Free Trade as a Working Class Movement
Jason Kuznicki on Mar 12th 2008
From the comments, Matt writes,
Completely off topic but yesterday I caught part of a radio programme that made me think of you guys. The part that fascinated me was Professor Frank Trentmann’s claim that advocating free trade was in the 19th century a *working class* movement. This certainly challenged my previous impression that avowedly working class political movements tend to be some variant of socialism. Anyway just thought I’d throw it in and see if anyone can make something of it. The programme website is [here].
Matt is absolutely right. The working-class appeal of free trade in the 19th century is maybe the biggest untold story in the history of free trade. It’s particularly ironic that today free trade is seen as benefiting chiefly the upper classes, because a thorough and principled free trade would I think not benefit the rich very much, while in the long term, it would raise living standards for the poor more than any other group. The great liberalization of the 19th century is instructive here.
In Britain, the Corn Laws set high tariffs on imported grains, making bread artificially expensive. The poor were particularly hard-hit, since a greater proportion of their overall income went to bread — and thus to the tax collectors. Similar duties existed on many staple products, and they were widely disliked by the liberals of the day.
The Anti-Corn Law League’s successful campaign to repeal the Corn Laws is therefore a textbook classical liberal success story. Wikipedia’s page on the ACLL is pretty poor, but this one at the city of Manchester is very good.
Yet the ACLL’s work was too little and too late to save Ireland from the famine of the 1840s. The Irish lived and died by the potato harvest in part because bread was not an economical substitute; added to this, restrictions on land ownership by ethnic Irish meant that English landowners had the final say in where the remaining food products went, and these often ended up in England. The result was the first modern famine, that is, the first famine produced not by natural dependence on weather and growing conditions, but by misplaced economic incentives. Or, to be frank, by the laws. Yes, there was a blight on potatoes in Ireland during the 1840s. But there was a blight on potatoes everywhere in Europe at the same time. Only Ireland starved.
In our day, tariffs and other measures restricting free trade still hurt the poor more than any other group, because the poor still have smaller savings and less ability to reduce luxury consumption in response to rising prices on necessities. With regard to consumer goods like clothing, housewares, and electronics, tariffs will result in less consumption by the working class. These goods tend to be imported, and threats to raise tariffs against China, for instance, are really threats to make everyday products more expensive for everyone — a step that the poor will notice more than any other group.
The difference is that today, working-class people don’t face starvation as the marginal method by which they reduce their consumption, and they are therefore much more willing to, in effect, “purchase” protectionism — at the cost of fewer or more expensive shoes, televisions, and the like. (Even if there were a tariff on imported foods, the result would not be a drop in food consumption, at least not to the point of starvation; these other goods would be purchased less often as food budgets rose and took up a higher share of income.)
Protectionism, ultimately based on an economic fallacy, is still intuitively appealing, and if it can be purchased so cheaply, well, the case for free trade is that much harder to make.
Filed in The Boardroom
I would like to understand now how free trade protects the working class now and specifically what jobs it has created for the working class. That is in language that I can understand.
Interesting. I’d say the difference between the 19th century and now is the welfare state, or at least what remains of the safety net. We are a consumer society first and foremost, and through free trade [unilateral as it seems], virtually every necessity of life is cheap, and even the luxuries like plasma TVs are downright reasonable.
So, as Jason notes, tariffs, usually on the lowest-priced goods/staples/consumer goods, hurt the poor most. The putative advantage of protectionism, which might bring more sneaker manufacturing jobs back to the US, would be far less quantifiable.
Not that this has stopped certain presidential candidates from trying the argument, and in Ohio, apparently succeeding with it.
But since Americans have food and sneakers, and most everyone who wants a job has one, the protectionist argument is largely nonsensical and demagogic.
Thank you, I knew if anyone could get an interesting article out of my comment it would be Positive Liberty.
I’m not sure VRB has understood the argument, or maybe I haven’t understood his. Free trade may not create jobs, though I’ll leave that question to those with more knowledge of economics. What it does is make any jobs there already are more valuable by lowering the price of basic goods. To put it in very simplistic terms it may not double the cash in your pocket but it can make it so that cash can buy twice as much.
Having lived and worked some forty years as a working class person, I haven’t seen where I’ve benefited. I aksed about creating jobs becausethat is what quite a few proponents tell us. Having cheap items is assumed a benefit. I had two pairs of shoes, fifty years ago that would last several years. One can barely get through six months wearing cheap sneakers. I have alway shopped at off price stores or shopped sales, and that TV is not in my house. Having cheaper prices has only allowed people to have more things and more debt. Over the years, the cost of food proportionaltely has gone up. Imported fruits look pretty but taste like crap. I am not against free trade, but I do get tired of people speaking on the benefits of it. Most economic benefits improve middle class lives. I have been treading water year after year no matter what policies were in place. The only thing that would improve my lot, if I were to move into the middle class. I am trying very hard to do that.
Ah, I did misunderstand then, I thought you were interpreting Jason’s argument as saying free trade creates jobs rather than free trade lowers costs. My defence of the low cost argument was meant as to answer that not argue for low costs per se. I personally have no idea what the relative costs and benefits of free trade or tarrifs are in your case, or even mine since I’ve never lived outside EU protectionism.
I did not say that free trade creates jobs on net. I said that it makes consumer goods cheaper.
This cheapening of consumer goods, however, can under many conditions create new jobs, since cheaper consumer goods also typically mean cheaper nonconsumer goods (that is, cheaper inputs to manufacturing). When the materials costs go down, more laborers can be hired. Indeed, this process goes on all the time.
Meanwhile, free trade will also destroy some jobs. Some are gained; some are lost. These together are more or less a wash. (If it weren’t, then after decades of more and more free trade, you would see massive unemployment, which is not the case. Employment numbers in recent years have been quite good, and even recent recessions have by historical terms been quite mild.)
So… In the process of free trade, some people gain jobs, amd some people lose. On the whole, however, consumer goods get cheaper. This benefit is not to be dismissed, and it is what I was arguing for to begin with.
Jason,
I think the reduction in cost has been less “free trade” vs restricted trade but the introduction of “mechanization”, i.e., the multiplication of the output of our labor do to labor multiplying devices from the back-hoe to the modern computerized robotic-enhanced computer driven automated assembly operations.
Another important input has been the cheapening of transportation costs, so we can take advantage of global wage inequities, reaping the $2 per diem Chinese wage here in the States where we get somewhat more per hour.
That last bit (transportation), you “might” be able to argue is an advantage of free trade, but I’m not sure that’s what you meant and the real advantages for us come from the low expense due again … to mechanization.
Jason,
I didn’t mean to say you did, I was just saying that is what working class people have been told.
Since I worked for several manufacturing plants, I wonder what plants you have actually seen to be able to say. “Indeed, this process goes on all the time.” Managers are really good at flim flam. A CEO of a very large corporation virtues were being extolled on wall street; while as customers, we wondered what other product would his corporation eff up. I guess what I am saying that America is productive in spite of itself and the economic rules could apply, but usually don’t.