This correspondent calls me “a closed minded globalist.”
Mr. F__:
Thanks for your reply to my earlier note. You write that you “don’t believe the revisionist history of tariffs not being responsible for the US industrialization in the 1800s.”
You must believe whatever your mind leads you to believe, but rest assured that there’s nothing revisionist about research that rejects the claim that 19th-century U.S. industrialization was fueled by tariffs. That research is long-standing and well-supported by both fact and theory. The Harvard economist Frank Taussig, in his classic 1888 book, The Tariff History of the United States, rejected this claim about the alleged pro-growth effects of tariffs, as did the eminent British economist Alfred Marshall after his 1875 visit to the United States.
For a recent survey of research on tariffs and the American economy over first century and a half of the existence of the U.S., see this thorough paper by Phil Magness.
But let’s assume that you remain unpersuaded by the above-mentioned research. You’ll then be left with a puzzle. You write that “Hamilton was on to something with protecting US industry from the developed competitors in England” – thus implying that healthy, long-established industries, such as existed in Britain in the 19th century, are destined to outcompete upstart rivals in less-developed countries unless those upstarts are protected by tariffs.
Yet you also believe that as foreign industries were rebuilt after the devastation they suffered during WWII, American industry was thereby put at an increasing disadvantage because these foreign industries were rebuilt, while at the same time under American leadership, starting in 1947, global trade barriers began to be lowered.
Why, if under free trade the ‘dominance’ of British industry in the 19th century would have suppressed the rise of American industry, did the ‘dominance’ of American industry after WWII, under increasingly freer trade, not suppress the rise of Asian and European industries – a rise that you and Glenn Beck believe now works to the disadvantage of American industry?
These historical facts are puzzling only to individuals who believe that trade is a zero-sum game and who don’t understand comparative advantage. I urge you to recognize that trade is positive-sum, as well as to learn about comparative advantage.
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
