Are Americans Today Enduring Unprecedented Economic Disruption?
Here’s a note to a new correspondent:
Mr. M__:
Thanks for your e-mail.
You write that Phil Gramm and I “can’t get around Robert Lighthizer’s point that tariffs in the Nineteenth century were significantly higher than today…. These tariffs kept our great-great grandparents from dealing with the breakneck economic disruptions forced on us now by our current low tariffs.”
With respect, I disagree.
First, the economic change that you describe as being “forced on us” is, in every case, the result of choices that our fellow Americans make about how to spend their money – money, not incidentally, that they rather than others have earned. If you have a gripe, it’s ultimately not with imports or low tariffs but, instead, with each of our fellow citizens who chooses to spend his or her money in ways that you might disapprove of but that that person believes is best for him or her (or for his or her family).
Second, Lighthizer’s point isn’t so much that 19th-century tariffs protected Americans from economic change as it is that those tariffs promoted industrialization that presumably wouldn’t have otherwise occurred. There is much tension between the argument, on one hand, that higher tariffs are justified as a means of fueling American economic growth, and, on the other hand, that higher tariffs are justified as a means of slowing the pace of economic change.
Third, late 19th-century and early 20th-century America was almost certainly subject to economic change that was as fast, momentous, and disrupting as that which occurs today. Americans in the half-century following the U.S. civil war saw the rapid spread of the telegraph, railroad, steamship, and refrigeration, the arrival of telephones, automobiles, motorized farm tractors, and airplanes, the electrification of factories, and the tapping of petroleum for fuel. It also witnessed what the economic historian Robert Higgs calls “the greatest volume of immigration in recorded history.”*
And then there’s this, from economic historians Kevin O’Rourke and Jeffrey Williamson:
The World Bank reports that tariffs on manufactures entering developed country markets fell from 40 percent in the late 1940s to 7 percent in the late 1970s, a 33 percentage point decline over thirty years. While impressive, this spectacular postwar return to “free trade” from interwar autarky is still smaller than the 45 percentage point fall in trade barriers between 1870 and 1913 due to transportation improvements.**
Government-imposed barriers to trade were higher in the late 19th century than they are today, but the remarkable decline brought about back then by improvements in transportation (and communication) in natural trade barriers nevertheless ensured rapid globalization.
I see no good reason to suppose that we Americans today are suffering either inability to grow economically or historically unique rates of economic change brought about by globalization.
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
* Robert Higgs, The Transformation of the American Economy, 1865-1914 (New York: John Wiley & Sons, 1971), page 23.
** Kevin H. O’Rourke and Jeffrey G. Williamson, Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (Cambridge, MA: MIT Press, 1999), page 36.
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