Kudos to Chronicles for “Sovereignty for Sale? The Free Trade Debate” (July) and high praise to Brother Pat for “Toward One Nation, Indivisible“! One thing, though: the Buchananite fair trade “Long March Back” will only come via the third-party route. The Republicans are but the Fabian wing of the Socialist Party, the Democrats being the Jacobins of the same. The last two GOP Congresses have, after all the dust has settled, brought us more crime, higher taxes, and “Joe Chink” (to use a Korean War GI term for the People’s Liberation Army) to California shores. Both President Clinton and Speaker Gingrich extol Red China. Where’s the difference?
—Robert G. Sepic
Pat Buchanan’s critics rail against tariffs on imports by saying that tariffs are taxes that cause consumers to pay more. Did it ever occur to them that domestic taxes like income taxes, FICA taxes, property taxes, etc., are tariffs on our own goods?
Whereas tariffs on imports constituted as much as 85 percent of federal revenue up to 1913, today they account for less than one percent. The other 99 percent is a tariff on ourselves. Last year federal, state, and local governments imposed $2.6 trillion worth of taxes/tariffs on our economy. Environmental, civil rights, safety, labor, and monetary regulations have raised labor costs alone from 50 cents an hour in 1935 to $19 today and constitute a tariff of more than 35 percent on our own products.
That being the case, government has a moral and constitutional responsibility to protect those who abide by our laws against any competitor who does not. No one would condone exemption from federal tax and regulatory laws for a corporation that closed a factory in one state and moved to another. Yet when corporations move to other countries for the specific purpose of evading our laws, while sharing in our economic jackpot virtually tax free, they are applauded for raising share values. Anyone who did that in an honest poker game, without having anted-up, would lose his arm.
Adam Smith would agree. In The Wealth of Nations, he wrote: “It will generally be advantageous to lay some burden on foreign nations for the encouragement of domestic industry when some tax is imposed on the produce of the latter. In this case, it seems reasonable that an EQUAL tax should be imposed upon the like produce of the former.
Every import of a product that can be made in America, and every dollar of our trade deficit, erodes our economy for the simple reason that it is a forfeiture of production, which is the origin of all new wealth. Those who speak only of exports but nothing about imports and trade deficits have no more integrity than a corporate CEO who speaks only of sales but nothing about expenses and operating losses.
Claiming that the present “prosperity” is a reflection of free trade is like saying that no one was killed in the Oklahoma City bombing because population is up. Trade policies must be judged on their own merit.
In the last quarter-century, as tariffs have been reduced, our economy has suffered a virtual holocaust. Instead of the largest creditor nation, we are now the world’s biggest debtor. We have lost control of our destiny to such a degree that foreigners now hold $1.3 trillion worth of mortgages on our federal treasury (40 percent of our public debt) on which we pay them over $80 billion a year in interest . . . money that could be put to far better use here in America. The irony is, it was all our money in the first place, but we parted with it under a fool’s gold fantasy that we could enrich ourselves by purchasing imports instead of the products of our industries, contrary to economic law that tells us production creates wealth, consumption dissipates it.
Pat Buchanan stands as a beacon in a moral wasteland. He is right on abortion, right on homosexuality, right on education, and right on trade policy. The fact that he has been unfairly vilified in all of these areas is prima facie evidence of the moral decline of our nation.
—Gus R. Stelzer
Mill Creek, WA
Thank you for running serious reviews of Pat Buchanan’s The Great Betrayal. Unlike a lot of conservatives, he cares about people harmed by economic dislocations. And no true conservative should have any problem with getting rid of the WTO and NAFTA bureaucracies, which don’t enact free trade but impose “managed trade” through thousands of pages of new regulations.
However, Buchanan’s ideas boil down to swapping a 15 percent tariff for tax cuts in other areas. But the past 18 years of the failed Reagan and Gingrich “revolutions” have proved that it is easy to raise taxes but almost impossible to cut them. Federal taxes now pilfer 21 percent of GDP, more than at any other time in our history except the last two years of World War II. A combination of Labor Democrats and Buchanan Republicans might impose a 15 percent tariff, raising about $80 to $100 billion a year, but where is the coalition in Congress to cut existing taxes an equivalent amount? The second part of the Buchanan program — ending foreign aid and bailouts and bringing the troops home—might by itself reduce federal spending enough for a $100 billion tax cut without a new tariff.
Foreign competition is not the major cause of our economic dislocations. The reasons for the decline in real income over the past 25 years are record tax increases; a near tripling of regulations in the Federal Register from 20,036 pages in 1970 to 54,549 pages in 1997; and ennui caused by abortion and other assaults on our moral foundations.
