≡ Menu

Again: Protectionism Did Not Fuel American Economic Growth

It’s even worse, actually, than mistaking correlation for causation. Phil Gramm and I offer evidence that the 19th-century American economy grew faster when tariff rates were falling than when tariff rates were rising. Nevertheless, America’s economic growth in the 19th century owed relatively little to U.S. trade policy.

Mr. D__:

You accuse Phil Gramm and me, in our recent Wall Street Journal essay, of relying on “bad revisionist history” when we argue that 19th-century American industrialization was not promoted by protectionism. As evidence for your accusation you offer only a 2019 opinion piece by Pat Buchanan.

With respect, the bad revisionist history is done by Mr. Buchanan, who I concede isn’t alone. Others who market this mistaken history include Oren Cass, James FallowsRobert Lighthizer, and Michael Lind. But their arguments amount to little more than instances of the post hoc, ergo propter hoc fallacy.

As early as 1888 the celebrated Harvard economist Frank Taussig, in his meticulously researched Tariff History of the United States, concluded that “in the main, the changes in duties have had much less effect on the protected industries than is generally supposed. Their growth had been steady and continuous, and seems to have been little stimulated by the high duties of 1842, and little checked by the more moderate duties of 1846 and 1857.”*

Almost a century later, another highly respected Harvard economist – Gottfried Haberler – wrote that “the broad fact is that in the [19th-century] United States the conditions for economic and industrial development were so favorable that tariff protection cannot have been more than a comparatively minor element in the whole picture. It surely has speeded up the growth of particular industries in certain locations, but the great sweep of overall growth was shaped by other more basic factors, especially the successive waves of immigrants from Europe, and was only marginally influenced, favorably or unfavorably, by tariff policies. These policies, it should be noted, have not been uniformly protectionist; periods of high protection alternated with periods of comparatively low duties. But whatever the overall impact of protection, which certainly was not profound and may well have been unfavorable both quantitatively (reducing the secular growth rate of GNP) and qualitatively (fostering the growth of urban slums), more important are the lessons taught by certain internal developments inside the U.S. economy.”**

Revisionist history attempts to revise accepted historical accounts. What Sen. Gramm and I present in our essay is the historical account long accepted by knowledgeable scholars. The bad revisionist historians are Mr. Buchanan and others who insist that America’s spectacular economic growth during the 19th century owed much to protectionism.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* Frank W. Taussig, The Tariff History of the United States (New York: G.P. Putnam’s Sons, 1888), p. 152.

** Gottfried Haberler, Economic Growth & Stability: An Analysis of Economic Change and Policies (Los Angeles: Nash Publishing Co., 1974) p. 150.

Next post:

Previous post: