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Thursday, November 03, 2011:

Why protectionism is bad for workers

To Workingmen

by Henry George

HTML version edited by
Gavin R. Putland
June 22, 2007.

Reposted November 3, 2011.

Editor's preface

“To Workingmen” was first published in Belford's Magazine (New York), vol.1, no.1 (June, 1888), and promptly reprinted in the author's own weekly paper, The Standard (New York, June 16, 1888). It is a concise but thorough demolition of protectionism, written from the viewpoint of working people. “[W]hat is labor, that it should need protection?” writes George. “... Is not labor the one thing that can take care of itself, that requires but access to the raw materials of nature to bring forth all that man's needs require?” No man will work for an employer for lower wages than he could get by employing himself. But to employ himself he needs a place to set up his enterprise; that is, he needs access to land. Where the tax system allows speculators to hoard all the land, access to land will be expensive, and real wages consequently low. Where the land is not all claimed, or where the tax system forces land owners to use their land productively or sell or let it to someone who will, access to land will be cheap, and wages consequently high. “Our higher wages are because of our cheaper land...” says George. What workers need is access to land, not “protective” tariffs that inflate their cost of living.

But the vested interests whose profits were inflated by protective tariffs prevailed: in the 1888 U.S. Presidential campaign, which George mentions in his second paragraph, Grover Cleveland campaigned against high tariffs, and lost.

The text of this HTML edition is taken from The Complete Works of Henry George, Vol. III: The Land Question (New York: Doubleday Page & Co., 1904; republished in PDF [6615kB] and DjVu [5536kB] by the University of Georgia). The spelling has been Americanized (Belford's Magazine was originally Canadian), and the punctuation occasionally modernized. Subheadings, hyperlinks, boldfacing, and brief explanatory notes [indicated by square brackets] have been added. The italics are partly original and partly added by the editor.


Beware of false friends

I AM one of those who believe that it is possible for workingmen to raise wages by an intelligent use of their votes; that this is the only way in which wages can be generally and permanently raised — the only way labor can obtain that share of wealth which is justly its due. And I am one of those who believe that this is the supreme object that workingmen should seek in politics. In seeking to raise wages, to improve the conditions of labor, we are seeking not the good of a class, but the good of the whole. The number of those who can live on the labor of others is and can be but small as compared with the number who must labor to live. And where labor yields the largest results to the laborer, where the production of wealth is greatest and its distribution most equitable, where the man who has nothing but his labor is surest of making the most comfortable living and best provide for those whom nature has made dependent upon him, there, I believe, will be the best conditions of life for all — there will the general standard of intelligence and virtue be highest, and there will all that makes a nation truly great and strong and glorious most abound.

Believing this, I am glad that the presidential campaign this year [1888] is to turn, not upon sectional issues or matters of party or personal character, but upon a great question of national policy — the question of protection or free trade — and that this is to be discussed, as it is most important that it should be discussed, in its relation to wages. What is thus entering our politics is more than a question of higher or lower [import] duties, or no duties at all — it is the most important of all questions, the great labor question. And what is really involved in the decision that will be asked of you, as to whether protection or free trade is best for the interests of labor, is whether the emancipation of labor is to be sought by imposing restrictions or by securing freedom. Until the men who would raise wages and emancipate labor settle that for themselves, they can not unite to carry out any large measure.

In the coming campaign the most frantic appeals will be made to workingmen to vote for protection. You will be told that “protection” means “protection to American labor”; that that is what it was instituted for, and that is why it is maintained; that it is protection that makes this country so prosperous and your wages so high, and that if it is abolished or even interfered with, mills must close, mines shut down, and poor labor stand idle and starve until American workmen are forced to work for the lowest wages that are paid in Europe.

Don't accept what any one tells you — least of all what is told you by and on behalf of those who have an enormous pecuniary interest in maintaining what is styled “protection”. Hear what they say, but make up your minds for yourselves. There is nothing in the tariff question that cannot readily be mastered by any one of ordinary intelligence, and the great question whether what is called “protection” does or does not benefit the laborer can be settled for himself by any one who will ask himself what protection really is, and how it benefits labor.

Privilege by another name

Now what is “protection”? It is a system of taxes levied on imports for the purpose of increasing the price of certain commodities in our own country so that the home producers of such commodities can get higher prices for what they sell to their own fellow-countrymen.

