The American System

Versus the Free Market

Recently I was given an essay assignment about whether we should restrict foreign imports of cars and other products. The final essay I wrote was quite dry, so I am going to use this article to address this problem in more depth, on a platform where I have a lot more room.

This question goes back to the very founding of the United States. Tariffs on foreign imports are one of the facets that make up the American System of Political Economy, which was first put forth by Alexander Hamilton, and has such adherers as Presidents Abraham Lincoln, William McKinley, and Franklin D. Roosevelt. Contrasted with this is the free market economy of the British Empire, as laid out by people such as Adam Smith and David Ricardo. There are many facets of the American System, but it can be summed up by a quote from Abraham Lincoln:

“My politics are short and sweet, like the old woman's dance. I am in favor of a national bank. I am in favor of the internal improvement system, and a high protective tariff.”¹

The national bank is a subject beyond the scope of this essay. I plan to do more research on the subject. I can tell you one thing: it is not the same as the Federal Reserve, which is also a subject of its own. The other two subjects are easier (in my opinion) to grasp, so I will limit my comments to them.

The most vehement opposers of the American System are not those on the liberal or left side of the aisle, but are conservatives who have adopted the British Empire’s system of free market for their own. The principles of free trade were first laid out by Adam Smith in his 1776 book The Wealth of Nations:

“In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest”.

A free market is touted as the way to increase competition between producers, leading to better, cheaper products. Adam Smith referred to this concept as the “Invisible Hand”, guiding the cheapest products to the top. But does the market work this way? Is it always in the interest of the public to buy whatever they want for the cheapest price?

The famous statue of Adam Smith in Edinburgh, Scotland. There is a picture of me at 6 in front of this statue. Photo by K. Mitch Hodge on Unsplash

The reality is that free trade tends towards colonialism, where countries like the US offshore their blue-collar jobs in an effort to focus on “advanced technological development”, all while our emerging generations work in service jobs. Instead of an industrial economy where a man had a physical skill, like assembling a car, a man now works behind a counter making minimum wage.

Service jobs are not scalable in the same way manufacturing jobs were. The so-called middle class of the fifties could make a living wage and raise families on manufacturing jobs. What came out of that generation was the boomer generation, who benefited from the offshoring of manufacturing to get office jobs. But now millennials are paying the price. In January 1939, there were about 11 million jobs in manufacturing and about 18.8 million in service industries. By 2019, the number of manufacturing jobs had doubled, but the number of service jobs had increased almost tenfold.

To further twist the knife in the wound, we are not leaders in science like we used to be. While the US focuses on whether “rock” and “banana” are real pronouns, countries like China and Russia are actually making real advances in science, like nuclear energy.

Libs of TikTok @libsoftiktok

A bunch of middle schoolers owned this woke teacher when she asked for their pronouns 😂

This TikTok video is insanely funny, by the way. The kid should get some sort of award.

The Colonial side of Free Markets

Free trade has also been a temptation for slavery and colonialism. Some countries in their desire to produce cheap goods will exploit their population, or populations of other countries, in the name of free trade.

One example was the Cotton Industry of the Civil War, where the South was using cheap slave labor to produce cotton for the British, who would then process it into textiles, which they in turn would sell to India for opium, which they then sold to China. This is what caused the Chinese Opium Wars of the 19th Century, where the British Empire was exporting opium to China, which they had made the Indians produce. Since it was a free market, they argued that they were justified in exporting the drug. The Chinese fought two wars with the British in trying to keep the drug from their markets, since it was deteriorating their society. When countries open their economies to free trade, industries are going to truly employ the cheapest labor that they can find, and those are the poorest and most needy countries in the world.

In addition since the South employed slaves, their society did not develop like the North, because it was cheaper to corrupt their society with low-cost slave labor. In that game might is right, and the British Empire was easily the most powerful empire in the world at that time. The free market is altogether an unrealistic vision of a one world order that puts the interests of the country in the hands of private companies instead of the government, who are elected to represent the people.

Free trade ultimately is not a way to elevate a society, but is the economic law of the jungle.

Some say that…

I read an article on FEE the other day about the Opium Wars, and it argued that it was wrong of the Chinese to stifle the free market in order to stop drugs from being imported. If there was a societal negative to having drugs, then the free market (the Invisible Hand) would decide. It was, in fact, the government intervention that caused the wars in the first place.

What’s the alternative? None but tolerance, human choice, and the gradual emergence of wisdom embedded in social norms. Nothing will be perfect on the other end.

—The article

In my mind, this is a bad libertarian-styled argument that might work in ivory towers, but not in the real world.

An ivory tower.

The true real world effect of the free market is wonderfully stated in this quote by G.K. Chesterton:

“Individually, men may present a more or less rational appearance, eating, sleeping, and scheming. But humanity as a whole is changeful, mystical, fickle, delightful. Men are men, but Man is a woman.”

