Jim Powell

A whiff of protectionism is in the air. Battered by the recession, many Americans are beginning to blame some of their woes on foreigners. There’s talk that the federal government ought to take action against Chinese, Japanese, Mexicans, Europeans and others. Hence, recent newspaper headlines like “Americans Sour on Trade” and “Goodbye, Free Trade?”

American labor unions and other interest groups are lobbying for trade restrictions that include tariffs, import quotas, “voluntary” export restraints, countervailing duties and anti-dumping duties. These restrictions make imports more costly and enable protected domestic producers to charge higher prices than they could get away with if American consumers were completely free to buy from anyone anywhere.

The late Milton Friedman believed that the rhetorically most effective critique of trade restrictions was Henry George’s book Protection or Free Trade (1879).

George (1839-1897) was a most unlikely source. He was born into a poor Philadelphia family. He grew up reading his way through the Quaker Apprentice’s Library and the Franklin Institute Library. He worked on a merchant ship bound for Australia and India. He survived with odd jobs as a storekeeper, printer and typesetter before he started writing for newspapers. He was a self-taught wonder, a shrewd observer and bold thinker with a gift for colorful language. He was particularly interested in how an economy works.

He realized that if tariffs were really good, then civilization would have begun where people were cut off from the outside world by mountains, oceans, deserts and other natural barriers. But, he explained, “it is where trade could best be carried on that we find wealth first accumulating and civilization beginning. It is on accessible harbors, navigable rivers and highways that we find cities arising and the arts and sciences developing.”

George wrote Protection or Free Trade because he hated monopolies. They could be maintained only if there were government-enforced restrictions that prevented people from dealing with alternative suppliers. He concluded that the most effective antitrust policy was free trade -- consumers and businesses able to shop the world for the best values.

Jim Powell

Jim Powell is a senior fellow at the Cato Institute in Washington DC.