This is all there is to “protection”. Protection can't enable any American producer to get higher prices for what he sells to people of other countries, and no duty is protective unless it so increases prices as to enable someone to get more from his fellow-citizens than he could without protection. How “protection” may thus benefit some people is perfectly clear. But how can it benefit the whole people? That it may increase the profits of the manufacturer, or the income of the owner of timber or mineral land, is plain. But how can it increase wages? “Protection” raises the price of commodities. That may be to the advantage of those who buy labor and sell commodities. But how can it be to the advantage of those who sell labor and buy commodities?

Never mind the confused and confusing claims that are put forth for protection until you can see how it can do what is claimed for it.

A private tax on workers

Ask yourselves what protection is and how it operates, and you will see that the only way it can benefit any one, or by “encouraging” him give him power to encourage or benefit any one else, is by enabling him to get from his fellow-citizens more than he could otherwise get. This is the essence of protection; and if it has any stimulating or beneficial effect it must be through this. The protective effect of any protective duty is precisely that of a subsidy paid by the government to some people out of taxes levied on the whole people. The only difference is, that in what is called the subsidy system the government tax-gatherers would collect the tax from the whole people and pay it over to some people, while in what is called the protective system the government tax-gatherers collect a tax on foreign goods so as to “protect” the favored people, while they for themselves collect taxes on their fellow-citizens in increased prices.

Now if workmen get any benefit from what is thus called protection, it can only be through the protected employers and by their favor. The protective system gives nothing whatever to labor. It gives only to the employers of labor, and only to some of them. And these some are necessarily comparatively few. It is utterly impossible that any protective tariff can “protect” the largest industries of any country, for a duty can only have a protective effect when levied upon goods some of which are produced in the country and some of which are imported or would be imported if it were not for the duty. Import duties cannot be levied upon things of which we produce enough for ourselves and consequently do not import, or of which we produce more than enough for ourselves and consequently export; and if levied upon things we do not produce and must import or go without, they can have no protective effect. In every country, therefore, the protected industries can only be those in which but a small part of the labor of that country is employed. In this country, out of over seventeen millions of laborers of one sort or another, those employed in the protected industries do not amount to more than 900,000, and these industries, it is to be observed, are those in which large capital is required and in which it is impossible for the mere laborer to employ himself.

Now, would it be possible by levying a general tax (especially a tax which, like all protective taxes, bears on the poor far more heavily than on the rich, on the laborer far more heavily than on the capitalist), and paying out the proceeds directly to the laborers engaged in certain industries, to raise wages, or even to raise wages in those industries? Everyone who thinks a moment will say no! If we were to levy such a tax and pay out the proceeds directly to glass workers or iron-ore miners or the hands in cotton or woolen factories, in addition to what they get from their employers, the consequence would simply be that labor would be attracted from the unsubsidized to the subsidized employments, and wages would go down to a point that would give the subsidized laborers no more than they got without the subsidy!

But if such a plan of raising wages is utterly hopeless, what should we say of a plan to raise wages by levying a tax upon all laborers and giving the proceeds, not to all laborers, or even to some laborers, but only to some employers? This is the plan of protection. If protection can increase or maintain wages, it must be in this way. What protective duties actually do is to increase the profits of certain employers — to allow them to collect a tax from their fellow-citizens without any stipulation as to how they shall spend it. To suppose that wages can be increased in this way is to suppose, in the first place, that these protected employers voluntarily give up their increased profits to their workmen, and to suppose, in the second place, that the increase of wages which the benevolence of the protected employers thus causes in industries which at the best employ not more than 1,500,000 people can raise wages in occupations that employ 20,000,000 people!

Reduction of real wages

Observe also that the first step in this precious scheme of plunder which is called “protection to American labor” is really to reduce wages. Wages do not really consist of money. Money is the mere flux and counter of exchanges. What the man who works for wages really works for are commodities and services for which he pays with the money he receives in wages. Necessarily, therefore, to increase the price of the commodities he buys with his money-wages is to decrease his real wages. For instance, a good many of the highly protected American laborers in the State of Pennsylvania (as in some other States) are compelled by their benevolent protectionist employers to make their purchases in what the highly protected American laborers call “pluck-me stores”. In fact, it is through these pluck-me stores that these highly protected American workingmen get their wages, as the pluck-me bill is deducted before any money is turned over to them on pay days; and many of them, being kept constantly in debt, hardly see a dollar from one year's end to another. Now, it is evident that if one of these employers adds a dollar to the prices his men have to pay for the goods they must buy in his “pluck-me”, he just as effectually cuts down their real earnings as though he reduced their wages by a dollar. And so it is evident that the protective taxes which we impose for the purpose of increasing the prices of commodities must in the same way operate to reduce the real wages of labor. Therefore the protective scheme for raising wages fully stated is simply this: Wages generally are in the first place reduced by taxes which increase the price of certain commodities, in order (1) that a comparatively few employers who profit by this increase in the price of what they have to sell may voluntarily increase the wages of their employees, and (2) that this benevolent raising of wages in some occupations may cause the raising of wages in all occupations!

