Conversation with Georgists; 1

Exploring the ideas of protection. Free trade wages taxes automation and unemployment. These are just some of the topics to be heard on. Conversation with George was produced in cooperation with the Henry George School of Social Science. And now we're here is your host for our conversation with Georges. The faculty of the Long Island extension of the Henry George School of Social Science devoted exclusively to the dissemination of the philosophy of Henry George via free courses in economics welcomes you to the first in a series of programs dealing with the subject of economics. This subject because of its vagueness and contradictions is usually relegated to a back

seat with respect to our interests and left in the hands of the so-called experts. We feel that economics is everybody's concern regardless of sex profession occupation or education. This program conversation with George's deals with economics in this vein and we hope to bring forth some answers to the perennial problems that face our nation and the world. My name is Stan Rubenstein director of the Long Island extension of the Henry George School and with us tonight are two members of the faculty of our school. Each one well-versed in the field of economics. Having spent many years teaching our free courses in economics. To my left is Jerry Schleicher an interior decorator and to my right is Wayne Berry an engineer. Our subject for tonight deals with

tariffs protection and free trade. Gentleman and Henry George's book protection or free trade. He states the following in the preference and I'd like to read you only one paragraph from that selection. My effort in short has been to make such a candid and thorough examination of the tariff question in all its phases as would aid men to whom the subject is now a perplexing maze to reach clear and firm conclusions. In this I trust I have done something to inspire a movement now faint hearted with the earnestness and strain of radical conviction to prevent the division into hostile camps of those whom a common purpose ought to unite to give to efforts for the emancipation of labor greater definiteness of purpose and to eradicate that belief in the opposition of natural interests which leads

peoples even of the same blood and to regard each other as natural antagonists. Now gentlemen of the selection as I mentioned before that I read is from the preface. And for those unfamiliar with this book this was written back in the 1880s. But just to get to the conclusion of what Henry George has stated what conclusion did Henry George reach concerning the merits of free trade versus protection. Mr. Wayne Berry the heritage origin. I come to the conclusion that free trade is a good person of society and protection. It is not free trade. I might go back and in my life time when I grew up and knowing when I listen to my father speak it was a really protectionist and all I could hear him saying we've got to protect the infant industries in New England at least against the industries in Europe that have been

going on for years. Well it took me a little while they come to Henry George's conclusion but I finally did that free trade is the only answer or not but direction. When can we perhaps go a little more into detail concerning this. I know that when I read the papers today and there have been a number of articles concerning this whole question about tariff vs. free trade that if we have the goods shipped in from another country it only means that people making those goods in this country will be unemployed and as a matter of fact I know that people are certain groups certain segments of our workforce certain industries. It only seems to make sense are hurt by this. Then how can you claim that free trade is better than protection How does Henry joyed back up this whole concept of free trade when it only appears that that protectionism is good and

the ones that are preaching protection imply ones of course that are going to benefit. And the ones that benefit are really the landowners are the ones that have the something to protect the manufacturers that are making sure they want protection. They don't want to have to compete with the cheaper shoes from foreign countries. They're out to get the highest protection they can in the shoe industry if they can make shoes for $2 over here in the Magnum for a dollar over and in Europe. Well here want and I mean and sell them on the market here. He'll want at least a dollar tariff on that pair of shoes and that some other machinery or something that reduces the price down to a dollar and a half will still keep that $2 up I mean that extra dollar and every once a tariff is levied it never seems to be lowered and they're always striving to get

this higher Taff and caps only. We're protecting industry that do not protect the consumer the consumers the one that has to pay and they should be able to buy on a free market. I noticed in the beginning when you were speaking you mentioned that the only one that gains is the landowner and I know that most people usually think that it is industry or industrialists are capitalist are the ones that are gaining. Why do you make this distinction or do you make a distinction between the landowner and the capitalists who are really the ones that are gaining by protection. Well when you say land owner of course good many manufacturers have landed interest in you indirectly or in their business. And that part is what they will benefit more than their industry or their workers certainly the workers may get a raise and pay temporarily but

who isn't soon or soon after that the land owner will be able to take this increased rent that materializes from the natural law of rent and you can always do that when the industry those that are really working are the ones that will have to take that minimum wage and compete with him. People out around the market wage labor market and they will never never be able to actually really increase wages because the loss of wages will always apply and the protection that the manufacturer gets is only for really for the benefit of the owners of the natural resources of the land. What you're actually stating is that any increase which the worker and he were only speaking about the worker it derives from the benefit of protection is only imaginary but it's

