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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, 03:01:35 pm »



How the abolition of protection would stimulate production, weaken monopolies and relieve government of a great cause of corruption, we have seen.

"But what," it will be asked, "would be the gain to working-men? Will wages increase?"

For some time, and to some extent, yes. For the spring of industrial energy consequent upon the removal of the dead weight of the tariff would for a time make the demand for labor brisker and employment steadier, and in occupations where they can combine, workingmen would have better opportunity to reduce their hours and increase their wages, as, since the abolition of the protective tariff in England, many trades there have done. But even from the total abolition of protection, it is impossible to predict any general and permanent increase of wages or any general and permanent improvement in the condition of the working classes. The effect of the abolition of protection, great and beneficial though it must be, would in nature be similar to that of the inventions and discoveries which in our time have so greatly increased the production of wealth, yet have nowhere really raised wages or of themselves improved the condition of the working classes.

Here is the weakness of free trade as it is generally advocated and understood.

The working-man asks the free trader: "How will the change you propose benefit me?"

The free trader can only answer: "It will increase wealth and reduce the cost of commodities."

But in our own time the working-man has seen wealth enormously increased without feeling himself a sharer in the gain. He has seen the cost of commodities greatly reduced without finding it any easier to live.
He looks to England, where a revenue tariff has for some time taken the place of a protective tariff, and there he finds labor degraded and underpaid, a general standard of wages lower than that which prevails here, while such improvements as have been made in the condition of the working classes since the abolition of protection are clearly not traceable to that, but to trades-unions, to temperance and beneficial societies, to emigration, to education, and to such acts as those regulating the labor of women and children, and the sanitary conditions of factories and mines.

And seeing this, the working-man, even though he may realize with more or less clearness the hypocrisy of the rings and combinations which demand tariff duties for "the protection of American labor," accepts the fallacies of protection, or at least makes no effort to throw them off, not because of their strength so much as of the weakness of the appeal which free trade makes to him. A considerable proportion, at least, of the most intelligent and influential of American working-men are fully conscious that "protection" does nothing for labor, but neither do they see what free trade could do. And so they regard the tariff question as one of no practical concern to working-men—an attitude hardly less satisfactory to the protected interests than a thorough belief in protection. For when an interest is already intrenched in law and habit of thought, those who are not against it are for it.

To prove that the abolition of protection would tend to increase the aggregate wealth is not of itself enough to evoke the strength necessary to overthrow protection. To do that, it must be proved that the abolition of protection would mean improvement in the condition of the masses.

It is, as I have said, natural to assume that increased production of wealth would be for the benefit of all, and to a child, a savage, or a civilized man who lived in his study and did not read the daily papers, this would doubtless seem a necessary assumption. Yet, to the majority of men in civilized society, so far is this assumption from seeming necessary, that current explanations of the most important social phenomena involve the reverse.

Without question the most important social phenomena of our time arise from that partial paralysis of industry which in all highly civilized countries is in some degree chronic, and which at recurring periods becomes intensified in widespread and long-continued industrial depressions. What is the current explanation of these phenomena? Is it not that which attributes them to over-production?

This explanation is positively or negatively supported even by men who attribute to popular ignorance the failure of the masses to appreciate the benefits of substituting a revenue tariff for a protective tariff. But so long as conditions which bring racking anxiety and bitter privation to millions are commonly attributed to the over-production of wealth, is it any wonder that a reform which is urged on the ground that it would still further increase the production of wealth should fail to arouse popular enthusiasm?

If, indeed, it be popular ignorance that gives persistence to the belief in protection, it is an ignorance that extends to questions far more important and pressing than any question of tariff—an ignorance that the advocates of free trade have done nothing to enlighten, and that they can do nothing to enlighten until they explain why it is that in spite of the enormous increase of productive power that has been going on with accelerating rapidity all this century it is yet so hard for the mere laborer to get a living.

In this great fact, that increase in wealth and in the power of producing wealth does not bring any general benefit in which all classes share—does not for the great masses lessen the intensity of the struggle to live, lies the explanation of the popular weakness of free trade. It is owing to the increasing appreciation of this fact, and not to accidental causes, that all over the civilized world the free trade movement has for some time been losing energy.

