Republicans who are shaky on protection are shaky all over.” - Joseph Wharton, Pennsylvania steel magnate
In 1892 Congressman William McKinley warned that abandoning American protectionism and adopting free trade would “revolutionize” the country’s values. Today America is flooded with foreign manufactures and our values have indeed been revolutionized. The influence of foreign money, of indebtedness to foreigners, of dependence on foreign oil, hangs over Washington D.C. like a gallows. In 1892 the protective tariff was a mainstay principle of the Republican Party. Congressman McKinley believed that tariffs should be higher, that America needed to maintain its independence; that America would be ruined by free trade. It may be said that McKinley held a classical rather than an economic position. He looked back to ancient wisdom, ignoring the modern economists. It is not that economics is wrong in its principles of efficiency. Merely, economics is one-sided. Economic efficiency is not the be-all and end-all of human existence. And yet, today’s politics would leave you with this very impression. Today’s political thinking, with its emphasis on globalization, free trade and permeable borders would shock a man like McKinley. The ongoing debasement of America’s currency would illicit, from him, groans of disapproval. He would ask: What do the Americans of 2008 think they are doing?
In 1896 McKinley ran for president on a platform of high tariff’s and currency “as good as gold.” Searching for an explanation for the success of McKinley’s policy, which stood in opposition to free trade, I was recently shown an article titled “The Influence of Protective Tariffs on the Industrial Development of the United States,” first published in May 1940. It was written by the economist Joseph Schumpeter and begins with the following lines: “I feel strongly that nothing but confusion and misunderstanding can result from any analysis of the effects of protective tariffs from purely economic considerations….” Free trade is economically efficient, he admitted. Yet national independence is even more fundamental. At the end of his article, Schumpeter penned the following memorable lines: “[If] we have got to live in a mercantilist, nationalist, bellicose world dominated by a few great empires, on the one hand, and if the domestic policy of this country is to remain free to shape its own destiny, on the other hand, I do not see the possibility, and I should very much doubt the wisdom, of any major deviation from the policy of protection.”
We know the argument for free trade. In the most simplistic terms, free trade intensifies the division of labor. The more advanced the division of labor the wealthier society becomes – and the more specialized. We seldom ask, in this context, whether modern specialization makes a better nation or merely makes a more comfortable nation. As a character in a Robert Heinlein novel once quipped: “Specialization is for insects.” A drone isn’t free, and neither is the hive society to which it belongs. The worker ant is hardly self-sufficient. How curious that national self-sufficiency is not equated with national freedom? In opposition to self-sufficiency, our theorists and politicians talk glowingly of “interdependence” – that form of dependency that draws nations and continents together in a process that ultimately promises “one world,” one “global village” (a.k.a. globalism).
It is no accident that we are today afflicted with a reason-withering “political correctness” closing in from all sides. This oppressive ideology pretends that opposing forces can amalgamate under the shaky utopian ramshackle of “multiculturalism.” To solve the problem of human difference, a counterfeit unity has been conceived. Under the rubric of tolerance we have abandoned our own heritage. McKinley was right when he said that free trade would “revolutionize” our values.
It has been our mistake to make economics the end-all and be-all. Today’s political conceptions refer back to economics, are justified through economics. As a successful political campaign once asserted, “It’s the economy, stupid.” Friedrich Hayek wondered at Aristotle’s proposition that the ideal order was Autarkos [self sufficiency]. How could the great Aristotle be so ignorant? But have we, in the modern world, built a lasting foundation when all our invention, and all our development, has brought us a runaway bureaucratic mega-system that continually undercuts self-sufficiency?
The ancients taught that history is cyclical. They believed that death was the herald of new life, that every ending signifies a new beginning. Perhaps that is where we are headed: to a new self-sufficiency, independence and rebirth. In order for this to happen the various organs of dependence – the nanny state, paper money and mass debt – must pass into oblivion.
