By Ian Fletcher
Online Journal Contributing Writer
Sep 29, 2010, 00:20
One of the most inexcusable things about America’s ongoing economic decline by means of free trade is how clear the historical portents are. For example, we are today treading the same path trodden by a nation that Americans know reasonably well: Great Britain.
It is easy to forget that until about 1850 Britain, not the U.S., was the world’s leading economic power. But then, of course, they blew it. There were, of course, many causes of this decline, but free trade was undeniably a major one.
Britain, like the U.S. and every other developed nation, initially rose from agricultural backwardness by way of mercantilism, the opposite of free trade. As late as the beginning of the 19th century, Britain’s average tariff on manufactured goods was roughly 50 percent, the highest of any major nation in Europe. And even after Britain embraced free trade in most goods, it continued to tightly regulate trade in strategic capital goods, such as the machinery for the mass production of textiles, in order to forestall its rivals. Even the famed Adam Smith -- who made his living as a customs collector! -- was only in favor of free trade after Britain had consolidated its industrial power through protectionism.
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The same accusations made in the United States today flew back and forth. Free traders were accused of viewing economics solely from the consumer’s point of view and of favoring short-term consumption over long-term producer vitality. Protectionist concern for producer vitality was tarred as mere cover for special interests. It was debated whether protectionism stifled competition by excluding foreigners or preserved it by saving domestic competitors. It was debated whether the country was living off its past capital. It clearly was: by the late 19th century, Britain ran a chronic deficit in goods and only managed to balance its trade by exporting services as shipper and banker to the world and by collecting returns on past overseas investments. Free traders were accused of abstractionism; in the words of one book at the time: “The free trader hardly professes to base his opinions on experience; he is content to adduce illustrations from actual life of what he believes must happen.”
http://onlinejournal.com/artman/publish/article_6385.shtml
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