WEBVTT 00:00.050 --> 00:08.270 Hello and welcome to another episode of the Unanimity podcast. I'm Mark Thornton at the Mises Institute. 00:08.950 --> 00:21.210 The Unanimity podcast is a long form podcast about a general subject that is of lasting value in terms of its content. 00:22.190 --> 00:28.670 In contrast, the Minor Issues podcast deals more with current events, current affairs. 00:29.810 --> 00:33.750 And so this is a little bit of a hybrid. 00:34.630 --> 00:43.870 The title of this episode is Why Smart People Are Rightly Confused About Tariffs. 00:45.010 --> 00:50.710 But it will drop in the same time slot as the Minor Issues podcast. 00:50.710 --> 00:58.810 I encourage everyone to go back and look at the previous episodes of the Unanimity podcast. 00:59.990 --> 01:01.550 Thank you for listening. 01:02.830 --> 01:13.150 I've had several friends, several very smart friends, almost menace level friends, asked me about tariffs. 01:13.150 --> 01:17.190 And they were generally confused. 01:18.010 --> 01:26.770 And so this episode is addressing that confusion of my very intelligent friends. 01:27.490 --> 01:41.870 But also it has a lasting value because it's something that Americans have been confused about for the entire period of American U.S. history. 01:43.530 --> 01:47.490 So why don't we understand tariffs? 01:50.130 --> 01:54.870 Well, the first reason is that it's really a special name. 01:56.490 --> 02:04.490 You know, tariffs are essentially a tax and everyone understands a tax pretty well. 02:05.310 --> 02:14.450 In the sense that, you know, taxes is the government taking your possessions, your wealth, your money, 02:15.130 --> 02:26.470 and it's creating disincentives for you to work, to save, to invest, and anything that the tax is placed on. 02:27.150 --> 02:34.850 So while we understand taxes pretty well because they directly harm us, 02:36.270 --> 02:46.830 tariffs, using this different name for a tax on imported goods or even exported goods, adds to the confusion. 02:46.830 --> 03:04.070 And of course, the second reason that people get confused about tariffs is that there are always a tendency to muddle the issue with not just tariffs, 03:04.430 --> 03:07.630 but also non-tariff barriers. 03:07.630 --> 03:22.450 So sometimes a protectionist policy, which also confuses the issues because tariffs are not really protecting us at all. 03:23.270 --> 03:29.890 But very often these non-tariff barriers get lumped in, things like quotas, 03:29.890 --> 03:43.270 so that we're only allowed to import a certain amount of a particular good or outright prohibitions of certain goods. 03:44.260 --> 04:00.910 And then of course there's also the general tariff where the taxes on goods imported apply to all goods that are imported, 04:01.290 --> 04:11.950 but very often they're targeted tariffs so that the tax only applies to certain classifications of goods 04:11.950 --> 04:26.250 or particular goods or certain sectors of goods, such as putting tariffs on raw materials or putting tariffs on manufactured goods. 04:27.050 --> 04:37.610 And so there's a lot of confusion about what exactly is that policy of protectionism. 04:38.570 --> 04:49.910 And the confusion grows for most people because it's something we simply don't deal with that often. 04:50.390 --> 04:56.230 So taxes we understand because we have to deal with them all the time, every day, 04:57.070 --> 05:03.310 at least in the current situation we pay taxes on just about everything we do. 05:04.310 --> 05:15.550 And it seems like there's multiple layers of taxation on our incomes and on our labor. 05:16.450 --> 05:27.690 So we've got plenty of experience there, but with tariffs it's really something that we think that foreigners have to deal with 05:27.690 --> 05:31.210 or customs officials have to deal with. 05:32.010 --> 05:42.550 Customs officials are basically tax collectors who regulate and collect taxes on imported goods. 05:43.770 --> 05:51.870 It might surprise a lot of people to know that later in his career Adam Smith was a tax collector. 05:52.790 --> 06:05.670 He ran the customs house in the local area where imported goods would actually be taxed and the taxes would be collected. 06:05.970 --> 06:07.750 So we don't have a lot of experience. 