind and the universality of law. Imagine a Christian missionary expounding to a newly discovered people the sublime truths of the gospel of peace and love—the fatherhood of God; the brotherhood of man; the duty of regarding the interests of our neighbors equally with our own, and of doing to others as we would have them do to us. Could he, in the same breath, go on to declare that, by virtue of the laws of this same God, each nation, to prosper, must defend itself against all other nations by a protective tariff?

Religion and experience alike teach us that the highest good of each is to be sought in the good of others; that the true interests of men are harmonious, not antagonistic; that prosperity is the daughter of good will and peace; and that want and destruction follow enmity and strife. The protective theory, on the other hand, implies the opposition of national interests; that the gain of one people is the loss of others; that each must seek its own good by constant efforts to get advantage over others and to prevent others from getting advantage over it. It makes of nations rivals instead of co-operators; it inculcates a warfare of restrictions and prohibitions and searchings and seizures, which differs in weapons, but not in spirit, from that warfare which sinks ships and burns cities. Can we imagine the nations beating their swords into plowshares and their spears into pruning-hooks and yet maintaining hostile tariffs?

No matter whether he call himself Christian or Deist, or Agnostic or Atheist, who can look about him without seeing that want and suffering flow inevitably from selfishness, and that in any community the golden rule which teaches us to regard the interests of others as carefully as our own would bring not only peace but plenty? Can it be that what is true of individuals ceases to be true of nations—that in one sphere the law of prosperity is the law of love; in the other that of strife? On the contrary, universal history testifies that poverty, degradation, and enslavement are the inevitable results of that spirit which leads nations to regard each other as rivals and enemies.

Every political truth must be a moral truth. Yet who can accept the protective theory as a moral truth?

A few months ago I found myself one night, with four other passengers, in the smoking car of a Pennsylvania limited express train traveling west. The conversation, beginning with fast trains, turned to fast steamers, and then to custom-house experiences. One told how, coming from Europe with a trunk filled with presents for his wife, he had significantly said to the custom-house inspector detailed to examine his trunks that he was in a hurry. "How much of a hurry?" said the officer. "Ten dollars' worth of a hurry," was the reply. The officer took a quick look through the trunk and remarked, "That's not much of a hurry for all this." "I gave him ten more," said the story-teller, "and he chalked the trunk."

Then another told how under similar circumstances he had placed a magnificent meerschaum pipe so that it would be the first thing seen on lifting the trunk lid, and, when the officer admired it, had replied that it was his. The third said he simply put a greenback conspicuously in the first article of luggage; and the fourth told how his plan was to crumple up a note, and put it with his keys in the officer's hands.

Here were four reputable business men, as I afterward found them to be—one an iron worker, one a coal producer, and the other two manufacturers—men of at least average morality and patriotism, who not only thought it no harm to evade the tariff, but who made no scruple of the false oath necessary, and regarded the bribery of customs officers as a good joke. I had the curiosity to edge the conversation from this to the subject of free trade, when I found that all four were staunch protectionists, and by edging it a little further I found that all four were thorough believers in the right of an employer to discharge any workman who voted for a free-trade candidate, holding, as they put it, that no one ought to eat the bread of an employer whose interests he opposed.

I recall this conversation because it is typical. Whoever has traveled on trans-Atlantic steamers has listened to such conversations, and is aware that the great majority of the American protectionists who visit Europe return with purchases which they smuggle through, even at the expense of a "custom-house oath" and a greenback to the examining officer. Many of our largest under-valuation smugglers have been men of the highest social and religious standing, who gave freely of their spoils to churches and benevolent societies. Not long ago a highly respected banker, an extremely religious man, who had probably neglected the precautions of my smoking-car friends, was detected in the endeavor to smuggle through in his luggage (which he had of course taken a "custom-house oath" did not contain anything dutiable) a lot of very valuable presents to a church!

