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No. 43: Buchanan and Free Trade

OPEN BOOK, Views & Reviews, No. 43
Copyright (c) 1998 Biblical Horizons
December, 1998

In a recent issue of the Chalcedon Report (March, 1999), R. J. Rushdoony praises Patrick Buchanan’s book The Great Betrayal (Boston: Little Brown, 1998), a defense of protectionism. Rushdoony claims that the conflict between free trade and tariffs is a religious conflict, and he is correct. Unfortunately and surprisingly, he takes the wrong side.

Tariffs are placed upon trade by government, that is, by men who are ruling other men. Tariffs are purely statist, and inescapably are set in place to favor some workers and discriminate against others. Theoretically, tariffs discriminate against foreign workers, but in fact they always favor some local workers against others. Whatever the case, however, tariffs always permit the state to regulate the economy. That is, tariffs allow men with guns to favor some men’s labors and to cripple the labors of others.

What possible Biblical foundation is there for this? A free market, including free trade, allows the worker to sell his wares for whatever the market will bear, and wherever he can find a good price. Free trade eliminates statist interference in the economy. This is precisely what Biblical ethics and economics always presents as righteous.

Consider exactly what tariffs mean. A group of people provides favors or threats to the state, and the state, as their agent, uses the sword to punish anyone selling goods cheaper than at state-established prices. In other words, the threat of the sword is used to keep some people out of the marketplace. Such a procedure is not only an attack upon the God-ordained cultural mandate, which applies to all human beings everywhere, but is also organized theft, a huge breaking of the eighth commandment: We are not authorized to steal from people on the basis that they are not citizens of our particular nation.

Where in the Bible does God ever imply that we may rightly use the sword to prevent poor people in other countries from selling goods in our markets? Nowhere. Quite the contrary: The Bible always tells us to show kindness to the stranger and the sojourner, and orders us to have the same laws for them as for us (Exodus 12:49).

It does not matter whether such a policy is "good for us" (good for America) or not. It is what God requires. Period.

But Rushdoony sets aside the Biblical testimony, and Biblical justice and equity, in favor of a specious theological canon. He states that "the essential meaning of free trade is the essential goodness of men and nations, so that all things work naturally [his emphasis] for good, not by God’s ordination, but by man’s." This is a sweeping generalization, and is untrue.

First, since free trade is taught in the Bible, it certainly is by God’s ordination. In fact, history shows that apart from the influence of the gospel, protectionism and statism reign supreme. It is the gospel that liberates human labor from the constraints of powerful brutes with guns.

Second, it is true that after the Last Judgment, all things will not work together for good to the wicked. But in history this is not true. God sends the sun to shine on the righteous and wicked alike; and while the wicked live in this, God’s world, they experience many blessings, blessings that should lead them to repentance. Even their suffering is designed to provoke them to repentance, and thus can work for their good.

Ultimately, Rushdoony’s position is heretical, no doubt unintentionally. It presumes that there is no complexity in the will of God. Like Herman Hoeksema, Rushdoony takes seriously the fact that God wills to damn some people for their sins; but also like Hoeksema, Rushdoony implicitly fails to admit that God also desires all men to be saved. By implication, Rushdoony rejects a distinction between God’s historical love for all His images, and His eschatological hatred for the damned.

This is not a contradiction because God’s will is complex; He wills different things at different "levels" so to speak. Only if we assume that God only has one will – the heresy of the simplicity of the will of God – can we deny that God both loves and hates the reprobate.

The proof of the complexity of the will of God is that Jesus, both God and man, wept over Jerusalem and stated that He desired to gather them to Himself, but they would not be gathered (Matthew 23:37). Here we see that God does desire all men to be saved, and is willing to be grieved when they reject Him. This truth must not be set, however, as the Arminians do, against the equally true fact that God raised up Pharaoh in order to destroy him. For God also wills, in a different way, that not all men be saved.

Rushdoony used to understand this quite well. His defense of "common grace" in his early book By What Standard? (1958) is a sustained attack on Hoeksema for just this type of error. It seems that he has moved from or forgotten his earlier position. Many years ago I heard a series of fine lectures by Rushdoony on American History. Back then he understood the evil of tariffs, but he seems to have changed his mind.

I have dealt with Rushdoony’s short review essay because he is an influential Christian thinker and it seems that more and more Christians are thinking along these lines. There is more to be said on the matter, however.

Reviewers have not been slow to point out the glaring mistakes in Buchanan’s treatise. David Frum, writing in the 13 April 1998 issue of The Weekly Standard, notes the many statistical and historical errors contained in the book. He then points out that if Buchanan has his way, certain industries will be "protected" by tariffs, but that this will mean other Americans will have to pay more for such goods, thus discriminating against other parts of the economy. To "protect" one industry without protecting others is to use the sword to harm those others.

