Tariffs, Trade, and Patriotism

By | 2018-03-11T12:07:55+00:00 March 10th, 2018|
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President Trump’s recent decision to impose tariffs on steel and aluminum in response to what he (and most Americans) view as the routinely unfair trade practices of China and other foreign powers has upset more than a few Beltway apple carts.

It has also triggered a lot of heated criticism from the Right—much of it amusing, some of it more thoughtful, but most of it simply wrong-headed.

For constitutionalists, this fascinating policy kerfuffle represents a rare, not-to-be-missed opportunity to review a few forgotten fun-facts about our Founders’ “original intent” on the matters of trade and taxes.

So let us examine the criticisms of NeverTrump conservatives of the president’s pro-tariff trade policies, consider what our Founders had to say about trade and in particular the policy of a protective tariff, examine where Free Traders really get their ideas about global political economy, and finally explore what “free trade” correctly conceived looks like from a truly constitutionalist perspective.

First, let’s hear the critics.

In Which the “True Conservative” Laments
Mark Levin is an honest, pro-free-trade, libertarian-leaning, one-time NeverTrumper whom many conservatives rightly admire for his animated articulation of oft-forgotten constitutional principles.

He was, until now, slowly warming to the president, on account of Trump’s mostly-conservative policy successes and the unsettling deep state sabotage that has at least partly disrupted his young presidency, and aims to end it.

But in response to this tariff policy announcement—yet another fulfilled Trump campaign promise, as it happens—“The Great One” got a bit unhinged, going so far as angrily accusing President Trump of imposing an “unpatriotic tax” on all Americans.

In this Levin merely trades his “constitutionalist” mantle of truth for his libertarian robes of righteousness. As I’ll explain shortly, both can’t be worn at the same time, at least not on this semantically sublime issue of tariffs and trade.

Speaking of “semantically sublime,” Sen. Ben Sasse (R-Neb.) used the occasion to grandstand on the issue, saying “If you own a steel mill, today was great for you. If you consume steel—and every American family bought something at the store tonight with metals in it—today’s a bad day for you.”

As if that analysis wasn’t reactionary enough, he went still further. “This is leftist economic policy and we’ve tried it a whole bunch of times over the last two centuries and every time, American families have suffered,” he asserted.

The only NeverTrumper who has ever said anything measurably dumber is Kevin Williamson, who famously opined that declining Rust Belt communities weren’t in any way victims of foreign interference in our economy permitted by a corrupted national politics, but instead deserved on their own moral merits “to die.” Trump’s talk about tariffs and other measures to help these communities are not sincere, he argues, but are just demagogic attempts to soothe and sedate ignorant people in the heartland.

Have any of these leading lights of Conservatism, Inc., these self-appointed guardians of GOP ideological and constitutional purity, ever bothered to study what our Founders really believed about trade? Or even what the first Republican president actually advocated about tariffs, and why?

Sadly, it seems not, because if they had, they’d realize to their embarrassment that Trump has more in common intellectually with those towering historical figures than they ever will.

The Founding Fathers Were “Leftists”
To Sasse’s not-so-subtle assertion that the tariff is a failed leftist policy tried repeatedly over the last couple centuries, resulting always and only in misery for American families, a few dispositive quotes are in order.

Sasse was certainly on to something, and in fact, may have inadvertently uncovered one of the most hidden-in-plain-sight Left-wing conspiracies of all time!

First, we’ll start with that famous Marxist agitator, George Washington:

A free people… should promote such manufactures as would render them independent on others for essentials. I shall give every encouragement in my power to the manufactures of my country.

And then there’s the crypto-Nazi, Alexander Hamilton:

Let the thirteen states be bound together in a strict and indissoluble union, concur in erecting one great American system superior to all transatlantic force or influence.

And the Trotskyite community organizer, Thomas Jefferson:

The prohibiting duties we lay on all articles of foreign manufacture which prudence requires us to establish at home, with the patriotic determination of every good citizen to use no foreign articles which can be made within ourselves, without regard to difference of price, secures us against a relapse into foreign dependency.

And that subversive anarchist who penned the Constitution itself, James Madison:

In its (Congress’) first act, a national revenue must be obtained; but the system must be such a one, that while it secures the object of revenue, it shall not be oppressive to our constituents. Happy it is for us that such a system is in our power; for I apprehend that both these object may be obtained from an impost on articles imported into the United States.

Next up, that Stalinist Henry Clay:

Poverty befalls any nation that neglects and abandons the care of its own industry, leaving it exposed to the action of foreign powers… There is a remedy, and that consists in adopting a genuine American system accomplished by the establishment of a tariff…. The cause is the cause of the country, and it must and it will prevail.

And the Bolshevik Daniel Webster:

My object is, and has been, with the protective policy, the true policy of the United States, that the labor of the country is properly provided for. I am looking not for a law such as will benefit capitaliststhey can take care of themselvesbut for a law that shall induce capitalists to invest their capital in such a manner as to occupy and employ American labor.