American revenue reformers delude themselves if they imagine that protection can now be overthrown in the United States by a movement on the lines of the Cobden Club. The day for that has passed.

It is true that the British tariff reformers of forty years ago were enabled on these lines to arouse the popular enthusiasm necessary to overthrow protection. But not only did the fact that the British tariff made food dear enable them to appeal to sympathy and imagination with a directness and force impossible where the commodities affected by a tariff are not of such prime importance; but the feeling of that time in regard to such reforms was far more hopeful. The great social problems which today loom so dark on the horizon of the civilized world were then hardly perceived. In the destruction of political tyranny and the removal of trade restrictions ardent and generous spirits saw the emancipation of labor and the eradication of chronic poverty, and there was a confident belief that the industrial inventions and discoveries of the new era which the world had entered would elevate society from its very foundations. The natural assumption that increase in the general wealth must mean a general improvement in the condition of the people was then confidently made.

But disappointment after disappointment has chilled these hopes, and, just as faith in mere republicanism has weakened, so the power of the appeal that free traders make to the masses has weakened with the decline of the belief that mere increase in the power of production will increase the rewards of labor. Instead of the abolition of protection in Great Britain being followed, as was expected, by the overthrow of protection everywhere, it is not only stronger throughout the civilized world than it was then, but is again raising its head in Great Britain.

It is useless to tell working-men that increase in the general wealth means improvement in their condition. They know by experience that this is not true. The working classes of the United States have seen the general wealth enormously increased, and they have also seen that, as wealth has increased, the fortunes of the rich have grown larger, without its becoming a whit easier to get a living by labor.

It is true that statistics may be arrayed in such way as to prove to the satisfaction of those who wish to believe it, that the condition of the working classes is steadily improving. But that this is not the fact working-men well know. It is true that the average consumption has increased, and that the cheapening of commodities has brought into common use things that were once considered luxuries. It is also true that in many trades wages have been somewhat raised and hours reduced by combinations among workmen. But although the prizes that are to be gained in the lottery of life—or, if any one prefers so to call them, the prizes that are to be gained by superior skill, energy and foresight—are constantly becoming greater and more glittering, the blanks grow more numerous. The man of superior powers and opportunities may hope to count his millions where a generation ago he could have hoped to count his tens of thousands; but to the ordinary man the chances of failure are greater, the fear of want more pressing. It is harder for the average man to become his own employer, to provide for a family and to guard against contingencies. The anxieties attendant on the fear of losing employment are becoming greater and greater, and the fate of him who falls from his place more direful. To prove this it is not necessary to cite the statistics that show how pauperism, crime, insanity and suicide are increasing faster than our increase in population. Who that reads our daily papers needs any proof that the increase in the aggregate of wealth does not mean increased ease of gaining a living by labor?

Here is an item which I take from the papers as I write. I do not take it because equally striking items are rare, but because I find a comment on it which I would also like to quote:


    "DAYTON, O. August 26.—One of the most horrible deaths that ever occurred in a civilized community was that of Frank Waltzman, which happened in this city yesterday morning. He has seven children and a wife, and was once a prominent citizen of Xenia, O. He tried his hand at any kind of business where he could find opportunity, and finally was compelled to shovel gravel to get a crust for his children. He worked at this all last week, and on Saturday night was brought home in a wagon, unable to walk. This morning he was dead. An investigation of the affair established the fact that the man had starved to death. The family had been without food for nearly two weeks. His wife tells a horrible story of his death, saying that while he lay dying his children surrounded his couch and sobbed piteously for bread."