06:08.030 --> 06:16.270 I mean most Americans, you know, if you're traveling abroad or foreigners who are traveling abroad, 06:17.170 --> 06:28.470 once you cross the border, sometimes you're accosted by customs officials to declare what you might be importing into the country. 06:28.830 --> 06:36.570 So if you're flying into a foreign country or you're on a cruise ship in the Caribbean, 06:36.570 --> 06:48.050 when you reach home base again you might have to declare what you're importing into the country and pay a tax on it. 06:48.570 --> 07:04.590 But that's usually very little typical experience although from my anecdotal data it seems like most of the people that I know 07:05.590 --> 07:14.070 are smugglers in the sense that they don't officially declare everything that they're importing on their trips. 07:16.250 --> 07:25.130 Now a big thing that adds to the confusion about tariffs and whether or not they're a good thing 07:25.130 --> 07:37.510 is that tariffs in the United States are considered a good thing with respect to 19th century America. 07:38.270 --> 07:50.330 That the United States relied, the federal government relied heavily on income taxes on imported goods. 07:51.330 --> 07:58.530 And the tariff revenues made up a substantial part of the federal budget and that's true. 07:59.810 --> 08:11.670 And the United States also grew as a nation in size, you know, in terms of its land mass. 08:12.510 --> 08:26.370 The United States spread from the eastern seaboard through the south and the midwest and to the west coast during the 19th century. 08:26.450 --> 08:38.390 The population of the United States increased from just a few million people to over 100 million people in that time. 08:38.390 --> 08:50.230 And of course, our economy grew enormously not just because of the size or the population, but in terms of income. 08:50.950 --> 09:03.490 The real income of Americans, the individual American or the individual family or household grew substantially through the 19th century 09:03.490 --> 09:15.910 so that Americans were the highest income earners or at least near the top in the world by the end of the 19th century. 09:15.910 --> 09:29.890 America had become by the end of the 19th century a economic superpower as a result of economic growth. 09:29.890 --> 09:45.190 And historians have confused the issue thinking that tariffs were the source of economic success. 09:45.570 --> 09:59.470 That by protecting certain industries, particularly iron, later steel industries that somehow contributed to American prosperity. 09:59.470 --> 10:03.850 But that's really completely confused. 10:04.730 --> 10:11.690 Tariffs, as I'm going to point out, are unequivocally a bad thing. 10:12.510 --> 10:18.430 There's nothing good economically speaking about tariffs. 10:19.190 --> 10:21.810 So I just want to get that on the table. 10:23.350 --> 10:29.670 They're bad for the economy, both in the short run and the long run. 10:30.090 --> 10:33.970 There's really nothing to be good to be said about tariffs. 10:34.990 --> 10:41.730 And that's, you know, with respect to my smart friends, they realize that. 10:42.560 --> 10:55.190 But then they remember the tale that somehow tariffs were good for America because America did so well in the 19th century. 10:55.850 --> 11:07.010 The real cause and effect here, though, was that America was an incredibly free market economy in the 19th century. 11:07.970 --> 11:15.370 And while the American Civil War was a complete disaster, killing untold numbers of people, 11:18.050 --> 11:29.070 and we were certainly not at peace through the entire time, we were at peace for a substantial amount of the 19th century. 11:29.570 --> 11:33.270 We were on the gold standard in the 19th century. 11:33.270 --> 11:39.570 But most important of all is we had a very free market economy. 11:40.370 --> 11:47.790 The federal government had very little budget, had very little control. 11:49.630 --> 11:55.250 Economists have studied to the extent that they did have controls and the results were bad. 11:55.250 --> 12:09.390 But the overall size of the federal government was so small that it just necessitated the fact that we had a open free market economy, 12:09.470 --> 12:19.330 even if we did have tariffs at very high levels for much of that century. 12:20.230 --> 12:31.050 And even if we did have a lot of unnecessary and sometimes disastrous monetary policy in the 19th century, 12:31.170 --> 12:40.050 the day-to-day activities of the American population were almost completely unregulated by the federal government. 