How free trade is ruining America - Part II
Our Buy American Mention of the Week!
by Roger Simmermaker
July 24, 2016
As I received more than a few emails after my recent article "How Free Trade is Ruining America" basically asking "Okay, I get it...free trade is bad for America - but what do you suggest we do about it?"
The answer is two-fold.
- Buy American wherever and whenever possible so American companies producing in the USA can remain profitable and competitive against foreign producers that undercut domestic producers on price. There never seems to be a shortage of predatory foreign companies willing to use their profits to either put otherwise competitive American companies out of business or acquire or swallow-up our American-owned companies, which results in all future income streams accruing to foreign owners, foreign investors, and foreign stockholders (all of which pay their taxes to foreign treasuries in foreign countries).
- Not only tell your representatives that you are against free trade (for the many reasons laid out in my article How Free Trade is Ruining America), but you can also tell them why higher tariffs are the answer to job-killing free trade deals.
Politicians are always warning against U.S. protectionism when they are assaulted for supporting bad free trade deals.
If you're a republican (and even if you're not), tell your representatives that the father of the Republican Party, Abraham Lincoln, was a protectionist who advocated high tariffs. Here's are a few quotes detailing what good old Honest Abe said about tariffs and protectionism:
- The abandonment of the protective policy by the American government will produce want and ruin among our people. (Even Donald Trump mentioned how amazed he was about discovering this gem of a quote).
- When an American paid 20 dollars for steel to an English manufacturer, America had the steel and England had the 20 dollars. But when he paid 20 dollars for steel to an American manufacturer, America had both the steel and the 20 dollars.
- I am in favor of the internal improvement system and a high protective tariff. These are my sentiments and political principles.
- The tariff is the cheaper system, because the duties, being collected in large parcels at a few commercial points, will require comparatively few officers in their collection; while by the direct tax system, the land must be literally covered with assessors and collectors, going forth like swarms of Egyptian locusts, devouring every blade of grass and other green thing. And again, by the tariff system, the whole revenue is paid by the consumers of foreign goods, and those chiefly, the luxuries, and not the necessaries of life. By this system, the man who contents himself to live upon the products of his own country, pays nothing at all.
- I...would continue (trade) where it is necessary, and discontinue it, where it is not. As instance: I would continue commerce so far as it is employed in bringing us coffee, and I would discontinue it so far as it is employed in bringing us cotton goods.
You can't get any more protectionist than this last quote, my friends. But, do you ever hear anyone (Republican or Democrat) vilify President Abraham Lincoln for his favorable views on protectionism? Of course not. Many say that he is among our greatest presidents, protectionist leanings notwithstanding. Even those that disagree with him admit he was one of the best presidents in American history. They wouldn't dare attack him for his supposedly wrong-headed economic policy of protectionism. So tell your representatives they shouldn't attack you either for simply advocating similar economic and trade policies.
Nor would anyone attack President George Washington for advocating a protective policy. The first major bill signed by George Washington, after approving the Seal of the United States, called for various tariffs on imports and 'the encouragement and protection of manufacturing' in America. This was the Tariff Act of 1789, which President George Washington signed into law on July 4, 1789.
And on Buying American, our first president was a staunch supporter. George Washington formed his own personal Declaration of Independence from England. This came about as a direct result of Washington being unable to audit his agent's activities and being unable to determine whether he was being treated honestly. Washington switched from raising and exporting tobacco to raising corn and wheat, which were sold to local merchants, and he used the profits to buy finished goods from American craftsman. In his historical farewell address, Washington said, There can be no greater error than to expect or calculate upon real favours from nations.
Free trade politicians often respond (trust me, I've heard all the responses) to the fact that all founding fathers and most popular historical presidents were "high import-tariff" advocates by saying "Well, the economy is much different now than it was back then. Things have changed, and we just can't live by the same economic policies as we did then."
Really? Trade with other nations has been occurring since the birth of our nation. Only the volume of trade has changed. And last time I checked, economists still believe in supply and demand, comparative advantage, and the like. That hasn't changed, and neither should advantages we could gain as a nation from more-protective trade policies.
Free trade advocates who say we can't have adequate tariffs like we once did for well over the first 100 years of our nation are treading in dangerous waters. One could use the same argument to say that we should throw out the U.S. Constitution, for example, because after all, things have changed since way back then. Should we no longer elect presidents and go back to having a King instead? After all, things have changed, right? So why should our nation switch from a protectionist trade policy to a free-trade policy simply because time has progressed.
We should tell our politicians that we don't want free trade - we want fair trade. And no, free trade and fair trade cannot co-exist. To make trade fair, we must advocate the wisdom of President Theodore Roosevelt who once commented that tariffs must never be reduced below the point that will cover the difference between the labor cost here and abroad. The well-being of the wage-worker is a prime consideration of our entire policy of economic legislation.
What Teddy Roosevelt was calling for could today be described as "equalizing tariffs", which would equalize production cost burdens for all competitors and actually make trade fair by making all competitors play by the same rules. After all, every other competitive activity requires all players to play by the same rules. In baseball, for example, each team gets three outs and every batter gets three strikes, etc. In the game of poker, if you want to sit at the table and share in the pot like everyone else, you have to ante up just like everyone else. U.S. producers don't ante up two dollars while Mexican producers ante up two pesos to share in the same pot.
In the global economy, the "pot" is the lucrative U.S. market. Every nation (including China) wants to sell to us. We have enormous leverage to dictate trade for our benefit, but we don't use it. We enter trade negotiations as if we have no standing, no leverage, and nothing to offer or negotiate of value. And quite possibly the reason we have little to offer is because we have often already unilaterally lowered tariffs for nothing in return. Our average tariff on imports currently hovers around a nearly negligible three percent.
So we should stop kidding ourselves, thinking the grass is greener on the other side, and the foolish notion that we should surrender our market to foreign producers if they would only surrender their foreign markets to ours. Perhaps the words of President William McKinley say it best:
What these other countries want is a free and open market with the United States...wherever we have tried reciprocity or low duties we have always been the loser.
And another great quote from President William McKinley:
The foreign producer has no right or claim to equality with our own. He is not amendable to our laws. There are resting upon him none of the obligations of citizenship. He pays no taxes. He performs no civil duties; he is subject to no demands for military service. He is exempt from State, county, and municipal obligations. He contributes nothing to the support, the progress, and the glory of the nation. Why should he enjoy unrestrained equal privileges and profits in our markets with our producers, our labor, and our taxpayers?
So I hope that you will use the wisdom of the founding fathers and other popular presidents when challenged about why free trade is bad for America and why higher-import tariffs are the best use of economic policy.
And perhaps if the wisdom of the founding fathers up to Abraham Lincoln, William McKinley, and Theodore Roosevelt aren't quite enough to sway you in favor of protectionism, conservatives especially should consider the words of the author of the 1848 Communist Manifesto, Karl Marx, who said:
In general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushed the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.
And also, of course, to keep America's prosperity going, we must buy American when and where we can to increase the demand from domestic factories, which will result in the hiring of more American workers to meet the consumer demand for the American-made product.
The beauty of a protectionist and Buy American policy is that both can be done simultaneously for the betterment on American prosperity - just like the founding fathers would have wanted - and communist Karl Marx would have hated.