Is it not time that American workingmen were done with such a preposterous scheme as this? There is one sense, and one sense alone, in which protection may raise wages: when real wages are low enough, it may to some extent raise nominal wages. If the protected Pennsylvania employer were to keep on raising the prices in his workmen's “protected home market”, the pluck-me store, he would come to a point where their nominal wages would not enable them to get enough food and clothing to support life, and where, consequently, he would be forced to increase their nominal wages in order to prevent their removal or starvation. In this way protection, like a depreciation of currency, may sometimes increase nominal wages. But it can never increase real wages. Whomsoever protection may benefit — and analysis will show that it cannot even benefit the employing capitalists whom it assumes to benefit, unless they are also protected from home competition by some sort of a monopoly — it cannot benefit the laborer. It is to the laborer a delusion and a fraud — a scheme of barefaced plunder that adds insult to injury: that first robs him, and then tells him to get down on his knees and thank his robber!

Old privilege; new excuse

The impudent pretence that what is called protection is protection to labor is peculiar to the United States, and is an afterthought [even] here. When this utterly un-American system of robbing the many for the benefit of the few was introduced into this country, it was not pretended that it was to protect labor or to compensate for high wages. It was asked for the protection of capital — to give capitalists a bonus — so that here, where interest was high, they could engage in the same sort of manufacturing businesses as in Europe, where interest was low. It was asked for the “protection of infant industries” — to give them artificial support for a few years, when, it was then claimed, they could stand alone without any more protection.

But men who once secure the enactment of laws to enable them to take the earnings of others never want [i.e. lack] an excuse for demanding the continuance of the privilege. Now that United States 3% bonds are at a premium [i.e. trading at a lower interest rate, hence a higher price], it would be preposterous to talk of protecting American capital against the cheaper capital of Europe; and now that the great protected industries have become very industrial giants, it would be only ridiculous to talk of protecting “infant industries”. So we are now told that protection is “protection for labor” and is made necessary by our higher wages. In fact, we are now told that it is because of protection that wages are so high and the country so prosperous.

The pretence is as hollow and insulting as the pretence of the slave-owners that slavery was for the protection of the slave. Special privilege needs protection, and monopoly needs protection, and all legalized systems of robbery that enable men who do no labor to grow rich, by appropriating the earnings of those who do labor, need protection. But what is labor, that it should need protection? What is labor, that votes should have to be bought and coerced, and lobbyists maintained, and congressmen interested, and newspapers subsidized, and our coasts and borders lined with seizers and searchers and spies and informers and tax-gatherers, to keep it from falling to pauperism? Is not labor the producer of all wealth? Is it not labor that feeds all, clothes all, shelters all, and pays for all? Is not labor the one thing that can take care of itself, that requires but access to the raw materials of nature to bring forth all that man's needs require? What benevolent capitalist drew a tariff wall around Adam to enable him to get a living and bring up a family? Whatever else may need protection, labor needs no protection. What labor needs is freedom! Not the keeping up of restrictions and the perpetuation of monopolies, but the tearing of them down.

Hypocrisy of protectionists

Who are these benevolent individuals, so anxious to protect the poor, helpless workingman, so fearful lest American labor may fall to the level of “the pauper labor of Europe”? The coal barons and the factory lords, the iron and steel combinations, the lumber ring, and the thousand trusts that, having secured the imposition of duties to keep out foreign productions, band themselves together to limit home production and to screw down the wages of their workmen. And are not these men who are so anxious, as they say, to protect you from the competition of “foreign pauper labor” the very men who are most ready to avail themselves of foreign labor?

Do you know of any protected employer, no matter how many millions he may have made out of the tariff, who pays any higher wages to labor than he has to? Is it not true that in all the protected industries wages are, if anything, lower than in the unprotected industries? Is it not true that in all the protected industries workmen have been compelled to band themselves together to protect themselves, and that these protected industries are the industries notable above all others for their strikes and lock-outs — the bitter and oft-times disastrous industrial wars that labor is compelled to wage to prevent being crowded to starvation rates? Are these the men whose protection you need?