12:40.050 --> 12:50.930 And because Americans were mobile and from state to state and from city to city, 12:51.250 --> 12:58.430 it meant that state and local governments had to compete to a certain degree. 12:59.330 --> 13:12.690 And they couldn't just use draconian policies without threatening to lead to an exodus of their population, their businesses, their entrepreneurs, etc. 13:13.750 --> 13:17.870 And so as a consequence, we had a very free market economy. 13:18.270 --> 13:19.670 Now where do tariffs come in? 13:19.670 --> 13:31.310 Well, tariffs produce very little revenue because people avoid tariffs. 13:32.790 --> 13:40.610 And there's a limit to what you can expect to get out of tariffs in terms of revenue. 13:40.750 --> 13:46.290 They're almost always disappointing the official estimates. 13:46.290 --> 13:57.390 So even though the United States government relied on tariffs for a substantial part of its revenue and its income stream, 13:58.550 --> 14:05.270 the fact that they did rely heavily on tariffs meant that they just didn't have much revenue. 14:05.390 --> 14:07.250 There wasn't much they could do. 14:08.990 --> 14:14.790 And so their revenue sources were relatively small. 14:15.310 --> 14:26.270 In the 19th century, there was tariff revenues and there was revenues from land sales and some excise taxes. 14:27.010 --> 14:34.890 But revenues were very small, which meant that the federal government had to be very small. 14:34.890 --> 14:38.030 And therefore, we had a free market economy. 14:38.250 --> 14:52.370 So you can only say that tariffs were good and contributed to American prosperity to the extent that it put a stranglehold on revenues for the federal government. 14:54.530 --> 15:01.510 And another misconception about tariffs is that tariffs cause the Great Depression. 15:01.510 --> 15:07.270 In 1930, the U.S. government passed the Smoot-Hawley tariffs. 15:08.630 --> 15:19.670 And those were protectionist tariffs to protect American industry and farmers from foreign competition. 15:21.790 --> 15:25.370 But they were not the cause of the Great Depression. 15:26.370 --> 15:39.270 As Murray Rothbard has explained very well, the Federal Reserve, which was a relatively new institution in this 20th century, 15:41.090 --> 15:48.310 because of the tremendous interventions that took place because of World War I, 15:49.730 --> 15:59.710 money and macroeconomic instability was really the rule after World War I. 15:59.830 --> 16:06.150 The Federal Reserve was actually instead of a passive institution, it was an active institution, 16:06.650 --> 16:12.270 and it set us up for a depression by the end of the 1920s. 16:12.270 --> 16:18.610 We were going to pretty much have a depression at the end of the 1920s, no matter what. 16:19.270 --> 16:25.210 Now, two of the two things helped make that depression great. 16:26.170 --> 16:32.330 The first one was Herbert Hoover's response to the Great Depression. 16:32.690 --> 16:39.750 Hoover was not a free market capitalist, but he was very much an interventionist, 16:39.750 --> 16:42.790 almost a progressive in that sense. 16:44.510 --> 16:50.390 And he took drastic actions as much as the federal government had power to do, 16:50.530 --> 16:54.750 and the moral suasion that the White House provided. 16:56.650 --> 17:05.250 He launched himself with the stock market crash into moral suasion to keep prices high, 17:05.250 --> 17:07.690 to keep wages high. 17:08.250 --> 17:14.150 And when 1930 came around and we were in the depths of the depression, 17:15.270 --> 17:22.990 the Smoot-Hawley legislation made its way through Congress as sort of a last-ditch effort 17:22.990 --> 17:28.150 to help save particular American voting blocks. 17:30.010 --> 17:37.830 And Hoover, who had opposed the idea for a long time, ended up signing the legislation, 17:38.250 --> 17:43.910 and that made the Great Depression great. 17:44.390 --> 17:48.010 It made it much worse than it would have otherwise had been, 17:48.550 --> 17:53.970 but it was part and parcel of Hoover's overall approach. 