Lake Ontario, Lake America, and the Price of Cheap Glory

The scene is almost farcical. On one shore of a great lake, a government erects a giant sign proclaiming “Lake Ontario. Now and Always.” On the other, the chief magistrate shares a spectacle of himself kicking down that emblem, raising a “Lake America” sign, and dancing to a popular air. Yet this operatic contest over a name conceals a more serious quarrel. Behind the rhetoric lies an escalating trade dispute, in which a 50% duty is imposed on steel from the northern neighbour, and retaliatory tariffs are levied in return. The eye is drawn to the giant letters on the bank; the real writing, less visible, is in the ledgers of merchants and the household budgets of workmen.

In my inquiries into the nature and causes of the wealth of nations, I argued that the true opulence of a country consists not in its titles, nor in the splendour of its public ceremonies, but in the annual produce of the land and labour as it comes, in the end, to be consumed by the people, and especially by the labouring poor. A tariff of fifty in the hundred on a principal material of industry is not borne by the air or by the lake; it is borne in some proportion by those who build with steel, who work upon it, and who purchase the things of which it is the substance. The nominal object may be to punish a foreign producer; the real effect is commonly to raise prices at home, narrow the market abroad, and cramp that division of labour which is the great engine of improvement.

Such impositions rarely fall from heaven; they commonly rise from the counting-house. When a government lays a heavy duty upon a foreign commodity, we may safely suppose that some part of the domestic interest in that trade has not been idle. When people of the same trade, whether of iron or of finance, turn their thoughts to politics, their proposals deserve the most suspicious attention, for they have a constant temptation to convert the public power into a private monopoly. To represent a 50% tariff as an act of patriotism is to put the ancient livery of the state upon what is often a very modern conspiracy against the public. The flag is displayed at the border; the bill is presented at the shop.

The retaliatory measures of the neighbouring government follow the same melancholy logic. Injured pride dresses itself as prudence, and answers one impediment with another, as if two obstructions made a clear road. Each side proclaims that it is merely responding, merely defending its honour, merely inscribing its chosen name upon the waters. Yet every new duty fragments what once was a common market into separate, smaller fields of exchange, in which the division of labour must be less perfect, the competition less brisk, and the produce less abundant. In the pin factory I once described, the efficiency arose from many hands cooperating under one roof; to divide the factory by a wall for the sake of a quarrel over its name would be an evident folly, yet this is what tariff wars accomplish on a continental scale.

The naming contest itself illustrates a different, though related, infirmity of human nature. Men are far more moved by what is seen than by what is felt at a distance, more by the applause of the moment than by the lasting though silent approbation of the impartial spectator within. To see a ruler trample upon a rival sign, raise his own, and dance in triumph, gratifies at once that childish love of play and that more dangerous passion for status and domination. The erection of a monumental “Now and Always” across the water likewise flatters the vanity of permanence. Yet neither sign adds a single fish to the lake, a single bushel to the harvest, or a single day’s wages to the poorest labourer who dwells along its shores.

In The Theory of Moral Sentiments I urged that praise-worthiness is of more consequence than praise, and that to be loved without being lovely is worth nothing. If we consult the impartial spectator—well informed, unmoved by faction, and placed at some distance from the noise—what judgment would he pass on this contest of signs and tariffs? He would, I think, remark that the honour of a people is not advanced when their rulers play at drama while quietly taxing their industry. He would see that true dignity does not consist in what one calls a lake, but in how justly one treats those whose subsistence depends upon the free higgling and bargaining of the market.

Nor should we imagine that such measures will be corrected by the invisible hand alone, as if folly, once armed with authority, were sure to defeat itself speedily. The damage of ill-contrived restraints often falls gradually and diffusely: a little higher price here, a postponed investment there, a workshop never opened, a young workman never hired. No magistrate receives a petition from the bridge that was never built or the ship that was never launched. Grand gestures and theatrical affronts, on the other hand, command every eye and ear. Thus nations are tempted to purchase a momentary exultation with a long train of unseen inconveniences. To prefer such baubles to substantial improvement is not only a political error; it is, in the end, a failure of moral imagination.

The impartial spectator, if he could speak across the water, would ask each side a very plain question: are you willing that the poorest of your countrymen should pay more for his tools, his dwelling, and his food, in order that you may inscribe your chosen word upon a body of water that remains, in its nature, indifferent to all your quarrels? Until that question is answered honestly, the great lake will reflect, not the grandeur of nations, but the vanity of their rulers.