Conscientious men will (until they get used to them) shrink from false oaths, from bribery, or from other means necessary to evade a tariff, but even of believers in protection are there any who really think such evasions wrong in themselves? What theoretical protectionist is there, who, if no one was watching him, would scruple to carry a box of cigars or a dress pattern, or anything else that could be carried, across a steamer wharf or across Niagara bridge? And why should he scruple to carry such things across a wharf, a river, or an imaginary line, since once inside the custom house frontier no one would object to his carrying them thousands of miles?

That unscrupulous men, for their own private advantage, break laws intended for the general good proves nothing; but that no one really feels smuggling to be wrong proves a good deal. Whether we hold the basis of moral ideas to be intuitive or utilitarian, is not the fact that protection thus lacks the support of the moral sentiment inconsistent with the idea that tariffs are necessary to the well-being and progress of mankind? If, as is held by some, moral perceptions are implanted in our nature as a means whereby our conduct may be instinctively guided in such way as to conduce to the general well being, how is it, if the Creator has ordained that man should prosper by protective tariffs, that the moral sense takes no cognizance of such a law? If, as others hold, what we call moral perceptions be the result of general experience of what conduces to the common good, how is it that the beneficial effects of protection have not developed moral recognition?

To make that a crime by statute which is no crime in morals, is inevitably to destroy respect for law; to resort to oaths to prevent men from doing what they feel injures no one, is to weaken the sanctity of oaths. Corruption, evasion and false swearing are inseparable from tariffs. Can that be good of which these are the fruits? A system which requires such spying and searching, such invoking of the Almighty to witness the contents of every box, bundle and package—a system which always has provoked, and in the nature of man always must provoke, corruption and fraud—can it be necessary to the prosperity and progress of mankind?

Consider, moreover, how sharply this theory of protection conflicts with common experience and habits of thought. Who would think of recommending a site for a proposed city or a new colony because it was very difficult to get at? Yet, if the protective theory be true, this would really be an advantage. Who would regard piracy as promotive of civilization? Yet a discriminating pirate, who would confine his seizures to goods which might be produced in the country to which they were being carried, would be as beneficial to that country as a tariff.

Whether protectionists or free traders, we all hear with interest and pleasure of improvements in transportation by water or land; we are all disposed to regard the opening of canals, the building of railways, the deepening of harbors, the improvement of steamships, as beneficial. But if such things are beneficial, how can tariffs be beneficial? The effect of such things is to lessen the cost of transporting commodities; the effect of tariffs is to increase it. If the protective theory be true, every improvement that cheapens the carriage of goods between country and country is an injury to mankind unless tariffs be commensurately increased.

The directness, the swiftness and the ease with which birds cleave the air, naturally excite man's desire. His fancy has always given angels wings, and he has ever dreamed of a time when the power of traversing those unobstructed fields might also be his. That this triumph is within the power of human ingenuity who in this age of marvels can doubt? And who would not hail with delight the news that invention had at last brought to realization the dream of ages, and made navigation of the atmosphere as practicable as navigation of the ocean? Yet if the protective theory be true this mastery of another element would be a misfortune to man. For it would make protection impossible. Every inland town and village, every rood of ground on the whole earth's surface, would at once become a port of an all-embracing ocean, and the only way in which any people could continue to enjoy the blessings of protection would be to roof their country in.

It is not only improvements in transportation that are antagonistic to protection; but all labor-saving invention and discovery. The utilization of natural gas bids fair to lessen the demand for native coal far more than could the free importation of foreign coal. Borings in Central New York have recently revealed vast beds of pure salt, the working of which will destroy the industry of salt making, to encourage which we impose a duty on foreign salt. We maintain a tariff for the avowed purpose of keeping out the products of cheap foreign labor; yet machines are daily invented that produce goods cheaper than the cheapest foreign labor. Clearly the only consistent protectionism is that of China, which would not only prohibit foreign commerce, but forbid the introduction of labor-saving machinery.

The aim of protection, in short, is to prevent the bringing into a country of things in themselves useful and valuable, in order to compel the making of such things. But what all mankind, in the individual affairs of every-day life, regard as to be desired is not the making of things, but the possession of things.
« Last Edit: March 02, 2011, 12:24:21 pm by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling

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