17:53.970 --> 18:04.310 So he was urging American businesses to keep prices high and to keep wages high, 18:04.630 --> 18:12.150 and that's one thing that tariffs do is, in terms of protectionism, 18:12.610 --> 18:20.910 is they help keep prices high and they help keep wages in certain industries at least high. 18:21.670 --> 18:29.150 But unfortunately, higher prices and higher wages as you're going into a depression 18:29.150 --> 18:32.010 is really the last thing you want. 18:32.790 --> 18:42.690 Austrians typically advise that deflation is really the solution to a depression 18:42.690 --> 18:51.570 where you allow prices and you allow wages to fall, to reestablish equilibrium in the economy. 18:52.130 --> 18:58.090 So while tariffs did not cause the Great Depression of the 1930s, 18:58.090 --> 19:03.170 that was the work of the Federal Reserve, and everyone pretty much agrees with that, 19:03.790 --> 19:12.070 you'll get a general consensus that Smoot-Hawley was not the cause of the Great Depression, 19:12.070 --> 19:16.930 but everybody also agrees that it made things much worse. 19:18.750 --> 19:30.550 And so, again, it's a cause-and-effect mixture that is confusing Americans here. 19:31.510 --> 19:43.270 It would be like if we went back to 2010 with Auburn University's national championship football team, 19:43.970 --> 19:54.750 and every time Auburn was losing a game, I would switch the chairs that I was in while I was watching the game, 19:54.750 --> 20:01.650 and Auburn would go from losing to winning the game. 20:02.690 --> 20:10.570 And so I would argue that me switching chairs during the game whenever Auburn was down 20:10.570 --> 20:15.970 was the reason Auburn University won the national championship in football. 20:17.610 --> 20:26.190 And I still hold to that position, but most people would argue that I'm confusing cause-and-effect, 20:26.690 --> 20:33.870 and that my changing chairs during the football game had really no impact 20:35.270 --> 20:39.350 about how the season turned out for the Auburn football team. 20:40.590 --> 20:48.790 Okay, so we have many good reasons to be confused about tariffs in general 20:49.350 --> 20:52.790 and tariffs specifically in American history. 20:54.350 --> 21:05.090 So when we come to today, as we begin 2025, we're told that tariffs are going to do all sorts of things. 21:06.470 --> 21:12.590 President Trump used tariffs in his first term. 21:13.610 --> 21:20.630 Those tariffs were kept by President Joe Biden and actually expanded in some respects, 21:21.470 --> 21:25.650 and now President Trump in his second term is coming back in 21:25.650 --> 21:30.250 and claiming that tariffs are going to do all sorts of good things. 21:31.190 --> 21:35.310 The first and most general thing is it's going to get back at China, 21:36.630 --> 21:46.130 and I'm not exactly sure or could I describe a clear game plan here, 21:46.330 --> 21:53.430 but President Trump has announced that he's going to place a general tariff 21:53.430 --> 21:57.390 on the importation of Chinese goods. 21:59.650 --> 22:07.430 He's also announced that he's going to put tariffs on goods coming in from Mexico and Canada. 22:11.430 --> 22:16.290 And the goals for this is to stem the tide of illegal immigration, 22:16.710 --> 22:23.650 to stem the tide of illegal drugs coming in from those countries, 22:23.650 --> 22:31.250 as well as supporting American jobs and American factories and things of that nature. 22:33.650 --> 22:40.430 Now, I guess both with the Chinese and the Mexican and Canadian tariffs, 22:43.510 --> 22:49.550 it's a clear mixture here of economic policy in the form of tariffs 22:49.550 --> 23:00.490 and foreign policy, and it appears to be a type of negotiating tactic. 23:01.990 --> 23:16.750 But all of those problems can be quickly and effectively dealt with by specific policies, 23:16.750 --> 23:25.430 specific economic policies that would have really nothing directly to do with China, 23:25.970 --> 23:34.010 Mexico or Canada, but more or less cleaning up our own policy agendas. 23:36.550 --> 23:47.270 It's not so much that we Americans benefit, for example, from cheap importations of Chinese goods 23:47.530 --> 23:52.010 and goods coming in from Mexico and from Canada. 23:53.410 --> 24:03.750 We get an enormous amount of resources and goods from all three of those countries 24:03.750 --> 24:10.830 that come into us at lower prices than we ourselves can produce. 