And here is the typical comment which the New York Tribune, shocked for a moment out of its attempt to convince working-men that the tariff has improved their condition, makes upon this item:


    "The Tribune, Tuesday, laid before its readers a very sad story of death by literal starvation, at Dayton, O. The details of this case must have struck many thoughtful persons as more resembling the catastrophes we are accustomed to regard as appertaining to European life than those indigenous here. The story is old enough in general outline. First, a merchant, prospering; then decline of business, bankruptcy, and by degrees destitution, until pride and shame together brought on the culminating disaster. A few years ago it would have been said that such a fact was impossible in America, and certainly there was a time when no one with power and will to work need have starved in any part of this county. During that period, too, the strong elasticity and recuperative power of Americans were the world's wonder. No man thought much of failure in business. The demand for enterprise of all kinds was such that no man of ordinary pluck and energy could be kept down. Perhaps this ability to recover was not so much a national peculiarity as an effect of the existing state of society. Certainly, as things settle more and more into regular grooves in the older States, the parallel between American and European civilization becomes closer, and the social problems which perplex those societies are beginning to overshadow this one also. Competition in our centres of population narrows more and more the field of unmoneyed enterprise. It is no longer so easy for those who fall to rise again. And social conventions fetter men more and tend to hold them within narrower bounds.

    "The poor fellow who starved to death at Dayton the other day suffered on Old World fate. He was down and could not get up. He was deprived of his old resources and could not invent new ones. His large family increased his difficulties. He could not compete successfully with younger and less handicapped contemporaries, and so he sank, as thousands have done in the great capitals of Europe, but as hitherto very few, it is to be hoped, have sunk in an American community. Yet this is the tendency of a rapid increase of population and wealth. The struggle becomes fiercer all the time; and while the exactions of society enslave and hamper the ambitious increasingly, the average fertility of resource and swift adaptability decline, just as the average skill of workmen declines with the perfection of mechanical appliances. Commerce and the artificial requirements of social tyranny have already educated among us a class of people whose lives are a perpetual struggle and as perpetual an hypocrisy. They could live comfortably if they could give up display, but they cannot do it, and so they make themselves wretched and demoralize themselves at the same time. The sound, healthy American characteristics are being eliminated in this way, and we are rearing up instead a generation of feeble folks who may in turn become the parents of such hewers of wood and drawers of water as the Old World city masses have long been. And here, as there, our remedy and regeneration must come from the more vigorous and better-trained products of the country life."

I will not ask how regeneration is to come from the more vigorous products of the country life, when every census shows a greater and greater proportion of our population concentrating in cities, and when country roads to the remotest borders are filled with tramps. I merely reprint this article as a sample of the recognition one meets everywhere, even on the part of those who formally deny it, of the obvious fact, that it is becoming harder and harder for the man who has nothing but his own exertions to depend on to get a living in the United States. This fact destroys the assumption that our protective tariff raises and maintains wages, but it also makes it impossible to assume that the abolition of protection would in any way alter the tendency which as wealth increases makes the struggle for existence harder and harder. This tendency shows itself throughout the civilized world, and arises from the more unequal distribution which everywhere accompanies the increase of wealth. How could the abolition of protection affect it? The worst that can, in this respect, be said of protection is that it somewhat accelerates this tendency. The best that could be promised for the abolition of protection is that it might somewhat restrain it. In England the same tendency has continued to manifest itself since the abolition of protection, despite the fact that in other ways great agencies for the relief and elevation of the masses have been at work. Increased emigration, the greater diffusion of education, the growth of trades-unions, sanitary improvements, the better organization of charity, and governmental regulation of labor and its conditions have during all these years directly tended to improve the condition of the working class. Yet the depths of poverty are as dark as ever, and the contrast between want and wealth more glaring. The Corn-Law Reformers thought to make hunger impossible, but though the Corn laws have long since been abolished, starvation still figures in the mortuary statistics of a country overflowing with wealth.

While "statisticians" marshal figures to show to Dives's satisfaction how much richer Lazarus is becoming, here is what the Congregational clergymen of the greatest and richest of the world's great cities declare in their "Bitter Cry of Outcast London":

    "While we have been building our churches and solacing ourselves with our religion and dreaming that the millennium was coming, the poor have been growing poorer, the wretched more miserable and the immoral more corrupt. The gulf has been daily widening which separates the lowest classes of the community from our churches and chapels and from all decency and civilization. It is easy to bring an array of facts which seem to point to the opposite conclusion. But what does it all amount to? We are simply living in a fool's paradise if we imagine that all these agencies combined are doing a thousandth part of what needs to be done. We must face the facts, and these compel the conclusion that this terrible flood of sin and misery is gaining on us. It is rising every day."