Detroit, an example mentioned by Buchanan, is a microcosm of what happened. I was born there and lived in Wayne, a suburb, from 1955 to 1982, when I left because of 15-percent unemployment in Michigan. Naderite federal micro-management of the auto industry drove up costs and cut jobs. The auto companies managed badly. The UAW made foolish demands, especially during the marathon 1972 GM strike. The city government of Detroit imposed an additional three-percent income tax on top of federal and state taxes. After the 1967 riots, desegregation drove middle-class whites and blacks from Detroit to the suburbs. And because of welfare, the city’s residents, most of whom are black, have an illegitimacy rate about 50 percent. The black abortion rate is three times the national average. No wonder the city has lost half of its population since I960 and looks like Dresden in 1945. None of that can be blamed on Toyota or Mercedes.
Finally, while an overall tax cut would help everyone, a tariff combined with a tax cut would harm export/import areas such as California, where I now live. We just got over a deep recession, with unemployment of 10 percent—worse than what Buchanan saw in New Hampshire in 1991—and we don’t need another assault on our export-intensive entertainment, computer, and medical instrument industries. Unlike the free trade Confederacy of 1860, we can’t secede, even for just four years.
Santa Ana, CA
After reading The Great Betrayal and the reviews in Chronicles, I can only conclude that Pat Buchanan has defeated the libertarians fair and square on the issue of free trade. The whole thing reminds me of pacifism; true, if everyone would put down their weapons, there would be no war, but the one who makes the unilateral initiative is almost surely going to lose. Just as there are quite a lot of charlatans pretending to be men of peace, the same is undoubtedly the case with free trade.
About 30 years ago, I took a course in economics taught by Alan Greenspan. One of the things he accentuated was Ricardo’s supposed law of comparative advantage: it is to the advantage of each nation to concentrate upon the one thing it can do better than anyone else— even if in some other fields, the nation is also superior to its competitors. Mr. Greenspan argued that comparative advantage is valid algebraically. Indeed it is, but internal consistency is not always a sufficient proof of truth. I can visualize an Irish landowner in the late 1830’s: “We Irish can produce potatoes better than anyone else in the islands or in Western Europe. In conformity with the latest findings of the science of economics, we should therefore devote our entire production to this crop; out of this bounty, we will be able to have all of our needs supplied through foreign trade. In this scientific age, ‘maximum efficiency’ should be the cry.”
—Peter F. Erickson
For the argument, I enjoyed Justin Raimondo’s criticism of Pat Buchanan’s organic view of society (“Utopia Incorporated,” July). For the record, however. Civil War Reconstruction, Indian Wars in the West, the Spanish-American War, the Philippine rebellion, and other lesser conflicts occurred within “roughly 1865 to 1914,” a period Raimondo characterizes as “untroubled by war, untouched by regulators, and unfamiliar with the social pathology characteristic of modern life.”
President Benjamin Harrison told Congress in 1892, “I believe the protective system . . . has been a mighty instrument of the development of our national wealth. . . . I have felt a most solicitous interest to preserve to our working people rates of wages that would not only give daily bread, but supply a comfortable margin for those home attractions and family comforts and enjoyments without which life is neither hopeful nor sweet.”
The surplus continued to mount at the rate of $63 million a year. In 1885, Woodrow Wilson wrote, “It has come to be infinitely more trouble to spend our enormous national income than to collect it.” While, contra Raimondo, the coincidence of general prosperity with tariffs seems proof of the fallacy of the free trade argument, Raimondo’s “American Company X” and “Japanese Company Y” seem “mere theory” and “floating abstractions.”
Why should we not prefer “sovereignty and independence” and “self-sufficiency”? They sound like fine libertarian principles to me. And why should we not be concerned for anguished American working men and women? They have as much right to a life that is both hopeful and sweet as the international financier and transnational corporation. Should they gradually be reduced to the existence of a Third World worker in income and opportunity? Even Nietzsche believed that it is “not just a courtesy of the heart,” but a “duty” to treat those who are weaker than ourselves more tenderly. Where economy and consumption meld with culture and community, you have a nation, healthy and whole.
Mr. Raimondo’s selection of the computer industry to illustrate the benefits of free trade was a poor choice. Many of the major manufacturers, such as Compaq, Dell, and Hewlett Packard, make their computers in the United States. Canon, a Japanese company, has quit making computers because it could not compete. American companies dominate the marketplace. No protective tariff needed here.
Concerning Raimondo’s general opposition to tariffs, however, some sacrifice has to be made to bring back lost industries. What is paying a few more dollars compared to the sacrifice soldiers make for their country? But free-traders are no longer interested in their country; only prices and profits count with them. Language, history, customs, traditions, ancestry, religion—these are of little concern for them. Neither are trade deficits.
Self-sufficiency is not merely an issue of aesthetics (as Raimondo argues) but of security.
North Palm Beach, FL