January 4, 2003
Conservatives dismayed by the increasing size of government can take heart. Large size is not tantamount to a loss of freedom. At no point since Europeans first colonized this continent have governments been less powerful, less oppressive, and less intrusive in our economic and personal lives. At the same time that conservatives should rejoice at the taming of governments, socialists alarmed by the growing trend to privatization can also take solace: The governments that have evolved are becoming more munificent and beneficent than even early utopians would have dared dream.
To examine a fundamental freedom cherished by our societies is to discover an awesome progress in freedom and democracy. A century ago, half the population – women – did not have the right to vote. Neither did Indians in much of Canada or blacks in much of the United States. Today, suffrage is universal and voting controversies have moved to the periphery of society, revolving around the voting rights of incarcerated people, or the greater weight given rural versus urban voters.
In the last century, economic discrimination against minorities was so blatant that quotas kept Jews out of prominent universities and industries kept Jews out of their upper echelons altogether. Today, universities and employers still discriminate, but not to exclude members of a too-successful minority from becoming captains of industry. Instead, their aim is well meaning – to promote members of poorly performing minorities to middle management or even blue collar jobs – and their quotas are driven less by government power than by the courts and the public’s predilection for political correctness.
In the last century, influenced by socialists like George Bernard Shaw and monopolists like John D. Rockefeller, 31 U.S. states and three Canadian provinces embraced eugenics. Social engineers liked eugenics for its potential to rid the continent of “undesirables.” Tommy Douglas, who would later become Saskatchewan’s premier, expressed this bigotry well when he proposed that native Indians, homosexuals and people of “low moral standards” be sterilized so as not to perpetrate social problems. Today, the debate over eugenics is at the margins, with the public pondering the morality of designer babies instead of practising forced sterilizations.
Government in the past was stern and authoritarian, interventionist to a degree that would be unimaginable today. In the 19th century, taxes were typically based on personal property: The tax man tallied up the value of personal possessions – cutlery, jewellery, carriages – as well as real estate. Well into the last century, sexual activity was heavily policed and alcohol consumption was strictly regulated when not banned altogether. Toronto in 1900 did not allow children to play in public parks or on public streets: Boys as young as 11 caught playing with a rubber ball on a quiet side street were charged by the police and sentenced in court to fines or jail. Today, the state does not destroy an unmarried woman or a gay man whose lifestyle offends official norms, and the debate over intoxicants has moved to cost-benefit analyses of running needle exchange programs for heroine addicts.
Some argue that the state may have relinquished its powers in social spheres, but that it has become more dominant over our economic life. Not so. For one thing, regulations over the social sphere control the economic: Prohibitions on alcohol affected the restaurant and entertainment industries as well as distillers; government enforcement of religious rules not only banned shopping on Sundays, but also the operation of public transit vehicles.
But even where governments weren’t enforcing religious or social dictates, the state kept a dictatorial grip over the economy. The modern state has transformed itself from economic tyrant to economic liberator, as the United States, the very symbol of free markets, itself demonstrates.
For most of its history, and especially for the 100 years prior to the Great Depression, the United States was proudly protectionist. Abraham Lincoln ran for president in 1860 as a protectionist, his campaign posters proclaiming “Protection To American Industry.” In 1890, Congress passed the McKinley Act, a starkly protectionist tariff bill named after William McKinley, later a Republican president of the United States. His rejection of free markets, and embrace of protectionism, were ardent and unambiguous: “Under free trade, the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man.”
With righteous fervour, the U.S. government enforced punishing tariffs throughout its economy. Lenses for eyeglasses attracted a tariff rate of 50%, ceramic roofing tiles 60%, toys 70%, jewellery 80%, handmade lace 90%. Before Franklin Delano Roosevelt and his free-market Democrats discredited protectionism, the average U.S. tariff exceeded 50%.
FDR liberated trade by centralizing federal trade power at the expense of Congress, which had set tariffs to please narrow interests. From FDR on, Congress delegated its authority over tariffs to the president, and tariffs have fallen relentlessly – to 35% in 1935, 16% in 1947, 12% in 1957, 8% in 1968 and 5% in 1995. A strong central government has promoted free trade, ushering in a period of globalization and consumer choice to the immense benefit of its citizenry.
Free markets have also flourished within countries. A century ago and more, governments in Canada and the United States financed the continent’s infrastructure – not only the great railways but also roads, canals and other infrastructure. Governments dominated the economy, deciding the pace at which the continent would develop and which areas would be settled when. Governments controlled virtually all the land, and the use to which astounding amounts of capital would be employed. In comparison, governments today are inconsequential bystanders to the real economy.
Conservatives, pointing to the state’s increasing tax take, argue that governments are becoming too powerful. But the level of taxation is a poor measure of government power. Communist countries, with often negligible taxes, exerted near total economic control. Canada and the United States dictated the development of the continent through government land grants and government guarantees, not taxes. The U.S. government’s once-prohibitive tariffs generated relatively little government revenue because the tariffs were set so high would-be exporters to the United States pursued business elsewhere.
Despite today’s tax levels, free enterprise continues its conquest over government regulation. Even when government is at its most interventionist, its goal, typically, is to promote competition by correcting imperfections in the marketplace. Almost never does it seek the nationalization or renationalization of industry. In effect, governments now agree with free traders that the goal is to make competition work. The battlegound today – between free trade and fair trade – is a far cry from the old distinction, between free trade and protectionism or even socialism.
Yes, at times the protectionists win a battle, setting back the forces for freedom. But over any period of time – the last century, the last 50 years, the last 25 years or the last decade – the freedom fighters have had the upper hand. In the sweep of time, democracy and the freedoms that accompany it have incontestably been in a roaring bull market.
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