History certainly shows this to be the case. Frum points out that in the period from 1873 to 1913, the heyday of tariffs, workers in certain parts of America were brutally exploited by workers in other parts. "Americans who grew wheat and cotton, who felled timber and mined copper, were highly dependent on export markets. The goods they sold were priced at world prices, but tariffs ensured that the things they bought – from farm equipment to shoes – were priced far above world prices. The trade policy of the late nineteenth century brutally exploited the South and the West, and the farmers, loggers, and miners knew it. . . . [U]nder the Morrill and McKinley tariffs, two-thirds of America was a colony of New York, Pennsylvania, Connecticut, and Massachusetts." Frum points out that the Fordney-McCumber tariff of 1922 "can fairly be said to have caused the Great Depression," which was only worsened by the Smoot-Hawley tariff of 1930. These also prevented the "bloodied and starving" Europeans after World War I from selling goods in the United States and thereby acquiring the wealth to rebuild. Particularly hard hit was Germany, with results that were especially horrific and tragic.

Ramesh Ponnuru in the July/August 1998 issue of The American Enterprise points out that after the "evil" NAFTA began operating, "U.S. manufacturing employment is up since 1993; ditto for the automotive, electronics, and industrial machinery sectors." And this at a time when many American workers are moving into retirement and taking social security!

Buchanan worries that American industrialists are moving overseas and employing cheap labor. If that is happening today – and statistics belie the charge, as we have just seen – we may ask why? Why didn’t American manufacture move overseas long ago, in search of cheap labor? The answer is that laborers in "third world" countries are not anywhere near as trustworthy as American laborers, because there is no "work and time ethic" in those places. Also, such nations have always been very unstable. If some American industries are moving overseas now, it is because of the huge number of U.S. federal regulations and the vast amount of paperwork the U.S. federal government now requires. The continual change and increase of these burdens makes the U.S. government very "unstable" in its face toward industry – at least as unstable as "third world" nations might be. It is now cheaper, in some cases, to put up with "third world workers." The corrective is to lighten the burden the federal government places on American industry, not to impose tariffs, which are destructive to the economy.

Buchanan argues that his proposed "protections" would bring down America’s trade deficit. Apart from questioning what is so problematic about a "trade deficit" (i.e., so what?), Ponnuru points out that tariffs would do no such thing. "Imports would go down, but so would exports. Exporters would be hurt by an appreciating currency, by retaliatory protection abroad, and by increased sluggishness among protected firms that would suddenly have little incentive to look outside the cozy home market." Ponnuru has the clear testimony of history on his side here.

Other matters come up for consideration as well. What if a nation, like Red China, uses slave labor to push loads of cheap goods on the United States, thereby undermining our workers? What if, having wrecked U.S. industry, China then hikes up the prices and exploits us? Possibly in such extreme situations it would be right for the U.S. government to impose tariffs, just to make the playing field equitable. Yet, there are some arguments against such a seemingly reasonable notion.

For one thing, Americans can only benefit, in the short haul at least, from cheap foreign goods. When Americans can buy many things cheaply, they have more money left over for other things, such as investing in American industries. The American economy thus benefits and grows as a result of cheap foreign goods, however they may be manufactured.

For another, no nation stays the same generation after generation. Red China won’t be red forever. Arguably, the influx of American money will not help keep the reds in power so much as undermine them. Arguably, the lives of those in "slave labor" will gradually improve as more money comes into the economy; they may be given better food, for instance. Then might come a revolution of rising expectations, the development of a small but growing middle class, etc. Such things are not inevitable, but they are possible. Would Castro still be in power in Cuba if the United States had not embargoed that nation, if the Cuban economy had become enriched by selling to the U.S.? Or would Castro have been thrown out years ago?

Thus, even the "fair trade" argument for a few tariffs is a shaky argument.

A second reflection is this: Buchanan is arguing for "economic nationalism." Do we as Christians believe in "nationalism"? No, we don’t. We believe in the international, catholic, universal community of the Church. We also should believe in international, catholic, universal free markets and free trade. There is no Christian justification for using the power of the state to prevent "foreigners" from selling their wares wherever they wish. The state is not "international" but local, and the purpose of the state is to restrain violence by the threat of physical punishment (the sword). The state has no legitimate role in fixing prices except in extreme circumstances (i.e., to prevent the exploitation of people suffering in dire emergencies, as when wicked people charge huge amounts for water to people whose water systems have broken down after a natural disaster).

Thus, I can fathom no Christian basis for a policy of economic nationalism and protectionism. To be sure, many of those advocating free trade today are on the left, and their advocacy is selective. Such men also want an international political government, whether the United Nations (cf. George Bush’s Gulf War) or NATO (cf. Bill Clinton’s Yugoslav War), and Biblical Christianity advocates the opposite (local government). But I submit that we should be happy that, whatever their motives, they are doing the right thing in this instance. Our position should be in favor of international trade, but opposed to international statism. By linking the two, Buchanan is every bit as far to the left as his opponents.

Buchanan wants the state to use the power of the sword to favor some workers at the expense of others. It may bother us that men like Al Gore take the right side of this issue, while a decent man like Pat Buchanan takes the wrong side, but this kind of confusion is often seen in history. Such confusion will manifest itself from time to time until the end of time. Christians must take their ideas from the Bible, and not be swayed by personalities, good or bad.

For a more extended discussion of the role of the state and of nationalism, see my essay "The Case Against Western Civilization" published in these pages in 1997-98, and my book The Bible and the Nations, available for $12.00 from Biblical Horizons.