Acton Institute Powerblog

Protectionism leads to turmoil, strife, and disorder

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Proponents of protectionism often ground their support in a quasi-nationalism; trade should be restricted for the benefit of the nation. Economically, the argument holds little weight. The benefits of more trade, like more and cheaper goods, outweigh the costs, like some temporary unemployment that results from the closing of a factory that couldn’t compete with foreign companies.

Some protectionists may accept this, and still urge tariffs, quotas, and other restrictions. They argue that a nation can still benefit, even with economic disadvantages. Sure, consumers might pay in higher prices if there’s a tariff on steel, but think of all the jobs! The consequences of protectionism, however, are not simply economic. Rather than developing national and political unity, tariffs often lead to national discord.

Take the United States in the early nineteenth century. Its still developing economy was primarily agricultural, with a growing commercial and manufacturing sector. Many early American politicians advocated a tariff in order to protect, foster, and develop American manufacturing.

Ignoring the economic flaws of such a plan, the policy sowed the seeds for national disunion, culminating in the United States Civil War. How?

The tariff at the time, like all tariffs, concentrated benefits to a few and spread the costs onto many. The benefits were still further concentrated regionally, and the costs laid more heavily on some than others. In this case, Northern states with more manufacturing gained, but only at the expense of the more agricultural Southern states.

Regional tensions first came to a head in 1828, with the passing of the so called Tariff of Abominations, which raised tariff rates to the further benefit of Northern manufacturing. John Calhoun, at the time the Vice President, anonymously wrote in opposition a pamphlet titled The South Carolina Exposition and Protest. In it, he outlines the growing discord stemming from protectionism. He writes:

The whole system of legislation imposing duties on imports – not for revenue, but the protection of one branch of industry at the expense of others – is unconstitutional, unequal, and oppressive, and calculated to corrupt the public virtue and destroy the liberty of the country …

Our complaint is, that we are not permitted to consume the fruits of our labor; but that, through an artful and complex system, in violation of every principle of justice, they are transferred from us to others.

Calhoun’s opposition is at least partially motivated by the Southern emphasis on agriculture, and its loss at the expense of Northern manufacturing gain. While all are forced to pay higher prices for manufactured goods, Northern industrial centers at least benefit from more jobs and production. In the South, where manufacturing was largely absent, farmers pay more without any benefits in compensation. It should come as no surprise that many in these states, like John Calhoun, came to resent Northern prosperity that came at the expense of theirs. 

Calhoun is most strongly motivated by concerns of justice. The law (the tariff) effectively takes from one, and gives it to another. The power of law is abused “by being converted into an instrument of rearing up the industry of one section of the country on the ruins of another.” With such a tariff, “its burdens are exclusively on one side and its benefits on the other.” Calhoun does not oppose manufacturing, but he does oppose the unjust expansion of it at the expense of others, writing:

The question, then, is not whether those States should or should not manufacture … but whether they should, with or without a bounty. It was our interest that they should without. It would compel them to contend with the rest of the world in our market, in free and open competition.

Of course, for all his opposition to the injustice of tariffs, Calhoun supported the far greater injustice of slavery, the ultimate expression of “burdens on one side, benefits on the other.” While he may have been a hypocrite in this regard, and deeply wrong on the justice and morality of slavery, he raises important political concerns associated with protectionism. What happens when the law gives to one from another? Will such a system have further political ramifications?

Frédéric Bastiat, who devoted much of his life to fighting protectionist ideas, wrote deeply on the proper role of law, and its perversion, in his famous essay The Law. He writes:

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.

Not only are tariffs a perversion of justice, as Bastiat writes, but they also lead to national turmoil. If one region, one group of people, or one type of industry benefit at the expense of others, resentment and reprisal quickly sets in. Protectionism leads to division and discord, not unity and peace.

Let the steel manufacturers make steel. Let the farmers farm. Let the doctors heal. True national unity comes from individual choice and action. Trying to force people to buy only domestic steel, or cars, or wheat, or whatever else by charging a prohibitive tariff only builds resentment. Voluntary exchange is the glue that binds society, and a nation, together. Protectionism tears it apart.

Tyler Groenendal