It is impossible for me in a brief article like this to go over all the claims and expose all the fallacies of protection. That I have already done, in anticipation of the coming before the people of this question, in a little book entitled Protection or Free Trade, in which I have shown the full relations of the tariff question to the labor question. All I want here to do is to urge every American workingman to think over the matter for himself, and to decide whether what is called “protection” is or is not in the interests of the men who earn their daily bread by their daily labor.

For if, as protectionists tell us, our country is so prosperous and wages are so high because of the protection we already have, then we certainly ought to bend all our efforts to get more protection. However prosperous this country may be when viewed through the rose-colored spectacles of the millionaire, and however high wages may be from the standpoint of those who think that the natural wages of labor are only enough to keep soul and body together, there will be no dispute among workingmen that this country is not prosperous enough and wages not high enough. Whoever may be satisfied with things as they are, the great mass of American citizens who work for a living are not satisfied and ought not to be satisfied. Monstrous fortunes are rolling up here faster than they ever did in the world before; but the great body of the American people get but a poor hand-to-mouth living, and find year after year passing without anything laid by for a rainy day. Our rich men astonish the rich men of Europe by their lavish expenditure, and the daughters of our millionaires are sought in marriage by European aristocrats of the bluest blood; but the tramp is known from the Atlantic to the Pacific; the proportion of our people who are maintained by charity, the proportion who are confined in prisons and lunatic asylums, the proportion of our women and children who must go to work, is steadily increasing. And the proportion of men who, starting with nothing but their ability to labor, can become their own employers, or can hope out of the earnings of their labor to maintain a family and put by a competence for old age, is steadily diminishing. “Statisticians” may pile up figures to prove to the American workingman how much better off he is than he used to be, and the editors of protection papers may picture the poverty of European workingmen in the darkest colors to show him how proud and happy and contented he ought to be. But the labor organizations, the strikes, the bitter unrest with which the whole industrial mass is seething, show that he is not contented. If protection gives prosperity, if protection raises wages, then in heaven's name let us demand more protection, even though we utterly destroy all foreign commerce, put a line of custom-houses between every State, and shut in our rich men so that they cannot go to Europe and spend their money on foreign paupers, as Mr. Blaine is doing. But if it does not — then let us sweep away what protection we have. Let us raise the banner of equal rights, and try the way of freedom!

The true determinant of wages

It is not protection that has made wages higher here than in Europe. If protection could make wages high, why has it not made wages high in Germany and Italy and Spain and Mexico? Why did it not make wages high in England when it was in full force there? Wages were higher in the United States than in Europe before we had any protection; and if they have on the whole remained higher, it is in spite of protection. Our higher wages are because of our cheaper land — because labor can more readily obtain access to the natural materials and opportunities of labor. The secret of our prosperity, of our rapid growth, of our better conditions of labor, is simply that we have had the temperate zone of a vast and virgin continent to overrun, and that it has taken a long while for monopoly to fence it in. As it is gradually fenced in, as the tribute that labor must pay to monopoly for the use of land becomes higher and higher, so must our social conditions, tariff or no tariff, approximate to the social conditions of Europe.

To give labor full freedom; to make wages what they ought to be, the full earnings of labor; to secure work for all, and leisure for all, and abundance for all; to enable all to enjoy the advantages and blessings of an advancing civilization — we must break down all monopolies and destroy all special privileges.

The rejection of protection and the abolition of the tariff will not of itself accomplish this, but it will be a long step towards it — a step that must necessarily be taken if labor is to be emancipated and industrial slavery abolished. Until the workingmen of the United States get over the degrading superstition of protection they must be divided and helpless. But when they once realize the true dignity of labor, once see that the good of all can only be gained by securing the equal rights of each, then they can unite, and then they will be irresistible.

And this is the question that you will be asked this year to answer by your votes. Are you for restriction or are you for freedom? Are you in favor of taxing the whole people for the benefit of a few capitalists, in the hope that they will give to their workmen some of the crumbs? or are you against all special privileges and in favor of equal rights to all?

To the man who thinks the matter over there can be no question as to what answer best accords with the interests of workingmen. It is possible for the few to be come rich by taxing the many. But it is not possible for the many to become rich by taxing themselves to put the proceeds in the hands of the few.

Labor cannot be hurt by freedom. The only thing that can be hurt by freedom is monopoly. And monopoly means the robbery of labor. What labor needs is freedom, not protection; justice, not charity; equal rights for all, not special privileges for some.

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