24:11.570 --> 24:20.790 But that doesn't mean that we don't have any policies that can deal with illegal immigration 24:20.790 --> 24:30.090 or the immigration problem in general, the importation of illegal goods and fentanyl 24:30.090 --> 24:38.710 and things of that nature, and there's specific policies that we have access to, 24:38.850 --> 24:46.070 that we can enact in the United States that facilitate good job formation 24:46.070 --> 24:58.970 and factory formation, that are general policies that would naturally induce the construction of factories 24:58.970 --> 25:02.030 and the construction of jobs. 25:02.190 --> 25:11.110 We clearly saw that the government's effort to sort of bulldoze us in with the CHIPS Act 25:11.110 --> 25:20.690 and the protectionism under President Trump and President Biden, those clearly didn't work. 25:21.590 --> 25:28.390 And any kind of job creation came at an enormous expense. 25:28.850 --> 25:39.150 All of those policies were, in any kind of cost-benefit analysis, were clearly loser-type policies. 25:42.690 --> 25:49.290 Another reason for tariffs as a negotiating tool, I guess in this case, 25:49.830 --> 25:53.550 is to prop up the value of the U.S. dollars. 25:54.450 --> 26:04.090 The BRIC countries, Brazil, Russia, India, China, now South Africa and several other countries 26:05.490 --> 26:16.790 are working on coming up with an alternative to the U.S. dollar to offset the monopoly of the U.S. dollar. 26:17.230 --> 26:24.950 It's not that these countries don't like the U.S. dollar or they're adverse to trading with it. 26:25.050 --> 26:30.710 Their governments would like essentially to have the same exorbitant privilege 26:30.710 --> 26:36.150 that our government and our Federal Reserve has in terms of inflation. 26:37.990 --> 26:46.670 But the reason they're able to push this agenda is that the U.S. dollar has been abused 26:46.670 --> 26:57.610 by our government and by our central bank, you know, the placing of sanctions on other countries 26:57.610 --> 27:03.810 and the freezing of assets, dollar-denominated assets and government bonds and so forth. 27:05.930 --> 27:14.190 We're using these economic policies aggressively against these countries and they don't like it, okay? 27:14.750 --> 27:18.430 So this is an area of, it's not just economics. 27:19.170 --> 27:23.170 This is an area of foreign policy and protectionism. 27:25.450 --> 27:35.190 Another thing that's, you know, perennially in the works is that tariffs will help our auto industry 27:35.190 --> 27:37.930 and our steel industry create jobs. 27:39.230 --> 27:48.230 But we've already recently seen that any kind of job creation has come at an enormous cost 27:49.130 --> 27:52.370 to American consumers and to American businesses. 27:53.350 --> 28:00.330 And a final, and this has happened in the past, but it's happened in the present as well, 28:00.530 --> 28:13.450 is that tariffs will offset taxes, reduce the national debt, reduce deficits, things of that nature. 28:13.450 --> 28:17.690 But that's all not true. 28:18.390 --> 28:32.190 Tariffs are very bad revenue raisers and so we should not expect any less burden in terms of other taxes. 28:33.190 --> 28:44.010 We shouldn't see any real debt in deficit spending or the growth of the national debt as a result of increased tariffs. 28:45.370 --> 28:51.230 And in any case, tariffs are not really paid for by foreigners. 28:51.590 --> 28:53.490 Foreigners are not going to pay those things. 28:53.490 --> 29:06.390 Those are going to be paid by American consumers in the form of higher prices and American businesses in terms of higher input cost. 29:06.870 --> 29:10.810 So it's all going to be paid for by Americans. 29:10.810 --> 29:26.730 And so just switching the name and switching the source from, say, income taxes to tariff revenue or deficits being reduced by tariff revenue, 29:27.190 --> 29:30.130 that's still all going to come out of Americans pockets. 29:31.150 --> 29:39.570 Plus, you're going to induce lots of very bad distortions in the economy, particularly in the short run. 29:40.250 --> 29:50.570 And you're going to create all sorts of inefficiencies in the long run as an inefficient Americans at producing product X 29:52.650 --> 30:03.150 have to come online in order to replace the efficient foreign production of product X. 30:03.910 --> 30:14.230 I'm going to put a lot of references in the show notes and in particular my recent paper on Ludwig von Mises 30:14.230 --> 30:27.990 and his general understanding of bad economic policy and the role of protectionism and tariffs in that area. 30:29.330 --> 30:35.470 And creating bad economic policy starts with economic intervention at home. 30:35.470 --> 30:50.590 In terms of creating bad economic policy, Ludwig von Mises really showed us the way the interconnections between the various levels of bad economic policy 30:50.590 --> 31:00.910 and how you go from one bad economic policy to another and eventually to chaos and destruction. 