April 20, 1818 Congress ushers in protectionism
On this day in 1818, Congress heeded President James Monroe's call to uphold the fiscal integrity of domestic industry and gave the green light to sharply protectionist tariff legislation. Not only did the tariff hike duties on iron imports, but it also put the breaks on an anticipated decrease in the levy charged on textiles. Moreover, the tariff legislation marked another chapter in America's long romance with protectionist policies. Indeed, from the time of its birth as a nation, the United States routinely adopted legislation designed to steel its producers' power in the international marketplace.
In the years following the tariff of 1818, America's fondness for tariffs grew especially pronounced; by the 1820s, duties climbed to unprecedented levels. America's proclivity for protectionism faded by the early to mid-twentieth century, when the Depression and World War II prompted U.S. leaders, including President Franklin Roosevelt, to shift to a more liberal fiscal course and open the doors to international trade. ( Source )
Commentary - It's not a coincedence that the United States led the world in textiles and steel production as a result of thses initiatives until the Reagan era. We were able to produce the best, and though expensive, the world wanted our products because of our high quality.We can be competitive under tariffs.The article suggest that the door to "free trade" was opened durring the Depression and the Post World War Two period, but this is not entirly true. The door was cracked open durring the New Deal era. The door to so-called free trade was opened more durring the Reagan / Bush administation, then kicked in by President Clinton when he signed NAFTA, GATT and WTO. Until President Clinton sold us out, an American could earn a decent living at a textile mill ( average $14.35 per hour) , now the mills are in China were a living wage is $.80 per hour.
We cannot possibly compete with this wage differential.
On this day in 1818, Congress heeded President James Monroe's call to uphold the fiscal integrity of domestic industry and gave the green light to sharply protectionist tariff legislation. Not only did the tariff hike duties on iron imports, but it also put the breaks on an anticipated decrease in the levy charged on textiles. Moreover, the tariff legislation marked another chapter in America's long romance with protectionist policies. Indeed, from the time of its birth as a nation, the United States routinely adopted legislation designed to steel its producers' power in the international marketplace.
In the years following the tariff of 1818, America's fondness for tariffs grew especially pronounced; by the 1820s, duties climbed to unprecedented levels. America's proclivity for protectionism faded by the early to mid-twentieth century, when the Depression and World War II prompted U.S. leaders, including President Franklin Roosevelt, to shift to a more liberal fiscal course and open the doors to international trade. ( Source )
Commentary - It's not a coincedence that the United States led the world in textiles and steel production as a result of thses initiatives until the Reagan era. We were able to produce the best, and though expensive, the world wanted our products because of our high quality.We can be competitive under tariffs.The article suggest that the door to "free trade" was opened durring the Depression and the Post World War Two period, but this is not entirly true. The door was cracked open durring the New Deal era. The door to so-called free trade was opened more durring the Reagan / Bush administation, then kicked in by President Clinton when he signed NAFTA, GATT and WTO. Until President Clinton sold us out, an American could earn a decent living at a textile mill ( average $14.35 per hour) , now the mills are in China were a living wage is $.80 per hour.
We cannot possibly compete with this wage differential.
posted by Van at 8:57 AM
8 Comments:
When are gonna write about something other than the econoy - blah, blah, blah, blah.
Fair Trade (tariffing goods from countries that tariff our own) is not at all inconsistent with Free Market Capitalism - Adam Smith endorsed them and today, Pat Buchanan endorses them, as well.
First world workers CANNOT compete with Third world manufacturing workers and that puts First World economies at risk.
Decent wages are NOT incompatible with Free Markets. Higher wages DO NOT always appreciably raise the costs of an item. For instance, an increase in the wage rates of lettuce pickers to $10/hour would purportedly only raise the price of lettuce by appx 34 cents a head!
While it is certainly true that wage or income disparity is indemic to Capitalism, that's merely the result of adhering to the economic equivalent of the law of gravity - supply & demand and is indicative of a healthy economy.
What's happened recently is that investor shills like Larry Kudlow have eroneously reported that what's good for investors is GOOD overall, when nothing could be further from the truth.
The reality is that investors, who only set their sights on maximizing profits, often do so at a terrible cost, first to workers, then to business, which begin to fail without the broad consumer spectrum needed to support them.
Kudlow often notes that "we're all investors, even if we're just in pension programs, 457s and 401Ks."
Well, that's one way for workers to effect some change. Pensioners and members of 457s and 401Ks need to direct their managers to dump the stocks of those companies that outsource, use foreign labor (even H1-B visa labor) and illegal immigrant labor and reward (invest in) those companies that hire American workers at decent, competitive salaries.
THAT is the ONLY real thing investors would listen to - stock dumping the stock of abusive companies and harming the pocketbooks of those investors.
