by James Perloff, James Perloff:
Back in the 1980s, I noticed something very odd. I was researching my somewhat seminal conspiracy book The Shadows of Power, published by Western Islands, book arm of the conservative John Birch Society. In doing so, I went through every issue of Foreign Affairs, flagship journal of the Council on Foreign Relations (CFR), then the highest connection between the federal government and what we now call “the Deep State.”
What was so odd? The CFR, chaired by David Rockefeller (later “honorary” chairman) consistently advocated “free trade.” So much so, in fact, that for many years, virtually every issue of Foreign Affairs carried a picture of a roller coaster on its rear cover, in an ad glorifying the benefits of free trade. By “free trade,” of course, we refer essentially to unrestricted trade between nations, unhampered by tariffs or quotas.
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What bothered me was that at the John Birch Society, we also championed free trade. On other issues—like the UN, globalism in general, socialism, and Deep-State control of government—we were the CFR’s mortal enemies. Yet when it came to free trade, we were joined at the hip.
I asked people at Birch headquarters about the contradiction. No one seemed to have a good answer. I would hear something like, “Well, those CFR guys sometimes goof up,” but that didn’t satisfy me. I knew the Council members were shrewd strategists with devious, long-term plans for America.
Now I apologize for potentially boring my readers by paying tribute to the man who cleared up the enigma for me—not only the JBS/CFR mystery, but the realities of “free trade,” why tariffs are normally good, but why (under Trump) they will probably bring disaster.
That man was William J. Gill (1932-2008). A conservative journalist, Gill published his first book in 1970, when I was still a snot-nosed know-nothing hippie college freshman. I don’t exactly recall when I first met Gill, but since his personally inscribed copy to me of his book Trade Wars Against America is dated 1990, it couldn’t have been after that.
OK, let’s unravel the mystery of why the John Birch Society (and many other conservatives) formed this unholy “free trade” alliance with the anti-American Deep State.
First, the Conservative Outlook
The conservative perspective, while sincere, was based on a misunderstanding of the concept of free trade, which is generally acknowledged to have originated with Scottish economist Adam Smith in his 1776 book The Wealth of Nations.
Smith reasoned that the world’s people should be allowed to freely trade, based on each country’s capacity to specialize and produce goods efficiently. Why should governments interfere with people’s right to engage in trade?
Free trade sounds good so far, right?
But unfortunately, world economic conditions drastically changed after Smith published his seminal work just under 250 years ago (uh, oh, better not get me going on that number again, especially with Klaus Schwab’s talk of an economic “Great Reset”).
New situations emerged that Smith had not foreseen: especially the advent of socialism and communism. Smith assumed that the cost of goods would be determined by the “efficiency” of whoever produced it. Under these new political systems, however, workers became slaves of the state. The government—not the market—dictated their wages. Of course, labor’s cost is among the most important factors in a product’s price.
But America was still essentially operating under free enterprise, with salaries determined largely by personal productivity, qualifications, market demand, and sometimes union negotiations. In the mid-20th century, American workers still earned a decent living wage. A middle-class dad on one salary could support a family, enjoy good benefits, own a home, and one or two cars.
Besides this, America had a number of safety and pollution requirements that many foreign nations, such as China, did not require themselves to abide by. This made their manufacturing costs—and goods—cheaper.
Furthermore, many of our trading partners began subsidizing their industries, while in America it was still mostly “you’re on your own.” Needless to say, subsidized products are cheaper than those that aren’t. Subsidies themselves have a cost, of course—the expense must be borne by the country’s taxpayers—but wiping out an American competitor could make it well worth it.
All of these dimensions—wages, benefits, protective laws, and subsidies—made American products more expensive than imports. And to keep U.S. enterprise alive and well, America required tariffs and quotas. For those who don’t know it, America first became a thriving productive nation thanks to the tariffs the Founding Fathers wisely instituted.
You see, Adam’s Smith’s vision of a world of “free trade” only worked if nations played by the same (or at least comparable) rules. When they didn’t, America had a perfect right to protect its own industry.
But conservatives and “freedom marketeers” didn’t see it that way. After all, shouldn’t consumers have the “freedom to choose” whatever goods were cheapest?
