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.
Protecting politically-connected corporations from international competition
is the surest way to make them fat and lazy, as the steel and automobile
industries demonstrated in the post-World War II era. It was only after
Japanese, German, and other manufacturers cleaned their clocks, so to speak,
that they were finally motivated to shape up. On this point Buchanan
cites the old blowhard and mentally unstable Teddy Roosevelt, calling him
“the Rough Rider,” as saying that it is competition, not protectionism,
that produces “fatty degeneration of the moral fiber.” What an
economically clueless gasbag was Teddy Roosevelt.
Another of Buchanan’s protectionist heroes is Congressman
Justin Morrill, who sponsored the Morrill Tariff of 1859, which finally
passed both the House and Senate by early 1861. Morrill was a steel
manufacturer and got into politics solely for the purpose of using state
power to rip off his American customers and line his pockets.
The same is true of another of Buchanan’s protectionist heroes, Henry Clay,
who was known as “The Prince of Hemp” for operating a large slave plantation
in Kentucky that grew hemp. Clay proclaimed that he got into politics,
like Morrill, to impose high tariffs on foreign hemp so that he could
(legally) plunder his customers. At least Clay’s hemp tariff
did not ignite a Civil War, as did Morrill’s tariff, which caused the
hyper-protectionist Abe Lincoln, another of Buchanan’s protectionist heroes,
to declare in his first inaugural address that it was his “duty to collect
the duties and imposts” but “beyond that, there will not be an invasion of
any state.” The Morrill Tariff had just more than doubled the average
tariff rate two days earlier, which Southerners had been protesting and
threatening secession over for the previous thirty years. Lincoln
literally threatened “invasion” of his own country over tariff collection,
leading to a war that, according to the latest research, may have cost as
many as 850,000 American lives. Going to war to fatten the wallets of
plutocrats is what Buchanan’s hero Justin Morrill should be known for.
Buchanan seems absolutely giddy when he quotes an 1895
“History of the Republican Party” that declared, “The Republican Party . . .
is the party of protection . . . that carries the banner of protection
proudly.” The party of corporate one-percenters, in
other words. Some things never change.
Buchaan is dead wrong when he makes the red herring
argument that “free traders” claim that the Smoot-Hawley Tariff, signed into
law by Herbert Hoover in 1930, caused the Great Depression. No one I
know of has ever made that argument, and I’ve been studying economics for 44
years now, as a student, professor, researcher, and author. The Smoot-Hawley
tariff increased the average tariff rate to almost 60 percent and ignited an
international trade war that shrunk the volume of world trade by two-thirds
in three years, but it was not the sole cause of the Great Depression, which
was another bust cause by the Fed’s boom-and-bust monetary policy.
Buchanan is also dead wrong when he tries to argue that
NAFTA was an example of “free trade” when exactly the opposite is
true. NAFTA was several thousand pages of fine-print legalese, written
by corporate and labor union lobbyists and sympathetic congressional
staffers, that centrally plans international trade in a thousand
different ways. It was all written up under the supervision of Clinton
administration lawyer/lobbyist Mickey Kantor who had quite the reputation as
a lobbyist for corporate fat cats, but no reputation at all as a free trader
or as someone who knew much of anything about economics. On this point,
Buchanan throws in yet another post hoc fallacy:
After NAFTA, “Communist China” became “the world’s No. 1 manufacturing
power.”
Hillary Clinton would be totally, one-hundred-percent
supportive of Pat Buchanan’s Quixotic protectionist crusade. It would
benefit the corporate one percenters who she and her husband have expertly
shaken down for years, and who would jump at the chance of benefiting from
another round of “pay to play.” This is the political game in which
corporations funnel many millions to the Clintons and their cronies
personally, and to their party, in return for onerous protectionist tariffs
on their competition that would spike their profits by allowing them to, once
again, rip off their American customers. And of course, there is the
old Democratic Party labor union machine that has always been in favor of
protectionism for obvious selfish and greedy reasons. Pat Buchanan just
might be Hillary Clinton’s ideal running mate.
One thing Pat Buchanan is right about is that “economic
nationalism” has always been the defining characteristic of the Republican
Party. That is why the party has been such an economic curse on
America, having transformed the nation into a corporate welfare/warfare state
during the Lincoln regime.