31:02.230 --> 31:10.910 So it all begins with interventionism, domestic protectionism in the local economy. 31:11.950 --> 31:23.690 So this is all the micro economic policies that the United States is just filled with in every most almost every other country 31:23.690 --> 31:32.870 is also just loaded up with all sorts of domestic interventionist policy. 31:33.570 --> 31:37.570 And here we're talking about regulations. 31:38.950 --> 31:50.690 We're talking about licensing the professions and even the minimum wage law really is a good example of this domestic interventionism 31:51.770 --> 32:03.930 that seemingly has nothing to do with things like international economic policy, foreign policy and war. 32:04.470 --> 32:14.230 But ultimately it does with the minimum wage law that disadvantages low skilled workers. 32:14.230 --> 32:24.510 Okay, some people get the minimum wage job, but a lot of people are left out in the cold, not having access to any economic jobs 32:24.790 --> 32:28.430 and having to rely on charity and welfare. 32:29.870 --> 32:34.710 But the minimum wage also advantages high skilled labor. 32:35.710 --> 32:43.750 It protects high skilled labor by keeping low skilled workers from competing with high skilled workers. 32:46.950 --> 32:51.150 So the same is obviously going to be true with licensing. 32:52.290 --> 32:58.490 Licensing advantages the people with the licenses to a particular profession. 32:59.390 --> 33:07.970 And it disadvantages people who don't have a license and they can't get into a profession. 33:08.090 --> 33:13.610 So they have to go to their second best or third best job opportunity. 33:13.890 --> 33:21.430 So they're going to be disadvantaged or end up worse yet on welfare. 33:22.430 --> 33:28.990 And then of course regulation. We all hate regulation, right? We all hate red tape. 33:29.730 --> 33:37.490 And the big breakdown here is that regulations are an advantage to big business. 33:38.370 --> 33:47.090 Big businesses, big corporations, multinational corporations, they have, you know, whole sections in their company 33:47.090 --> 33:55.090 with accountants and lawyers and people to look after all of the regulations and to fill out all the paperwork. 33:55.750 --> 34:04.650 So that's really an advantage to the big corporations where it's a disadvantage to small businesses 34:04.650 --> 34:09.370 who don't have lawyers and don't have, you know, accounting departments 34:09.370 --> 34:15.150 and people to fill out all the paperwork or who even know how to fill out the paperwork. 34:15.150 --> 34:26.290 So, you know, it's advantages and disadvantages throughout the economy, producing virtually no benefits whatsoever, 34:26.910 --> 34:33.450 just creating a lot of red tape and protectionism for particular people. 34:34.790 --> 34:43.650 You know, say in my little town, profession X, all of a sudden the government, 34:43.650 --> 34:49.990 the local government requires people to work in that profession to have a license. 34:50.750 --> 35:00.590 Well, the people who have a license in that profession in my town can effectively keep out new competitors 35:00.590 --> 35:03.130 and so they can raise their prices. 35:04.330 --> 35:11.150 And so that means that I have to pay higher prices to use that service. 35:11.910 --> 35:17.350 And so what's my natural inclination is to either not use that service. 35:17.730 --> 35:21.670 Of course, I could always pay the higher price and many people have to. 35:22.370 --> 35:32.830 Or maybe I can go outside of my little hometown to somewhere in the outlying areas to hire somebody in that profession, 35:33.730 --> 35:41.110 whether it's a county or my doctor or a barber or whatever it happens to be, 35:41.190 --> 35:47.510 I can travel a little ways and avoid the extra cost that that license imposes. 35:48.730 --> 35:53.990 Now, of course, my county could impose the same licensing requirements, 35:54.170 --> 36:01.510 so I'd have to go outside of the county somewhere else in my state to get those same services. 