And then, finally, the tax-and-spend Bernie Sanders socialist, Abraham Lincoln:

The tariff is the cheaper system. By the direct-tax system the land must be literally covered with assessors and collectors going forth like swarms of Egyptian locusts. By the tariff system the whole revenue is paid by the consumers of foreign goods. By this system, the man who contents himself to live on the products of his own country pays no tax at all.

In other words, the tariff was the original “flat tax,” with an opt-out for anyone who wished instead to “Buy American” or invest in American labor! Who knew?

Wherever these “conservative” and “constitutionalist” NeverTrumpers got their ideas about global free trade (and open immigration, for that matter), it clearly wasn’t from our Founders or from the celebrated statesmen who arose during the first 150 years or so of American history.

Conservatism, Inc.’s Very Foreign Policy Principles
The thing is, we do know where they get their ideas about trade and taxes. They get them from the libertarian and European neo-liberal philosophical traditions, among whose most articulate advocates today are those from the Austrian school, notable for their principled defense of free trade not merely as an economic policy, but as a political doctrine.

The Austrian economists are, in fact, worthy of admiration and respect, mainly for their intellectual rigor. For them, the philosophical battle is between statism and freedom. Their “methodological individualism” is unique and thoughtful in its approach to economic theory that contrasts favorably with the “macroeconomic” approaches of most statist schemers, such as Keynes, at least for anyone who thinks freedom is a good idea.

Whereas leftists and statists prefer a command-and-control global system (so-called “fair trade”), the Austrians argue philosophically for a global system based on contractual or “free market” principles (i.e., “free trade”).

But—and this is the critical point—they both pine for a global system.

There is no place for national self-determination or republican self-rule, much less even the concept of the nation-state itself in the cosmology of either’s globalist doctrines. They merely disagree on the particulars of implementing their respective global systems.

And this is the false dichotomy into which Conservatism, Inc., has fallen, mainly out of bad intellectual habit and lack of curiosity. Global capitalism versus global socialism is not the only option. And this is the paradigm from which Trumpian conservatism is seeking to escape.

Only leftists speak of “arcs of history” or “inevitable” future realities, a point to bear in mind next time a NeverTrumper tells you we can’t “retreat” to “Fortress America” or put the global economy genie back in the bottle lest we be “left behind” in the “global economy of the future” and so forth.

Certainly, the current international trading regime is a real thing today and it is something with which we must contend wisely. But it is important to remember that political systems are all empty abstractions only made real—or undone—by deliberate policy implemented intentionally over time. The only thing that is inevitable is the march of time, and we make more or less of that time by the degree to which we consciously shape our future by choice instead of by accident.

What delicious irony, then, that the very same Austrians, with their insights properly divided between their philosophical contributions, on the one hand, and their economic contributions, on the other, are the key to our escape from these false choices—and to contemplate the brilliance of the American system as conceived by our Founders!

A Tale of Two Mises
In his seminal treatise, Human Action, Ludwig von Mises, Austrian economist extraordinaire, makes an important distinction between philosophy (the “science of ends”) and economics (the “science of means”). The latter, he maintains, never has anything to say critical about the former, other than whether, given some goal and resources on hand to achieve it, it is feasible according to stated time constraints, or must be reconsidered or rejected.

But free traders violate this rule all the time, conflating the goal with the means to achieve it, so that any other goal than “free trade” itself is seen as “not economic.” All pure nonsense to anyone who really gets what Mises is really saying. If your goal is national economic independence, as ours at least used to be, global “free trade” is the last policy an economist would advise; but a “free trader” would tell you that you’re just not thinking economically to seek national independence in the first place.

So, setting aside the usual sophisms that make free trade both the means and the end itself, the adult question here for those who seek national independence is this: through which economic policies can we intentionally become independent and self-sufficient (dare I say “great”?) again? Or are we no longer free to do so, and if not, why not?

Behold none other than Ludwig von Mises, during a rare moment when he was speaking strictly as a free-market economist and not a globalist philosopher:

The average standard of living is in [the United States] higher than in any other country of the world, not because the American statesmen and politicians are superior to the foreign statesmen and politicians, but because the per-head quota of capital invested is in America higher than in other countries . . . Capital is more plentiful in America than in other countries because up to now the institutions and laws of the United States put fewer obstacles in the way of big-scale capital accumulation than did those foreign countries.

That’s from his famous 1952 talk, “Capital Supply and American Prosperity,” which Mises delivered before the University Club of Milwaukee. He doesn’t attribute this observation to any particular founding policy, but his conclusion is even more Trumpian (never mind Lincolnian, Jeffersonian, and Washingtonian):

No party platform is to be considered as satisfactory that does not contain the following point: as the prosperity of the nation and the height of wage rates depend on a continual increase in the capital invested in its plants, mines and farms, it is one of the foremost tasks of good government to remove all obstacles that hinder the accumulation and investment of new capital.

