“What protectionism teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.”
– Henry George, Protection or Free Trade
The perspective of Georgist is often summed up as simply being the advocacy of land value taxes. To those with cursory knowledge about Henry George, his influential book Protection or Free Trade, published in 1884 and that had the distinction of being the first book read into the Congressional Record, seems something of a strange digression from the rest of his publishing career. However, the question of free trade is integral to George’s conception of political economy. The replacement of tariffs with income tax revenue was seen by 19th-century progressive Georgists as a crucial step toward a freer and more just society; reversing that direction now would be an egregious step backward.
George encouraged the removal of tariffs for multiple reasons, all of which remain valid today. First, the practice of tariffs creates numerous opportunities for government to pick winners and losers in the economy. This seems to be the expected result of the tariffs promised by the incoming administration as well. President-elect Trump’s co-campaigner and election watch-buddy Elon Musk saw his net worth skyrocket by billions as Tesla stock ballooned to over a trillion dollars in market capitalization the morning the election results became clear. Some of this likely stems from Musk’s current and anticipated billions of dollars in government contracts, but Tesla will also undoubtedly benefit from tariffs Trump has promised to levy on China and the EU, which are the only plausible sources of competition for American auto manufacturers. Other industries will have little choice but to lobby for the same benefits. Even if they are not actively seeking a leg up on foreign competition, just to continue business as usual will require the government’s good graces to ensure any foreign supplies (and nearly every business in the modern economy has some foreign suppliers) are not made unaffordable by rising import duties.
This will create another layer of profitable government privileges, on top of the institution of land ownership which George most famously condemned, one that funnels resources to the politically connected. George described a series of thefts culminating in land rents, and the tariff along with the monopolistic trusts it engendered, as robberies afflicting the American people as well.
Another reason George wanted to shift the tax system was that even an income tax not specifically aimed at land values could succeed in taxing at least some portion of land rents. Those rents collected would be taxed at the same rate as any other income. Perhaps more importantly, the profits that businesses and wealthy individuals derived from their land would also be subject to taxation; for one contemporary example, profits such as those that WalMart makes because its nationwide landholdings allow it to carry out its business efficiently.
Shifting to tariffs from income taxes, especially capital gains taxes and those on high- income individuals and firms, will reverse even this insufficient effort to recover these incomes for the common good. While Georgism is most strongly associated with efforts to shift the results and effects of property taxes, free trade is also a crucial part of its political economy. Georgists should resist the increasing trend towards reinstating the kind of tariff barriers and trade restrictions that have always been used to grant government privilege and facilitate the flow of wealth towards political cronies.
