Riding the Free Trade Raft Over the Falls

I thought I'd add a little more historical perspective to the issue of protectionism.  An old commentary by Pat, but a very good one. -----lee

by Patrick J. Buchanan
April 18, 2005

     These are not the halcyon days of the Republicans' champion of open borders and free trade, Jack Kemp.
     The "Minutemen," who appeared in Cochise County, Ariz., April 1 to highlight the invasion President Bush will not halt, are being hailed by conservative media and congressmen as patriots, as they are dismissed by the president as "irrational vigilantes."
     Comes now the trade shocker for February. The deficit hit an all-time monthly record: $61 billion. The annual U.S. trade deficit is now running at $717 billion, $100 billion above the 2004 record.
     Smelling political capital, Hillary Clinton and Chuck Schumer are co-sponsoring a 27 percent tariff on goods from China. Beijing ran a $162 billion trade surplus with us in 2004 in what trade expert Charles McMillion calls "The World's Most Unequal Trading Relationship."
     The waters are rising around the Kemp Republicans. For these gargantuan deficits are sinking the dollar, denuding us of industry and increasing our dependence on imports for the components of our weapons, the necessities of our national life and the $2 billion in borrowed money we need daily now – to continue consuming beyond our capacity to pay.
     Brother Kemp is correct in his Washington Times column in saying Beijing has not been manipulating its currency. China fixed the value of the renminbi at eight to the dollar in 1994, just as we once tied the dollar to gold. Beijing rightly objects, "It is not our fault your dollar is sinking."
     But here, the free-traders enter a cul de sac. They recoil at tariffs like Lucifer from holy water, but have no idea how to stop the hemorrhaging of jobs, technology, factories and dollars, except exhortation and prayer. For as 19th-century liberals, they believe free trade is "God's Diplomacy." Whoever rejects it sins in the heart. True believers all, they will ride this raft right over the falls and take us with them. This unyielding belief in the salvific power of free trade is, like socialism, one of modernity's secular religions.
     As Kemp's column testifies, these folks are as light on history as they are long on ideology. Kemp claims "there is no demonstrable instance in economic history where nations were made worse off by free and open trade. There are only the doomsday scenarios spun out of the imagination of half-baked economists ..."
     But between 1860 and 1914, Great Britain, which began the era with an economy twice the size of ours, ended it with an economy not half the size of ours. Britain worshipped at the altar of free trade, while America practiced protectionism from Lincoln to McKinley to Teddy Roosevelt to Taft. Tariffs averaged 40 percent and U.S. growth 4 percent a year for 50 years.
     Bismarckian Germany did not exist in 1860. But by 1914, by imitating protectionist America, she had an economy larger than Great Britain's. Were it not for protectionist America shipping free-trade Britain the necessities of national survival from 1914 to 1917, Britain would have lost the war to Germany, so great was her dependence on imports. A real-life "doomsday scenario," thanks to a few dozen German U-boats.
     Jack Kemp notwithstanding, protectionism has been behind the rise of every great power in modern history: Great Britain under the Acts of Navigation up to 1850, the America of 1860 to 1914, Germany from 1870 to 1914, Japan from 1950 to 1990 and China, which has grown at 9 percent a year for a decade. As China demonstrates, it is a mistake to assume free trade, or even democracy, is indispensable to growth.
     Kemp trots out Smoot-Hawley, the 1930 tariff law, for a ritual scourging, suggesting it caused the Depression. But this, too, is hoary myth. In the 1940s and 1950s, schoolchildren and college students were indoctrinated in such nonsense by FDR-worshipping teachers whose life's vocation was to discredit the tariff hikes and tax cuts of Harding and Coolidge that led to the most spectacular growth in U.S. history – 7 percent a year in the Roaring Twenties. Under high-tariff Harding-Coolidge, the feds' tax take shrank to 3 percent of GNP.
     As high tariffs and low or no income taxes made the GOP America's Party from 1860 to 1932, the Wilsonianism of Bush I and Bush II – open borders, free trade, wars for global democracy – has destroyed the Nixon-Reagan New Majority that used to give the GOP 49-state landslides. Bush carried 31 states in his re-election bid. He would have lost had Democrats capitalized on the free-trade folly that put in play, until the final hours, the indispensable Republican state of Ohio.
     Kemp calls China our trade partner – surely a polite way to describe a regime that persecutes Catholics, brutalizes dissidents, targets 600 rockets on Taiwan, lets North Korea use its bases to ship missile and nuclear technology to anti-American regimes, and refuses to denounce racist riots designed to intimidate our Japanese allies.
     As some on the Old Right have said since Bush I succeeded Reagan, open borders, free-trade globalism and wars for democracy are not conservatism, but its antithesis. And they will drown the GOP.
     The Republicans jumping off the raft into the river and swimming desperately for shore testify to it more eloquently than words.  


to read original article