What key political principle divided the Democrats from the Republicans prior to the Civil War? Answer: Free Trade. Lincoln and his party of the industrial North were protectionist. Democrats under the influence of big dollar cotton were free traders. This critical ideological distinction lasted roughly until the 1960s. If this isn’t a red flag for microeconomics and free trade theory, I’m not sure what would be.
But don’t take my word for it, consider McCleary’s speech in a passage from my book:
In Honorable James T. McCleary’s speech to the House of Representatives in 1904 “Protection, Our Proper Permanent Policy”, illustrates the point: …from section 3 of the Democratic national platform: “We declare it to be a fundamental principle of the Democratic party that the Federal Government has no constitutional power to impose and collect tariff duties except for the purposes of revenue only.” (McCleary. 1904. 4)
…the Republican Party made its declaration in the following language: “We believe that all articles which cannot be produced in the United States, except luxuries, should be admitted free of duty, and that on all imports coming into the competition with the products of American labor there should be levied duties equal to the difference between wages abroad and at home.” (McCleary. 1904. 4)
Thus, from a historical perspective, modern [establisment] conservatives have become traditional economic Democrats.
McCleary also unearths the powerful speech “Shall the Republic Do Its Own Work?” given by the silver mining industrialist and Senator from Nevada John P. Jones in 1890 which nicely paints the economic contrast between the North and South: “Without mechanical and manufacturing resources and capacity, no people can maintain prosperity or independence.” (McCleary. 1904. 31)
“… Free-Trade would banish those establishments and would exchange skilled mechanics for cheap doorknobs or cheap cutlery. It would reject the knowledge of useful arts in order to save for the moment a few cents a yard on woolen cloth or cotton ties or a few cents a pound on tin plates. Protection secures the arts and Protects the artists. It transforms ignorance into knowledge, indifference into zeal, inertia into activity, impotence into power.” (McCleary. 1904. 33)
“… Free Trade brings the watch. Protection brings the watchmaker; Free-Trade Free-Trade brings the machine, Protection the machinist; Free-Trade brings the engine, Protection the engineer. Given the men, we cannot lack the machines. Having the art, we shall not want for the article. Possessing the producer, we shall not want for the product. Between them, who shall hesitate as to which is the more valuable to the country? Men found communities, machines do not; men constitute a society, machines do not.” (McCleary. 1904. 33)
“… When the South declared war it was found that its people could create nothing of practical utility. Their orators and stump speakers, who led them into the war, could spin “yarns,” but not of cotton; they could weave sentences, but not wollens. They could make speeches, but could not make engines. They could make verses, but not vestments. They could write flaming essays on courage, but could not make a gun or canister of powder. They could organize armies, but not industries. They could inspire their troops with enthusiasm, but could not supply them with blankets.” (McCleary. 1904. 31)
“… looking only to the moment and never to the morrow, permitted iron, coal, and other valuable minerals in illimitable quantities to lie inert and useless in their fields.” (McCleary. 1904. 31) “… Their soldiers suffered for want of proper clothing, some of them even dying of cold, and many, especially toward the close of the war, wearing uniforms made from rag carpet.” (McCleary. 1904. 31)
“… Had it not been for their slaves they would have been without food.” (McCleary. 1904. 31)
So what would Lincoln do? Please consider:
Thus the root problem we face is a failure of economic theory. So for those intrepid enough to ask themselves what precisely is wrong with economic theory, please consider:
In the end, the establishment’s economics is not Lincoln’s economics, and it is for this, and only this reason, we are in decline. China understands this. Maybe it’s time we do to.