36:01.510 --> 36:09.170 It might mean a longer trip, a greater cost, but I could still save money potentially, 36:09.450 --> 36:14.250 depending on how severe the licensing requirements are. 36:15.550 --> 36:27.390 And so you can see that this domestic local intervention creates an incentive for people to move their business 36:27.390 --> 36:30.170 outside of those local areas. 36:31.210 --> 36:40.110 And of course, eventually, you know, sometimes that leads people not just outside of their hometown 36:40.110 --> 36:50.190 or their home county, but maybe outside their own country to seek professional services or goods. 36:51.190 --> 36:56.750 You know, so like when I was a kid, everybody bought American cars, 36:57.510 --> 37:06.190 but as they became more and more expensive without any offsetting quality improvements, 37:06.670 --> 37:18.350 more and more people started turning to lower cost alternatives from automobiles outside the country. 37:19.350 --> 37:28.870 And of course, eventually that led to calls for, you know, protectionism at the border, 37:29.310 --> 37:41.830 so that the local producers wanted to stop consumers from accessing goods and services from outside the country. 37:41.830 --> 37:55.310 And so that's how domestic interventionism or protectionism leads to international intervention or protectionism. 37:56.130 --> 38:04.230 And then of course, the biggest example of that is putting tariffs on imports. 38:04.230 --> 38:15.670 And of course, once the tariffs go into effect, you've created a situation which almost necessitates a foreign policy 38:16.710 --> 38:21.870 to deal with other countries and to deal with trade. 38:22.810 --> 38:31.990 And then of course, this protectionism creates animosity between the countries. 38:32.870 --> 38:41.570 You know, that these foreign producers who had access to markets and were efficient at producing the goods 38:41.570 --> 38:52.610 were satisfying foreign consumers, and now all of a sudden they've been blocked by protectionist policies from selling their goods. 38:56.030 --> 39:05.110 And so all of a sudden you've created antagonism, and of course that can get aggressive like it did during the Great Depression. 39:05.690 --> 39:13.610 The United States imposed tariffs on foreign countries. Foreign countries turned around and imposed tariffs on U.S. goods. 39:13.610 --> 39:21.050 So it wasn't just a smooth, holly tariff that drove down our standard of living in the United States. 39:22.130 --> 39:32.290 It was also the fact that other countries were responding to our protectionism with their own protectionism. 39:33.290 --> 39:45.950 And then of course, inevitably, it is these trade tensions which are sparked by protectionist economic policies 39:45.950 --> 40:04.350 that create this underlying distrust of other countries' governments, animosity on the part of the citizens versus the foreign governments. 40:06.170 --> 40:23.390 And it just devolves into a very antagonistic situation where foreign policy devolves into a military type policy involving things like sanctions, 40:23.390 --> 40:40.590 but eventually outright warfare. And we saw this clearly with World War I and World War II, but we see this even in the modern context. 40:41.520 --> 40:58.890 It seems clear that countries, and in particular U.S. interventionism abroad, doesn't really have anything to do with any ideals of any sort, 40:58.890 --> 41:16.670 but usually really rests on this basic economic conflict created by governments where people are fighting over oil and energy and pipelines and trade routes and those kind of things. 41:17.670 --> 41:33.950 So that, you know, Mises clearly explained how even domestic interventionism can lead right on past protectionism at the border to outright military conflict. 41:33.950 --> 41:48.690 I have a paper where I summarize and provide a little graphical analysis for Mises' views on protectionism and international trade, which I will link in the show notes to this episode, 41:48.890 --> 42:01.790 and I'll link a lot of other resources on tariffs and protectionism for your further elaboration of this topic. 42:01.790 --> 42:12.830 Well, this has been another episode of the Unanimity podcast. I'm Mark Thornton at the Mises Institute. Thank you for listening.