Tariffs, Hockey Sticks, and the High Cost of Cant

A statesman who taxes a hockey stick at fifty per cent presents us, in miniature, with the whole genius of the commercial system I once called mercantile. The White House, I am told, invokes an old statute to justify heavy duties on Canadian wine, cement, and other wares, professedly in retaliation for that country’s discrimination against American products. Thus oppression is avenged by dearer skates and dearer cellars. In such disputes, each party complains of the other’s partialities while carefully concealing its own. The quarrel is ostensibly about justice between nations; the substance is almost always about advantage to some class of traders within them.

We ought, therefore, to begin where the consumer must begin, with the price. A duty of fifty per cent is not paid by some shadowy foreigner; it is paid, in the first instance, by the home buyer who must now surrender more of his labour to obtain his glass of wine or his bag of cement. If the foreigner is thereby excluded, the home producer gains an easier sale, not by superior industry or frugality, but by the law’s artificial favour. When I wrote on the Wealth of Nations, I remarked how often such contrivances sacrifice the consumer to the producer; the principle has not improved with age.

The damage is not confined to the shop-bill. By raising a wall on the frontier, the legislator narrows the market within which the division of labour can be carried. Fewer Canadian bottles on the shelf mean fewer specializations in vineyards and logistics; dearer imported cement means fewer building projects, less employment for masons and carpenters, worse dwellings for the poor. Opulence advances when markets are widened, carriage cheapened, and trade rendered easy; it halts, or even retreats, when trade is vexed for reasons of state. A tariff is a tax upon the very progress of industry which politicians are so fond of applauding in their speeches.

Who then benefits so much as to make this sacrifice appear tolerable? Not the labouring poor, whose wages buy less. Not the public revenue in any durable sense, for the tax that destroys a trade soon destroys itself. The visible winners are a cluster of home producers—wine growers, cement manufacturers, makers of sporting goods—who enjoy, for a time, higher prices and an easier market. People of the same trade, I observed long ago, seldom meet without contriving some device to raise prices; when they can dress that device in the garments of patriotism and retaliation, the plot is only the more perfect. Every such petition deserves the most suspicious attention.

It will be answered that Canada first discriminated, and that retaliation is but justice in another form. Perhaps; I have not the facts to weigh each grievance, and I do not pretend to an oracular knowledge of these modern statutes. Yet the impartial spectator, that cool judge within the breast of every tolerably virtuous person, will ask whether two injuries make one equitable system, or merely a pair of unjust burdens on two innocent publics. To punish a foreign legislature by taxing one’s own people is a singular kind of patriotism, resembling the man who burns his own house that his neighbour may be smoked.

Across the ocean, a new British minister speaks, I am told, of giving ordinary citizens “breathing space” and has begun with a cut to a tax on electricity. Here at least the declared object is not to exclude a foreign rival, but to lessen the cost of living. If the measure truly lowers the price of so universal an article, it enlarges, in some small degree, the command which the labourer has over the necessaries and conveniences of life. When I wrote that the real wealth of a nation is the annual produce of its land and labour as consumed by its people, I had chiefly in view this condition of the many, not the grandeur of the few.

Yet even here, the man of system lurks in the wings. It is one thing to ease the poor man’s bill by removing an unnecessary burden; it is another to imagine that a single tax cut can, by some magical arrangement of the great chess-board of human society, relieve all hardship without new costs elsewhere. If the revenue thus forgone is replaced by more artful imposts upon trade, or by debts charged upon future generations, the breathing space may prove as illusory as the satisfactions which lure the poor man’s son into a life of incessant toil. The impartial spectator will judge both tariff and tax-cut, not by their flourish, but by their settled effects on the price of life’s necessaries for those who labour.