-The Napoleon of Notting Hill, Chapter 1

This may sound nonsensical when you first read it. But if you think about it in terms of a pure democracy, or mob rule, it is perfectly clear. Women often are more emotional than men. That is their gift in many respects. Men are more analytical. That is their gift in many respects. A mob (of either sex) is prone to being more emotional than the individual. A democracy is also swayed by the masses more than the individual. In this country we have a democratic-republic to protect us from the mob.

This is the same reason the Invisible Hand does not work. You cannot expect a population high on drugs to make analytical, calculated decisions. The individual has to have something to say as well. That is why we fight opium wars.

“Comparative Advantage”

English economist David Ricardo’s Law of Comparative Advantage, which declares that every country has a particular raw material it can produce better than any other country is used by free trade advocates, but if looked at closely has unintended consequences. Under a system following this law, each country would have its particular goods that it trades with other countries. This is what the British Empire was doing to the world. They mandated each country export a particular good, which the Empire would use in exchange for another particular good.

A reasonable person might ask what did the British export.

The British were the industrial economy of the world, who took all the raw material, converted it into finished products, and sold it back to other countries. Don’t ask who decided they got that industry.

After the Civil War, the British imported most of their cotton from India. They would then produce textiles from it and sell it back to India. These were the same problems that Gandhi would later deal with in this fight for Indian independence from the British Empire of the 1930s.

Keep in mind that until World War II the British Empire was the maritime powerhouse of the world, and that the island of Britain is small compared to other countries. In order to control a large empire from so far away, they had to have an economy that was rigged in their favor, one that would give them power over their colonies. In a free market, Ricardo’s law is going to favor the nation who can produce final products that that nation can sell.

On the other hand, the United States is a vast country with a lot of natural resources, and access to both the Atlantic and Pacific Ocean. The varying terrain creates a diverse biogeochemical atmosphere. The US does not need other countries for almost anything. It would ultimately be a waste of time and resources to rely on the industry of the British Empire to produce their goods. But in order to engage in any trade with other nations, there needs to be an industrial foundation on which to build things, or you run the danger of being just another India or China at the mercy of the British Empire. The Founding Fathers realized this, and therefore created, or reappropriated, a system that is designed to protect industry and boost economic growth internally.

The American System

The American System has worked multiple times throughout history. It is, in fact, the prevalent system throughout history since it is the easiest to implement in a society. The reason for this is that it calls for every country to have its own sovereignty, that they do not import what they can produce themselves.

A nation’s government is “of the people. . .by the people. . .for the people. . .” and a government can help its people much more by providing jobs than delivering cheap goods. As reviewed earlier, the US has seen a decline in stable manufacturing jobs. But it has not always been thus.

Photo by Caleb Fisher on Unsplash

Economic growth has been observed in the past, in such cases as the Civil War. President Abraham Lincoln and subsequently William McKinley were promoters of protectionist policies to increase domestic production. German Chancellor Otto von Bismarck was vocal in his praise of America during this time:

“The success of the United States in material development is the most illustrious of modern time. The American nation has not only successfully borne and suppressed the most gigantic and expensive war of all history, but immediately afterward disbanded its army, found employment for all its soldiers and marines, paid off most of its debt, given labor and homes to all the unemployed of Europe as fast as they could arrive within its territory, and still by a system of taxation so indirect as not to be perceived, much less felt.”

This is an amazing testimony to how the United States recovered after the Civil War. It is none the more amazing that they held the World Exposition in the same period of time, a fair whose whole point was American progress and industry. This same sort of economic success was felt coming out of the Great Depression and continuing after World War II. Presidents Franklin D. Roosevelt and John F. Kennedy advocated for intense industrial development of the United States. One form this took was government infrastructure projects such as the Hoover Dam, Tennessee Valley Authority, or Kennedy’s Space Program.

The point of these programs is that they were of a type that did not produce direct profits to a private company, and therefore would never get done without the help of government. A Space Program, while not generating a revenue or producing profits could help scientists better understand the planet and could help improve quality of life. The same goes with a dam or bridge.

These improved conditions can help a society increase and multiply. With better roads and bridges comes better cars and more people who want to buy cars. The United States has been a booming manufacturing power before, why can not it be again? The implementation of protective tariffs on foreign goods would help the economy focus locally, so that the American people have a better quality of life, not just cheaper goods.

“This land is you’re land, this land is my land”

I literally thought up to a year or two ago that this song had to do with property rights. I pictured a guy shouting “this land is YOUR land”, imply that his neighbor had to stay out of his (the man’s) land. Of course, it really is about love of America. It also can be applied to the practice of “isolationism” in powerful countries. It is our responsibility to take care of our own backyard, whether literally, or in terms of our family, town, state, or country.

Our nation is under the impression that we are the “good guys” in every respect. But we really have not been good guys for a long time.

But the US² is constantly getting involved in wars that they have no skin in. Starting in World War I, and continuing throughout the 20th and 21st century, the US has been consistently in wars. But in that time there was never a war on our own soil. This cartoon from Seamus Coughlin of FreedomToons displays this with chilling precision:

Chilling.

