SLL reposts a fair amount of material from Patrick Buchanan. However, not many of his jeremiads against international trade and in favor of high tariffs, nor his so-called “history” of such, makes it to this site. Thomas J. DiLorenzo, one of the few historians out there who knows economics and also leans libertarian, has taken Buchanan to task. It’s long overdue. (As an aside, DiLorenzo sets the record straight on Abraham Lincoln in The Real Lincoln, an excellent book that was a source for some of the historical background in The Golden Pinnacle.) From DiLorenzo at davidstockmanscontracorner.com:
I’m a fan of much of Pat Buchanan’s “America First” foreign policy writings in which he expresses the supposedly outrageous idea that the purpose of the national defense establishment should be to defend against foreign aggressors, and not be the aggressor. Defense, not offense. But his “America First” economic writings in defense of protectionism are completely wrongheaded, and often historically inaccurate.
The main reason for the wrongheadedness is Buchanan’s pervasive error of the post hoc ergo propter hoc fallacy (“after this, therefore because of this”). An example of this fallacy would be: 1) A rooster crows in the morning; 2) The sun rises shortly after the rooster crows; 3) Therefore, the rooster crowing must cause the sun to rise.
In Buchanan’s case, his entire argument for protectionism rests on a slightly different version of the post hoc ergo propter hoc fallacy. Buchanan’s fallacy is: 1) The Republican Party ushered in forty years of protectionist tariffs, beginning in 1862; 2) There was a lot of good economic news for Americans during that period; 3) Therefore, the Republican Party’s protectionist trade policies caused the economic good news.
In a recent column entitled “Who’s the Conservative Heretic” Buchanan repeats this mantra, which he has written over and over for the past several decades, by citing the high tariff policy of the post-Civil War era, along with declining prices, higher real wages, 4% per year increases in GDP, increased industrial production, etc. and claims that ALL of it is the result of high tariffs.
But during that time period international trade accounted for less than 10 percent of the entire economy, so that high tariffs could not possibly have had such huge impacts. Moreover, the economic impacts of the GOP’s protectionist tariffs were uniformly bad. The main beneficiaries of the Party of Lincoln’s protectionism were the politically-connected corporate one-percenters of the day, whose corporate profits were “protected” from competition. As John C. Calhoun once accurately stated, what average Americans are “protected” from with protectionist tariffs is lower prices. Buchanan’s beloved high, post-war tariff rates allowed protected industries to rip off their American customers while all other industries were expanding, innovating, and dropping their prices. This is always and everywhere the fundamental effect of “economic nationalism”: the politically connected benefit at the expense of their fellow citizens.
Many of the post-Civil War tariffs were imposed on capital goods that were used by American manufacturers to produce other products, thereby making those American manufacturers less competitive on international markets.
Farmers were plundered mercilessly by the high tariffs championed by the Party of Lincoln. American farmers sold much of their product in Europe. Three-fourths of Southern agriculture was sold in Europe shortly after the war, for example. But when high protectionist tariffs deprived our European trading partners of revenue by prohibiting them from selling in America, they had fewer (or no) dollars with which to buy American agricultural products. Thus, farmers were plundered twice: Once by having to pay more for a lot of “protected” products shielded from competition and therefore higher priced; and then a second time from lost sales abroad. This is why American farmers became a powerful political force in favor of a federal income tax: They were promised lower tariffs in return for their political support.
Farmers did help get the income tax adopted, and the average tariff rate was lowered in 1913 when the income tax was adopted. But then they were once again abused by the Party of Lincoln which, in 1922, just nine years later, passed a huge tariff increase known as the Fordney-McCumber tariff, which Buchanan praises to the treetops with another silly post hoc fallacy: “For the next five years, the economy grew 7 percent a year,” he writes. Farmers ended up with high tariffs and an income tax.
To continue reading: A Short History Of Trade Protectionism——-Crony Capitalism That Always Hurts The People