JMK - Boy, where to begin....
I think that one of the fundamental difference between how you and I is how we see the world and what is meant by a good economy?
We use the same words, however, we pour in different meanings.
"Generally the more market based economies are stronger"
I suppose what this depends on what you mean by stronger. I'm going to go out on a limb here and suggest that you believe that the economy is meant to be served by the people, in short we completely depend on the market driven economy to all of our needs.
While I believe that the economy is meant to serve our needs, in fact people drive the economy - workers, consumers, investors -- in that order.
So what you mean by stronger and what I mean by stronger may be mutually exclusive.
I see our economy as being week on many levels. We have the highest poverty rates of any industrialized nation ( and growing), we have the highest trade imbalances and deficits of any industrialized nation (and growing), we have higher death rates due to illness than many European nations (and growing), we have the highest bankruptcy rates due to illness (and growing), and we lag in education across the board. These elements affect and produce our economy - they will make it stronger or weaker. The fact that our stock markets are doing well is not as much of a factor since our market will improve when the cancer rate increases, or when we go to war - in fact the bond and commodities market improved after the 9/11 attacks - Gold and Oil commodities went way up.
So the markers that you and I use for judging a good economy are very different.
Second, I'm not advocating a Command Economy in the strict sense. I'm advocating a mixed environment, one that puts people (workers) over profit. The pendulum has been swinging towards the market driven society for some time now, I think that it's time to swing back to a people driven economy. By that I mean rebuilding our infrastructures, industrial base, roads, expanding education, providing basic health care, etc. The government is the only entity that can help with this.
You may be throwing out the baby with the bath water when you say,
"We seem to disagree over the workability of the Command economy (democratic Socialism) - you seem to hold out hope that it could work, while I'm convinced it can't and over the viability of the European economy - France has made it so hard to get rid of incompetent employees that companies hire very few new ones each year, thus France's double digit unemployment rates."
Context is determinative, and the context for the riots and protests where that the French government moved to strike the rights of these workers without any public discourse. The laws were passed without public dialog. This is what angered the French workers. As I've said before, they will strike a compromise, but changing a law such as the employment law with out public discourse and debate is undemocratic. There is no denying that France is experiencing slow economic growth and high unemployment - higher than our number of employment eligible workers who are not working.
But these are trends. There is no reason to think otherwise. Also, France and most of Western Europe are realizing that they cannot have open borders and expect to maintain a middle-class lifestyle. This is a mistake that we should learn from. Their employment markets are saturated with low skilled workers, and therefore there are not enough jobs to go around. I hope that we do not continue to make this mistake.
The founders opposed an income tax, but again consider the context. They had tariffs to pay for government services. Which is better?
I'm not so sure that you are correct about Jefferson fearing government, from my readings he was more fearful of moneyed interests than big government. We may have to disagree about that.
I am very glad to hear you say this:
"I'm all for more "help" in the form of more educational loans, etc, but pretty down on government taking care of people because that tends to mire the recipients in dependent poverty."
I completely concur, providing that they are very low interest. I would also like to see more small business grants, currently we issue about 100,000 per year
As usual I enjoy your comments. You are a worthy opponent.
JMK - sorry, I posted comments under the wrong post.
JMK- About your comments.
You are right on target. I am in agreement with much of what you wrote here.
Thanks for posting. I find your perspective on this refreshing.
JMK - if you would like to submit a guest post about on your thoughts on decent NOT being incompatible with Free Markets and how higher wages do NOT always appreciably raise the costs of an item, you are welcome to.
I'd like to hear more of your perspective on this, so let me know.
I'd have to research wage-cost-pricing and compare them across various products. An economist I met claims that paying Americans $10/hour to pick produce would only raise the cost of produce 35 to 43 cents per unit because the wage cost increase would be spread over a large distribution, of course, in the case of a roofer, low paid, undocumented and off-the-books labor directly impacts the cost of each roof as that cost is spread over only a single unit, as they estimate jobs unit by unit.
Moreover, cheap labor IS NOT cheap!
The cost of illegal immigration are not fully known because we have such deliberately poor records of the numbers of, for instance, people getting welfare and other froms of public assistance with phony documentation.
At minimum, the cost is over a $100 BILLION even when the benefits of cheap labor are balanced against the cost. So that $100 Billion must be factored into the "undeclared price" - that is the price we pay in added taxes, etc. let alone the downward pressure on ALL wage rates it exerts.
Hi Van, email if you'd like, I'll try and get some more detailed information on price-cost ratios and such.
Of course, the tough thing is to try and discuss things like that without disengaging most of those who'd come across such a topic...it's simply not as riveting as many other topics are, though it is timely at this juncture.
My email address is jmk444@earthlink.net
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