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Friday, February 11, 2011

Republicans, Tariffs, "Free Trade," and Economics in an Easy-to-Understand Nutshell

The estimable Pat Buchanan writes:
As for “protectionism,” Harding did approve the Fordney-McCumber Tariff Act of 1922, doubling rates to 38 percent. But he also slashed Woodrow Wilson’s income tax rates by two-thirds, back to 25 percent.

Result: Unemployment, 12 percent when Harding took office, was 3 percent when Calvin Coolidge left. Manufacturing output rose 64 percent in the Roaring Twenties. Between 1923 and 1927, U.S. growth was 7 percent a year. At decade’s end, America produced 42 percent of the world’s goods.

Compare this economic triumph with the fruits of W’s free-trade policy that wiped out 6 million U.S. manufacturing jobs, one of every three we had, and put America in hock to China.

The protectionism Bush calls “evil” was the policy of 12 Republican presidents from Abraham Lincoln to Coolidge, who made the GOP America’s Party and converted this country into the industrial marvel of mankind.

Is Bush oblivious to this? Did someone at Phillips Academy, Yale or Harvard Business School tell him Lincoln, William McKinley and Theodore Roosevelt were free-traders?
Now, don't waste my time pointing out the negatives of tariffs. Of course there are negatives. Every kind of tax has negatives. Income taxes have negatives, too. I am only contending, as always, that on balance, tariffs are better than income taxes. I think the track record is there.

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