This is everywhere the testimony of disinterested and sympathetic observers. Those who are raised above the fierce struggle may not realize what is going on beneath them. But whoever chooses to look may see.

And when we take into account longer periods of time than are usually considered in discussions as to whether the condition of the working-man has or has not improved with improvement in productive agencies and increase in wealth, here is a great broad fact:

Five centuries ago the wealth-producing power of England, man for man, was small indeed compared with what it is now. Not merely were all the great inventions and discoveries which since the introduction of steam have revolutionized mechanical industry then undreamed of, but even agriculture was far ruder and less productive. Artificial grasses had not been discovered. The potato, the carrot, the turnip, the beet, and many other plants and vegetables which the farmer now finds most prolific, had not been introduced. The advantages which ensue from rotation of crops were unknown. Agricultural implements consisted of the spade, the sickle, the flail, the rude plow and the harrow. Cattle had not been bred to more than one-half the size they average now, and sheep did not yield half the fleece. Roads, where there were roads, were extremely bad, wheel vehicles scarce and rude, and places a hundred miles from each other were, in difficulties of transportation, practically as far apart as London and Hong Kong, or San Francisco and New York, are now.

Yet patient students of those times—such men as Professor Thorold Rogers, who has devoted himself to the history of prices, and has deciphered the records of colleges, manors and public offices—tell us that the condition of the English laborer was not only relatively, but absolutely better in those rude times that it is in England today, after five centuries of advance in the productive arts. They tell us that the working-man did not work so hard as he does now, and lived better; that he was exempt from the harassing dread of being forced by loss of employment to want and beggary, or of leaving a family that must apply to charity to avoid starvation. Pauperism as it prevails in the rich England of the nineteenth century was in the far poorer England of the fourteenth century, absolutely unknown. Medicine was empirical and superstitious, sanitary regulations and precautions were all but unknown. There was frequently plague and occasionally famine, for, owing to the difficulties of transportation, the scarcity of one district could not be relieved by the plenty of another. But men did not, as they do now, starve in the midst of abundance; and what is perhaps the most significant fact of all is that not only were women and children not worked as they are today, but the eight-hour system, which even the working-classes of the United States, with all the profusion of labor-saving machinery and appliances have not yet attained, was then the common system!

If this be the result of five centuries of such increase in productive power as has never before been known in the world, what ground is there for hoping that the mere abolition of protective tariffs would permanently benefit working-men?

And not merely do facts of this kind prevent us from assuming that the abolition of protection could more than temporarily benefit working-men, but they suggest the question, whether it could more than temporarily increase the production of wealth?

Inequality in the distribution of wealth tends to lessen the production of wealth—on the one side, by lessening intelligence and incentive among workers; and, on the other side, by augmenting the number of idlers and those who minister to them, and by increasing vice, crime and waste. Now, if increase in the production of wealth tends to increase inequality in distribution, not only shall we be mistaken in expecting its full effect from anything which tends to increase production, but there may be a point at which increased inequality of distribution will neutralize increased power of production, just as the carrying of too much sail may deaden a ship's way.

Trade is a labor-saving of production, and the effect of tariff restrictions upon trade is unquestionably to diminish productive power. Yet, important as may be the effects of protection in diminishing the production of wealth, they are far less important than the waste of productive forces which is commonly attributed to the very excess of productive power. The existence of protective tariffs will not suffice to explain that paralysis of industrial forces which in all departments of industry seems to arise from an excess of productive power, over the demand for consumption, and which is everywhere leading to combinations to restrain production. And considering this, can we feel quite sure that the effect of abolishing protection would be more than temporarily to increase the production of wealth?
« Last Edit: October 26, 2010, 03:35:37 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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