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Saturday, March 13, 2010

Short and Sweet on "Free Trade"

Pat Buchanan's column today is on "free trade." Again, if you're not familiar with the subject, don't confuse "free trade" with "free markets." They are not at all the same thing. "Free trade" is the policy of having low or nonexistent tariffs on imported goods. Used to be that the federal government was financed almost entirely by tariffs. Ran surpluses, too. The United States rose to be an economic colossus during this period.

You cut tariffs, you have to raise other taxes, or create new ones. Tariffs are a consumption-type tax. In their absence, you get income taxes--basically, taxes on economic productivity and success. Brilliant.

Now, as I often say for the benefit of those who, when tariffs are brought up, automatically shout "Smoot-Hawley and the Great Depression!" A) That's hogwash, we had a decades-long history of high tariffs without having a decades-long history of "great depression," and B) I'm not unaware that tariffs are not perfect. I favor the Fair Tax, which is not perfect either, but seems to me to be a better system that has some of the same salutatory effects as tariffs, that is, it creates a tremendous tax advantage to manufacturing and doing business in the United States. However, if I can't get the Fair Tax, I definitely want more tariffs and less income tax, capisce?

Now, on to the Patmeister's remarks--and I do recommend you go read the whole thing. Emphasis is mine and in bold:
How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base -- from Britain under the Acts of Navigation to 1850, to protectionist America from the Civil War to the Roaring Twenties, to Bismarck's Germany before World War I, to Stalin's Russia, to postwar Japan, to China today?

No nation rose to world power on free trade. From Britain after 1860 to America after 1960, free trade has been the policy of powers that put consumption before production and today before tomorrow.

Nations rise on economic nationalism; they descend on free trade.
What is more, other nations practice economic warfare on us already. Somebody always brings up "retaliation." If there is a question of "retaliation," the question is when are we going to retaliate. Other nations protect their markets, either via their own tariffs, or through such mechanisms as rebating their VATs on exports. This global free-trade zone that some utopians envision does not actually exist, never has existed, and never will exist.

As Pat points out, the pitiful part is that our current crop of Republicans simply don't get this. It's pitiful because, if you didn't know, the same period of time that the United States was rising to manufacturing and national preeminence was also a period of time when the United States was under an almost uninterrupted string of Republican presidents, all of whom favored high tariffs. The Republican Party used to be the party of high tariffs; now, they won't touch 'em, despite the lessons of history.

It's a stinkin' pity.

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