Economic protectionism and the tyranny of taxation with representation
By: Katherine Emily
Tags: American Revolution, Trump, Free Trade, Populism, Politics

Economic protectionism, much like the populist tradition of which it is often born, involves the exportation of need. Individuals are not primarily responsible for securing, or often even defining, their own needs, but task an intermediary figure, in whose goodness they place their trust, with doing so.

Even as a certain type of grasping, malevolent elite becomes the archetypal bogeyman in the populist’s dichotomous morality play, the downtrodden masses champion their own elite: a modern-day Lancelot whose strength of will and purity of heart are a force of virtue against which no other political jousters stand a chance. But, if the populist Lancelot is to prevail, the masses chaffing under the exploitative thumb of one overlord must cede yet more of their autonomy; a malevolent ruler is exchanged for a malevolent one.

But there is very little of the objective to distinguish virtue from vice in the populist epistemology. Belief, itself a product of the most powerful of emotions — those related to self-survival — drives the populist faithful. Because there is no accountability for the chosen elite — any contradictions are explained away by roadblocks thrown up by bitter clingers-onto-power — there is really nothing to stop a benevolent elite from pursuing the same policies of a malevolent one.

Picture, if you will, the following scenario:

A leader utilizes his power to implement an import tax on goods imported into America. He does this not only to protect the domestic economy from foreign competition in order that it might burgeon, but because the money collected from the duties represents a new source of revenue, which can be used to better secure the nation.

Now, this scenario obviously describes President Trump’s protectionist behavior, but it is actually a summary of the rationale used by representative of the British crown to justify the Townshend Acts.

In 1767, following the outrage generated by the levying of direct taxes on colonists by measures such as the Stamp Act, Chancellor the Exchequer Charles Townshend introduced into Parliament a series of revenue-generating acts he hoped would be more amenable because they utilized an indirect form of taxation: import duties. England’s mercantilist system meant the colonies could only trade with their mother county. All goods that had to be imported into the colonies had to come by way of Britain, even if they originated in other parts of Europe.

The Townshend Acts attempted to weaponize trade; the Indemnity Act exempted the British East India Company from paying British import tariffs so that they could sell tea more cheaply to the colonies, thus undercutting competition from Holland. Colonists not only had to pay the import duty on tea, but England was nudging them towards particular choices.

All this was justified by the idea that such policies contributed to the greater stability of the empire. The idea that colonists were incensed by the manipulative trade policies of the Crown was baffling to British officials. The Townshend Acts were, in fact, a kind of capitulation. Internal or direct taxes were considered onerous, so Parliament began levying indirect or external taxes. And, more broadly, the revenue acts were done to benefit the colonists, as the 1767 Revenue Act details:

“And be it further enacted by the authority aforesaid, That his Majesty and his successors shall be, and are hereby, empowered, from time to time, by any warrant or warrants under his or their royal sign manual or sign manuals, countersigned by the high treasurer, or any three or more of the commissioners of the treasury for the time being, to cause such monies to be applied, out of the produce of the duties granted by this act, as his Majesty, or his successors, shall think proper or necessary, for defraying the charges of the administration of justice, and the support of the civil government, within all or any of the said colonies or plantations.”

Here the exportation of need, which is characteristic of protectionism, is evident. The welfare of the colonies is supposedly at the heart of the tax policy pursued by the British Crown, but nowhere are the colonists consulted in the crafting of that policy; they had no way of informing their representatives — far-off members of parliament whom colonists had no hand in electing — of their needs. Even had some means existed for colonists to directly address their representatives and petition for a redress of their grievances, arguments rooted in autonomy and individual hardship would likely have been disregarded. “Need” in this context takes on a very collectivistic interpretation: citizens are dependent upon the state for their welfare, therefore they prosper as the state prospers.

Returning to the twenty first century, President Trump’s quasi-mercantilist policies adopt an eerily parallel rhetoric to that of the Townshend Acts. His latest Twitter tirade reveals that, contrary to the protectionist rhetoric that holds tariffs have been pursued to benefit the forgotten workers of middle America, his trade policies are about centralized government control. Trade to the president is not a function of talented producers creating a product that fits a particular individual need. It’s not about creators and consumers independently finding each other and, of their own volition, instigating a transaction that each party deems to be to their respective benefit. Rather, it’s about buoying the nation’s standing in the world:

“Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come, Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth… Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!”

Trump, much like Townshend and the British Parliament, seeks to place limitations upon the parties with whom trade can be enacted. He seeks to nudge consumers towards domestic producers of goods, undercutting foreign producers by making their goods subject to import tariffs, which place them at a disadvantage in the prices they charge to make a profit. This hearkens back to the efforts the British Crown undertook on behalf of the East India Trading Company.

Trump does not see his actions as punitive because businesses always have the escape the penalty of tariff duties by relocating to America. Much like the British Crown, he sees import duties as a further positive because they become a revenue source that can be utilized by government to improve domestic conditions.

But though he invokes “the people” as a party positively benefited by these actions, the “we” of whom he speaks does not in fact include the people, at least not at an individual level. Trump cannot afford to allow individual to have a say, because this would undermine the idea that tariffs and protectionism at large is a political boon. Tariffs are import taxes, as the British Crown at least had the honesty to admit. They are paid by domestic consumers, not by foreign trading partners. Further, by truncating trade — by attempting to create incentivizes that nudge would-be buyers towards domestic goods for offer — Trump takes autonomy away from the people he claims to be benefiting. He is removing from them the freedom to make their own choices and exercise their own judgment as to what kind of economic interactions are in their best interest.

Again, this fits with the protectionist idea that need is exported to an intermediary figure, who has sweeping powers to make decisions about what policies best serve the interests of the people being represented. Autonomy is traded for security because those in the polity who buy into the logic of populism believe their chosen champion will labor on their behalf.

But, as is evidenced by the protectionist actions of the president, it is not truly “the people” for whom empowered politicians labor. “The people” exist primarily as an entity whose actions can help bolster the state. It is the state’s needs that are looked to; the people are subsumed by the state because they are a constituent member of it. Protectionists adopt the Aristotelian mindset that the whole is greater than the sum of its parts. Constitutive members depend upon the whole; they are therefore of second-degree importance to it.

The irony of this is that populism is spurred by the perception of an exigent threat to a certain subset of the population, imposed by powerful elites who lack sympathy for the plight of the people. But all populism does is exchange one leader for another, who might talk a good game but who is substantively no different than his reviled predecessor, as the parallels between Trump’s protectionism and the revolution-spurring protectionism of the British Empire.

Democratic protectionism contains exactly the same kind of political tyrannies as monarchical protectionism. The packaging is simply softer.

In the era preceding America’s declaration of independence from England, British politicians made the arguments that colonists, even though they had no direct political representation, had “virtual representation.” This idea was predicated on the idea that colonists were British citizens exactly like those who actually resided on the British Isles and Parliament labored on behalf of all British citizens.

Modern populism rests on a similar form of virtual representation: a representative is elected, then given autonomy to act on behalf of his constituents. This autonomy is purchased from individuals who buy into the logic of protectionism. But, as Alexis de Tocqueville describes in Democracy in America, this simply exchanges a hard form of statist tyranny for a softer, more comfortable one:

“They devise a sole, tutelary, and all-powerful form of government, but elected by the people. They combine the principle of centralization and that of popular sovereignty; this gives them a respite; they console themselves for being in tutelage by the reflection that they have chosen their own guardians. Every man allows himself to be put in leading-strings, because he sees that it is not a person or a class of persons, but the people at large that holds the end of his chain. By this system the people shake off their state of dependence just long enough to select their master, and then relapse into it again.”