The Data Don’t Lie, and Tariffs Don’t Work

Economic freedom produced the economic miracle of the 19th century—and it can do so again

Letter to The WSJ. 

"In responding to our op-ed “No, Tariffs Don’t Fuel Growth” (Oct. 17), Robert Lighthizer has a big problem. His protectionist policies were put to the test starting in the middle of 2018, and they failed even on their own terms. The economic growth rate slumped in 2019, exactly as the Congressional Budget Office predicted. Manufacturing employment as a share of total nonfarm employment continued to decline. The promised reduction in the trade deficit didn’t happen. Evidence has consistently shown that the wages paid to workers whose jobs were “saved or created” by recent tariffs are only one-tenth the cost the tariffs have imposed on the economy.

Desperate for evidence that protectionism can generate prosperity, something it failed to do in the 20th and 21st centuries, Mr. Lighthizer and other protectionists claim that tariffs in the 19th century caused the American economic miracle. Left out of their story is that the federal government couldn’t tax income prior to 1913 and an excise tax on whiskey caused a rebellion. Tariffs were the dominant source of federal revenues for the entire 19th century, funding more than three-quarters of the federal government. Mr. Lighthizer says he doesn’t want to argue about data because in the 19th century the economy grew faster when tariffs were falling.

Economic freedom, not protective tariffs, produced the economic miracle of the 19th century. If we will give it a chance in the 21st century, it will do it again.

Phil Gramm and Prof. Donald Boudreaux"