Sunday roundup

Sam Houston State economic historian Brian Domitrovic on the role tariffs played in the life of our country up to 1913. The first Congress assembled after the Constitution was ratified passed some tariffs, in a blatant act of cronyism:

At the very outset of this nation’s Constitutional order, by means of the tariff, Congress offered itself to the public as venal and corrupt. This is surely one of the reasons—perhaps the major reason—that government remained so small over the entire era of the tariff.

From 1789 to 1913, the size of the federal government in the economy as a whole averaged about 3%, with variation in time of war. Today, that number is over 20%—a 7-fold increase. State and local government was another 3% back then, and is another 12% today. Where total government was 6% of economic output in the era of the tariff, it is five times larger at over 30% today.

A reason government was small under the tariff was that it was widely understood that government and its functionaries are objectionable. The tariff communicated this lesson inherently and explicitly. Because the tariff was a list displaying cronyism and making no play for being enlightened or fair, it did not demand respect. The quid pro quo the populace made with the tariff is that Congress and its conspirators in business got their favors, but in turn Congress’s realm, the government, had to stay small.
Therefore, the private economy was free to survey immense horizons. Boundless growth at the hands of entrepreneurs and a talented and ambitious workforce built up year after year as Congress got to curry its petty favors on the condition that government stayed limited in size.

The second essential aspect of the tariff during its heyday concerned receipts. Debates surrounding the tariff always inquired whether it was “for revenue” or “prohibitive.” These terms were ubiquitous in Congressional dronings on the tariff, the tariff easily being the most discussed political issue, slavery included, in America from 1789-1913, even in the antebellum period.

A tariff “for revenue” was one where a rate was set low enough for the good in question to flow into the country in sufficient quantity to bring in increasing receipts to the government. A “prohibitive” tariff was one that was so high, receipts would go up if a rate were lowered. The “Laffer curve” concept was the most discussed theorem in political-economic debates in the United States in the 19thcentury.

A tariff for revenue was that minimally tolerable to the public. A prohibitive tariff not only raised the cost of living; it also required further tax impositions to make up for the lost revenue. When Congressmen suggested prohibitive tariffs, they had to resort to stratagems. In the 1880s, Congress suggested that prohibitive tariffs were good because they yielded government less money, and government was bad. In the 1820s, pro-tariff Northerners had the votes, so they were relieved of having to justify a prohibitive tariff to South Carolina. This was one of the reasons South Carolina felt less and less need to move away from its slave economy on ethical grounds.

After the income tax was put in place in 1913, the tariff shed its revenue purpose and became exclusively a vehicle for cronyism. Therefore it got very high—so high, in 1930, that it shut out imports that were responsible for financing upwards of a fifth of the American banking system’s loan portfolio. That system was ruined and the result was the Great Depression. 

In other words, the vast majority of those engaged in commerce, behaving in a free-market manner, harbored no illusions about how human nature plays itself out in the government environment. They just went about their business unfettered by it.


You may know about the January 2017 meeting between Blackwater founder Erik Prince and the crown prince of the United Arab Emirates in the Seychelles, a subsequent get-together in the hotel bar with a Russian, and Prince's testimony about his trip in front of the House Intelligence Committee in November 2017.  

Prince told House investigators that a representative of the Emiratis got in touch with him to ask him to come to the Seychelles to meet top officials, including Crown Prince Mohammed bin Zayed, known as MBZ. Prince, who said he was focused on the oil and minerals trade, told investigators he was hoping for some business. "I'll be direct about it," he told the House. "I think the Obama administration went out of their way to tarnish my ability to do business in the Middle East, and, with a different administration in town, they probably figured that the downdraft wasn't present any more. So I'd been wanting to see [MBZ] for some time."

Prince said he met for about an hour with MBZ and other officials at a Seychelles hotel. At the end of the meeting, according to Prince, the Emiratis "mentioned a guy I should meet who was also in town to see them, a Kirill Dmitriev, from Russia, who ran some sort of hedge fund."

"It's not like I was at a meeting and they invited this Russian guy to the meeting," Prince explained. "It was a matter of, 'Hey, while you're here, there's a Russian guy that we've done some business with in the past, and it'd be interesting for you to meet him." Prince said he met with Dmitriev later at the hotel bar for about 20 or 30 minutes. "We chatted on topics ranging from oil and commodity prices to how much his country wished for resumption of normal trade relations with the — relationship with the USA," Prince said.
And that was it, Prince told the House. He made no arrangements with the Russian, was never in touch with him again, and didn't get any business with the Emiratis, for that matter.

Now Lebanese-American businessman George Nader has told the Mueller team that he was at the meeting, too. All very interesting, but, um, it can hardly be called collusion. The election had transpired over two months earlier.

Another FNC personality is exposed as a failure at marital integrity. Jesse Watters's wife has filed for divorce. They'd married in 2009 and have twin daughters. He is still dating the mistress, a 25-year-old associate producer of his show. (She's been moved over to Laura Ingraham's show.) What is it with that place?

I always enjoy Ed Morrissey's Sunday Reflections at Hot Air. Today's is particularly good. It riffs off of John 3: 14 - 21, which includes, of course, the one-verse encapsulation of the entire Gospel message. The overall passage, though, depicts Jesus being able to make a comparison between Moses lifting up the bronze likeness of a serpent and his own death, because he knew that as a big shot of Jewish theology, Nicodemus, to whom he was speaking, would know that story from Numbers. Morrissey draws in some other scriptural passages to make the larger point about the pattern of the Israelites asking God for favor and then rebelling against him, and how that in turn is a microcosm of the sin in which we're all mired. He ties it all back together by saying we must squarely face the cross.

Here's a moral monster for you: Washington Post deputy editorial-page editor Ruth Marcus says that if tests during either of her two pregnancies had come back positive for Down's syndrome, she would have aborted the person in question, "grieved the loss and moved on."