Aaron Rupar’s great newsletter Public Notice features a great interview today by Thor Benson with historian Eric Rauchway discussing William McKinley and Trump’s ignorant obsession with tariffs. I highly recommend reading the whole thing. This sums up Trump’s idiocy on the subject:
“He wants the society of the 1950s with the policies of the 1890s. But you literally don’t get the society of the 1950s without a comprehensive rejection of the policies of the 1890s, even by Republicans.”
A short excerpt of the history lesson.
Thor Benson
Trump loves to talk about the late 1800s and early 1900s, how we paid for everything with tariffs instead of income taxes, and how great that period was. But I’m familiar with that era and know he’s full of it. There was massive income inequality and basically no social safety net. What’s he getting wrong about how average Americans lived during that time?
Eric Rauchway
You’d have to ask the average American who kept voting for socialists and populists and progressives. [laughs] They clearly wanted some kind of change.
That was the great era of unionization. It was the era of broad social protests. Many of the protesters thought tariffs were the cause of their misery.
A tariff is a regressive tax. It hurts people more the less money they have. The most progressive thing progressives wanted to do back then was have an income tax.
There had been an income tax during the Civil War, during the Lincoln administration, and then there was another one in the 1890s, but the Supreme Court said it was unconstitutional. One of the big things progressives wanted to do was bring that back, and ultimately they did with the 16th Amendment in 1913. That allowed the federal government to fund itself with income taxes rather than tariffs. That relieved a lot of people’s sense of unfairness toward the federal government.
The other problem with tariffs, people would say at the time, is that a tariff is the mother of trusts. The current president does not give evidence of understanding the difference between a tariff for revenue and a tariff for protection.
If you set a tariff at three percent, you collect three percent on all of your imports. That’s great. If you set a tariff at 300 percent, then nobody buys imports, so there’s no revenue collection. The president seems to believe he can impose prohibitively high tariffs and collect revenue, which you can’t do.
Thor Benson
But he says McKinley was the best.
Eric Rauchway
The president keeps saying he admires McKinley because of his high tariffs, but there are a couple things people these days like him seem to not understand very well.
One is that the McKinley tariff actually came before the McKinley presidency. The McKinley tariff is a law of 1890, and it’s called that because he was then the chair of the House Ways and Means Committee and a sponsor of the bill. McKinley didn’t get elected president until 1896. The McKinley tariff of 1890 was a prohibitively high protective tariff on many, many things.
Here’s the theory of protective tariffs: Let’s say, for example, we’re talking about hats, and the British make hats way better than Americans do. The American consumer, given the choice in an open market, will buy the British hat. American hatmakers suffer. You put a protective tariff on British hats to make it prohibitively expensive to buy a British hat, so people don’t buy British hats.
The federal government gets no money because there are no transactions on British hats. What there is, though, is room for American hatmakers to raise prices on their hats to just under the prohibitively high British price. They can now profit, because people will buy their hats at higher prices. Then, theoretically, they’re supposed to plow that money into research and development, so you are protecting, and therefore promoting, the American hat industry.
But what the United States actually did in the McKinley era is afford “protection” to companies that didn’t need it, like steel, where the United States was already highly competitive. All it allowed companies to do is have artificial room to raise their prices and increase profits. It gave an advantage to these firms to get bigger and bigger.
They were able to buy out the firms that supplied them with raw materials. They vertically integrated and became trusts. Tariffs aid monopolies. They’re to the advantage of people who own capital, who own factories, who employ factory workers. They’re intended to be pro-capital, and they are. That’s what gave rise to the great antitrust movement and the populist movement and ultimately the progressive movement.
There’s much more and it’s all fascinating.
We know Trump’s an idiot. But what excuses the people around him going along with it? Has it not occurred to them to read a book if they are unfamiliar with this history? I guess not. One of the problems with the ultra-rich finance moguls is that they all think they’re geniuses and don’t have anything to learn.
I also think we can’t underestimate the cult psychology at work. It’s clear to me that Trump’s ability to escape from all accountability, his ability to persuade massive numbers of people to believe his lies, his unlikely political comeback after J6 and now forcing powerful institutions like Universities and law firms to kow tow has made otherwise intelligent people to believe that he really does have godlike abilities. They know he’s stupid but somehow it doesn’t matter. he gets what he wants anyway. They’re just going along for the ride now, putting their fates and the fate of the world in his hands. These guys think he has the power to defy logic, reason and all the normal laws of economics.
It’s pre-modern. It’s insane.
