Sunday, August 14, 2005

Lincoln on free trade and the role of government

I'm continuing with my reading of Carl Sandburg's Abraham Lincoln. I'll have something positive to say about Lincoln in the next post but let me first get this out of the way. Sadly, Lincoln did not appear to have a clear understanding of the benefits of free trade and rather thought tariffs served a useful purpose as the following passage from the book illustrates.
From p.88 (emphasis in original):

"To [secure] to each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government." How could a government effect this? One remedy would be to "as far as possible, drive useless labour and idleness our of existence." For example, "Iron & every thing made of iron, can be produced in sufficient abundance, [and] with as little labour, in the United States, as anywhere else in the world; therefore, all labour done in bringing iron and it's fabrics from a foreign country to the United States is useless labor."...
Universal idleness should speedily result in universal ruin; ... and useless labour is, in this respect the same as idleness." Therefore, reasoned Lincoln, to abandon the protective tariff "must result in the increase of both useless labour, and idleness."

Lincoln seems not to have quite grasped how markets work. I claim to be no expert on this but I do understand this much. If a tariff has been imposed on imports, it is because the import is cheaper than the domestic manufacturer. If the imported items were consistently more expensive than the domestic ones, there would be no need for tariffs; the imports couldn't compete. But the very fact that the import may be cheaper than the domestic product serves to illustrate that Lincoln is wrong in his assumption that it makes no difference where the product is manufactured. If the import is cheaper then the foreign company is more efficient than the domestic and a cheaper alternative is provided to the domestic consumers of the product, some of whom may be businesses themselves that employ other people. Thus I don't see a danger of "idleness" when tariffs are abandoned. Instead, I see a tax that hurts both individuals in both countries. Of course, fundamentally if two individuals (or companies) have decided to trade with one another between two countries not at war with each other, no government ought to interfere. Any interference, such as tariffs, import quotas and the like would be a violation of their right to property.

In a separate passage on p. 115, Sandburg writes of Lincoln:

He wrote of the legitimate object of government being "to do for the people what needs to be done, but which they can not, by individual effort, do at all, or do so well, for themselves," such as "Making and maintaining roads and bridges, and the like; providing for the helpless young and afflicted; common schools; and disposing of deceased men's property." Military and civil departments were necessary . "If some men will kill, or beat, or constrain others, or despoil them of property, by force, fraud, or noncompliance with contracts, it is a common object with peaceful and just men to prevent it."

By the laissez faire standards of Objectivism this passage reflects badly on Lincoln and seems to provide the altruistic justification for all sorts of improper government functions. Still, I doubt his views were particularly revolutionary for his day and they are still a far cry from today's welfare state liberals and conservatives. In his own mind Lincoln did not seem to want expand government too much but ideas have consequences and the ideas the Lincoln supports in the above passages clearly point to a much more interventionist government.

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