Our Founders’ genius was to use tariffs, not in the way of the mercantilists (i.e., to pick winners and losers in various industries) , but rather for national revenue as the least-oppressive alternative to the confiscatory income tax, which they consciously rejected; and to define the boundaries of our system, for the purpose of increasing the power and riches of our nation (in the old Adam Smith sense). They didn’t just “not hinder” capital investment; they actively promoted it.

Tariffs had the effect of encouraging continual accrual of new capital in our domestic labor, and this, not “free trade” either as an ideology or a policy, is how and why we became a wealthy nation. Indeed it is no surprise that during the present era of free trade we have reversed our fortunes, and become the largest debtor nation in history, shipping most of our capital supply and industrial infrastructure overseas in exchange for cheap goods, as Jefferson feared.

All of this leads to an important insight: There is a difference between “free trade” as a loose confederation of nations sharing labor and capital freely, and genuine union of the serious sort our Constitutional republic is intended to ensure. We tried the former with the Confederacy. It failed. So far, the latter has succeeded for nearly 300 years. There’s a reason for that.

Now let’s discuss how critical and interconnected political union is to economic union. The path for any country wishing to have “free trade” with us has always been clear since 1789, in the form of the Constitution itself.

Free Trade vs. True Political and Economic Union
Inasmuch as “free trade” is really just division of labor between members of a system masquerading as some new doctrine, and not “trade” between separate systems in a purely economic sense at all, any argument for “free trade” between the United States and another country is, according to our founding perspective, really just an argument for statehood. That is, free trade is and must be in accord with a positive and mutually beneficial argument for political and economic union.

For the states already in the union, the Austrian economic criteria for such proposition would be the degree to which the proposed new state would contribute or attract greater capital investment relative to the combined per-head quota of capital investment of the whole society after the merger.

If that math doesn’t justify it, or political union of this kind, with the responsibilities it entails between the other states in the Union and another country, is not desirable for any other reason under the sun (language, fundamental cultural differences, or the practical impossibility of defending it), neither, then, is economic union an appealing option.

Put another way, “free trade,” like “free love,” seeks to have the benefits of physical union with none of the responsibilities of cultural or political marriage, and that is the formula for cultural and systemic disaster. We have seen it wreak havoc on our dying industries and their declining communities.

The combination of falling wages resulting from the law of equilibrium performing its inexorable leveling function, and an income tax regime made necessary because tariffs were eliminated in the interest of global division of labor is the truly “unpatriotic tax” levied on all Americans by ideological free trade, Mr. Levin.

You can’t be a libertarian free trader and a constitutionalist at the same time on this issue, unless you adopt our Founders’ understanding of the need both to regulate trade and to encourage national unity and self-sufficiency as critical to the wellbeing of the country and the freedom of our citizens.

Subverting national borders is truly a “leftist” utopian policy that never works, at least not for any national good, no matter how often it’s tried—all due respect to Senator Sasse.

Religious pursuit of free trade as an abstraction against the interests of American industry is what has starved our Rust Belt communities of life-breathing capital supply, precipitating systemic cultural failure and widespread individual despair remedied only by hiring a U-Haul, Mr. Williamson.

Unless we are willing to bring in other countries as new states into our Union (and no one is making a practical argument for doing that), the idea of an assumed “free trade” between us and them is absurd.Any other relationship than shared statehood and nationhood is just trade of surplus production. It is, therefore, subject to the dictates of prudence.

It has ever been thus in the real world that even clear-thinking classical liberals like von Mises once upon a time inhabited. That it is no longer so is a testament to how far Conservatism, Inc., has drifted from the moorings of constitutional first principles.

“Free trade” as it has come to be understood today is a globalist ideology and is *not* conservative (in the sense of “conserving” the American way of life), but radical in that it is a departure from it. Nor is it an economic doctrine but a political one. In the crudest terms: It is to political union what free love is to marriage.

Free trade the economic phenomenon is just “division of labor’ by another name, and no free market supporter opposes it. Understanding the context is vital. You can’t have a division of labor between members of disparate systems; that is ”trade” in the economic sense, and negotiated between nations based on surplus.

The idea we can’t be independent and self-sustaining is not an economic idea, but a philosophic one, one that is entirely at odds with the system the Constitution was designed to guarantee.

About the Author:

Bob Calco
Bob Calco is a verified Deplorable who lives in Tampa, Florida, with his wife, two sons, and four cats. A successful software architect by trade, and an inveterate polyglot and world traveler at heart, he studied political philosophy until it was clear that to pay bills he needed a marketable skill. His passion on issues related to trade and economics go back to his formative college days, when he learned to distrust, and independently verify, literally everything he was taught.