Now the saber rattling has extended itself to China and Taiwan. The Taiwanese say that they are the real government of China. China says that they are the real government of Taiwan. Who is right? Maybe Taiwan is right, but that does not justify World War III. At that point, we might as well restore every land to their “legitimate owners”. There is a whole list we can go through (as an angry Scotsman):

• The English Throne to the English (they need to get rid of Boris, and return it to the days of the Glorious Revolution)

• The English Throne to the Stuarts (they need to get rid of Germans in England)

• The English Government to Cromwell (they need to get rid of kings)

• The English Throne to the Stuarts (because they need kings after all)

• The Scottish Throne to the Stuarts (because the Stuarts are Scottish)

• The English Throne to the Tudors (I seriously don’t know why…)

• The English Throne to the House of Plantagenet (oh, wait, the War of the Roses was about the fact that the Yorkist and the Lancastrian… forget it)

• The English Throne to the Saxons (because William the Conqueror doesn’t have any claim, no matter how many Battles of Hastings he fought)

• The English Throne to the Romans (because they were totally not an empire)

• The English Throne to the Scottish Picts (because they deserve it, don’t ask me why)

• Oh, and Northern Ireland to the Irish. Seriously, how does that belong to the English?

• Oh, and all the Vikings have to leave (where are the Vikings, anyway?)

You get what I mean?

As a country, we need to return to a “This land is my land” attitude, and clean up our own backyard before we tell other nations what to do. We are not the liberators of the world, we are more like the British Empire trying to control the world. You don’t believe me? How many military bases do we have across the world?

Source

Why do we need that many bases? I though we only asked for a place to bury our dead. We have become what we fought against in 1776: an empire.

As a side note…

I am not completely “anti-war”. That is a very committal statement that I am not sure will play out well.

I think it is best put by (again) G.K. Chesterton, in talking about H.G. Wells:

“He says in his innocent way that Utopia must be a world-state, or else people might make war on it. It does not seem to occur to him that, for a good many of us, if it were a world-state we should still make war on it to the end of the world. For if we admit that there must be varieties in art or opinion what sense is there in thinking there will not be varieties in government? The fact is very simple. Unless you are going deliberately to prevent a thing being good, you cannot prevent it being worth fighting for.”

—Heretics, Chapter V

In other words, there are things worth fighting for, worth living for, and worth dying for. But those things should not always be on the other side of the world, and have nothing to do with my community.

It is best to think of it in a familial setting. A father’s job is to protect his family. It would be wrong for him to forsake his family to fight for another family. So it is wrong for a government to forsake it’s citizens to fight for (or against) someone else’s government for someone else.

What is the path out of being an empire?

I am not saying that we need to dissolve the Union, have a “National Divorce”, or even that the United States is essentially bad. What has happened is something that happens to many people: the US government has gotten fat, it has gained too many Federal Agencies over the last 100 years. President Trump was combating some of this (putting the US on a diet) when he made plans to pull out of Afghanistan, his “Schedule F” that was going to result in the resignation of a whole bunch more of officials than usual, his de-escalations of situations like North Korea, and brokering peace in the Middle East³ with the Abraham Accords. These are the sorts of things we need done, and more. John Zmirak’s suggestion of how to respond to the invasion of Taiwan is another example of this: close down immigration for 20 years from everywhere except Taiwan. China gets Taiwan, the Taiwanese go free, and the US gets smart people who will be good citizens. Win, win, win.

In closing

To conclude, it is important that we, as a country, take back our sovereignty. The way this is done is, in reality, is be American. Taking back manufacturing, focusing on internal development, and making good “Art of the Deal” trade deals with other countries are all things that will not only make our and our children’s lives better, but can encourage other countries to do the same, and help make good societies for all.

It is also important that we remember that America is great, not because of it’s government (that is usually a disappointment) but because of the ideas and men behind the good things that have happen in the US. We have been truly blessed by God to have a nation like this one that we can mess up, and fix.

All while not meddling in each other’s business.

I must remind you that I am just an 18 year old young man who is trying to figure things out. I am not a doctor, lawyer, financial advisor, or theologian. I read the doctors, lawyers, financial advisors, or theologians and try to understand what they are talking about, and then write about it. Don’t listen to me! Listen to the people I listen to.

Matt Ehret and the Rising Tide Foundation are part of the inspiration for this article. Reading their stuff helps me understand what I am talking about:

1. Life and Works of Abraham Lincoln, Volume 3, Abraham Lincoln, ed. Marion Mills Miller, Announcement of His Candidacy for the State Legislature. About March 1, 1832.

2. Operation Northwood was a plan by the DoD, and authorized by the Joint Chiefs of Staff under Kennedy to hijack planes, blow up building, and kill US civilians, and blame it all on the Cubans in order to start a war. Thankfully President Kennedy rejected it.

3. It rhymes!