What William Graham Sumner Would Say About Trump And Vance’s Tariff Rhetoric – OpEd

By Kody Jensen

William Graham Sumner (1840–1910) was a professor, sociologist, clergyman, and advocate of laissez faire, the gold standard, and free trade. His book What Social Classes Owe to Each Other was influential in the thinking of Leonard Read, according to Mary Senholz’s biography of the FEE founder.

Whilst Sumner was a supporter of free trade, in more recent times Donald Trump has built his political reputation on being its adversary.

How would William Graham Sumner respond to claims made by Trump and his running mate JD Vance about free trade in the recent debates? Let’s go to his writings to find a potential answer.

The Great Free Trade Debate

DT: “First of all, I have no sales tax. That’s an incorrect statement. [Trump is responding to Harris characterizing his tariff plan as a sales tax.] We’re doing tariffs on other countries. Other countries are going to finally, after 75 years, pay us back for all that we’ve done for the world. I took in billions and billions of dollars from China.”

Sumner observes that protectionists have always shied away from referring to tariffs as taxes. Consider these comments from his 1888 book Protectionism: the -ism which teaches that waste makes wealth:

There are some who say that “a tariff is not a tax,” or as one of them said before a Congressional Committee: “We do not like to call it so!” That certainly is the most humorous of all the funny things in the tariff controversy. If a tariff is not a tax, what is it? In what category does it belong? No protectionist has ever yet told. They seem to think of it as a thing by itself, a Power, a Force, a sort of Mumbo Jumbo whose special function it is to produce national prosperity. They do not appear to have analyzed it, or given themselves an account of it, sufficiently to know what kind of a thing it is or how it acts. Any one who says that it is not a tax must suppose that it costs nothing, that it produces an effect without an expenditure of energy. They do seem to think that if Congress will say: “Let a tax of —— per cent be laid on article A,” and if none is imported, and therefore no tax is paid at the custom house, national industry will be benefited and wealth secured, and that there will be no cost or outgo. If that is so, then the tariff is magic. We have found the philosopher’s stone.

Furthermore:

A protective tax is one which is laid to act as a bar to importation, in order to keep a foreign commodity out. It does not act protectively unless it does act as a bar, and is not a tax on imports but an obstruction to imports. Hence a protective duty is a wall to inclose the domestic producer and consumer, and to prevent the latter from having access to any other source of supply for his needs, in exchange for his products, than that one which the domestic producer controls. The purpose and plan of the device is to enable the domestic producer to levy on the domestic consumer the taxes which the government has set up as a barrier, but has not collected at the port of entry. Under this device the government says: “I do not want the revenue, but I will lay the tax so that you, the selected and favored producer, may collect it.” “I do not need to tax the consumer for myself, but I will hold him for you while you tax him.”

DT: “They aren’t gonna have higher prices; what’s gonna have and who’s gonna have higher prices is China and all of the countries that have been ripping us off for years” [when asked if consumers can afford higher prices caused by tariffs].

WGS: “To this it is obvious to reply: what good can they then do toward the end proposed?”

If the tariffs do not raise prices, how do they encourage the protected industries? No doubt it would be a neat trick if the President could force foreigners to pay more for US products while not raising prices for US consumers. However, I cannot comprehend how taxes on US imports will achieve this.

JDV: “Think about this. If you’re trying to employ slave laborers in China at $3 a day, you’re going to do that and undercut the wages of American workers unless our country stands up for itself and says you’re not accessing our markets unless you’re paying middle-class Americans a fair wage.”

WGS:

The protectionist says that he does not want the American laborer to compete with the foreign “pauper laborer.” He assumes, that if the foreign laborer is a woolen operative, the only American who may have to compete with him is a woolen operative here. His device for saving our operatives from the assumed competition is to tax the American cotton or wheat grower on the cloth he wears, to make up and offset to the woolen operative the disadvantage under which he labors. If then, the case were true as the protectionist states it, and if his remedy were correct, he would, when he had finished his operation, simply have allowed the American woolen operative to escape, by transferring to the American cotton or wheat grower the evil results of competition with “foreign pauper labor.”

Can a tariff raise the general wage level? Sumner comments in this regard:

Wages are capital. If I promise to pay wages I must find capital somewhere with which to fulfill my contract. If the tariff makes me pay more than I otherwise would, where does the surplus come from? Disregarding money as only an intermediate term, a man’s wages are his means of subsistence—food, clothing, house rent, fuel, lights, furniture, etc. If the tariff system makes him get more of these for ten hours’ work in a shop than he would get without tariff, where does the “more” come from? Nothing but labor and capital can produce food, clothing, etc. Either the tax must make these out of nothing, or it can only get them by taking them from those who have made them, that is by subtracting them from the wages of somebody else. Taking all the wages class into account, then the tax cannot possibly increase, but is sure by waste and loss to decrease wages.

One point both Trump and Vance raised was that apparently even Joe Biden agreed with protectionist ideas, as he did not remove most of the tariffs imposed by the previous administration. I do not know what answer Sumner could give to this ubiquity of bad economics, other than to glumly shake his head.

• About the author: Kody Jensen is a millennial who enjoys economics and chess. Some of his favorite writers are Frédéric Bastiat, Henry Hazlitt, and Frank Albert Fetter.
• Source: This article was published by FEE