not a real increase in wages. That's right it's only a part and it just seems to be an increase for them because they may get for a few weeks or a month an increase. But in the long run and I want to bet benefit the landowner or their landed interest debts in the manufacturing it's what it is is a subsidy I look on it as or for anybody that has a high tariff on its goods and Mabel's him to sell at a higher price than necessary and you know keep his price up as long as the tariff is there. But boys competition think will we. We can see that competition is good for good for the consumer. OK Mr. George Michael perhaps we can pursue this point that I was pursuing with Wayne Very. Could you perhaps give some examples give instances how free trade

and here you were speaking about the wage earner only and I'm sure there are other categories or other sections that we could talk about but you could perhaps give some examples of how it is beneficial I still have some difficulty in understanding that. If for example I am man and this is an actual case if for example I worked in New York and I was involved in the manufacture of blouses and we found out that another country to which Japan because of various means could produce blouses cheaper if we did not place a tyrant upon the blouses that came into this country or we would just let all these blouses come in without any tariff. Would they. Would it not mean that they would be selling more blouses from Japan say than in this country. And I if I were a worker eventually I would be losing my job. I don't quite understand. How I as a

worker would gain from free trade could you perhaps clarify this point. Well the proposition you just stated is a wonderful selling gimmick. The protection is you this is just what they say. They say that because of the certain influx of a great amount of blouses the dumping of blouses of the late put it and they want to stop dumping the blouses. It's almost the same as if the Japanese are going to produce blouses and for the exercise they're going to come across 5000 miles of ocean to dump it onto our shores like dead shells. And you ask yourself why did they come. What do they want from us. Do they bring us here. As I put it for exercise or are they interested and exchanging these boxes for something. Another words it seems to me that a Japanese who sells blouses in the United States and the understand something about international trade you'll know that dollars never change never travel across the ocean. I was in the manufacturing I'm out of

familiar what occurs. The Japanese will make suits and American wants to buy suits so he deposits in a bank out of say a hundred thousand dollars gets a letter of credit and sends it to the Japanese producer who then releases the blouses. So now you see blouses are going across to the ocean and going to reach the shores $100000 worth. And the only thing the Japanese has is a letter of credit saying that he owns $100000 in an American bank. Now what's he going to do with that if we don't doesn't intend traveling the United States. He can take that piece of paper and put it on his wall and just look at it. But he doesn't intend doing that. What he intends doing is now selling it to a Japanese who wants to buy a hundred thousand dollars worth of goods in the United States. And this is how the trade takes place. Now you see that the hundred thousand dollars will buy one hundred thousand dollars worth of American goods and that must leave and go to Japan. So what you've done actually is transport it. Japanese goods to the United States to the

tune of 100000 and take an American gold and transport it to Japan worth 100000. And both countries seem to be better off because if this is not true then who would bother going through this machinations Evidently there are people united states that want the Japanese goods and Japanese people want the United States goods and want both complete the transaction they have gotten more for their money because after all that's what trade is. If I want to trade with you Stan and I say well look I'll give you two books with two of your books you can look at two of my books and say well you know I like those two books and I'm going to look at two of your blogs. Yeah I like your toolbox and the trying is made but if we cannot agree that it is an equal trade and we're not going to make the trade now that this is what trade does. Now the protectionist says on the other hand that these blouses will put American workers out of business out of work.

And that's true. Yes they won't they won't make promises on the other hand a hundred thousand dollars that the Japanese is now using to buy American goods. Somebody has to produce that hundred thousand dollars worth of merchandise whatever it is and there is a change in the trend toward certain industries either growing or bang depending on what the demand is not what the protection of an individual decides. The free marketplace is going to decide what is going to be produced based on how much people want. Now getting back to this question of how does this affect the labor of sellers because you make more money because let us say we raise the top and we keep the Japanese blouses out. Now instead of paying a dollar for this blouse he is now told that we're going to protect the American blossom out of factory and therefore we can't put a tariff on forcing the manufacture Jap amount of factory to sell his last three dollars which now means that the American producer can charge three bucks. So I as the laborer who makes a hundred dollars a week and wants to buy

my wife for one dollar I have to spend $3 whatever increase in wages I may get. Will still cause me to spend two more dollars for each blouse than for my my effective income has dropped in spite of the fact they might have given me an extra dollar. Now I gather this is Wayne what you had reference to before when you spoke of not the individual that's earning a wage and it shows up in his salary. But you are perhaps speaking about the other ramifications that come along with this increase for example. If one were to earn one hundred twenty five dollars a week and say previously he would earn $100 a week. The only way that you could measure whether this one hundred twenty five dollars represented an increase is by measuring what he can buy for that one hundred twenty five dollars. This is the point as Jerry is making right now.

I think that very nice job explaining. Yes this is one of illustration and I think that I like to give a little hypothetical story of well trained you always hear the cry go up but people want to read more. Should the school system because they can get cheaper shirts. So I've given Mike grassers I thought that is good but it shows I think the real meat of the problem. We still know oranges was started to be raised in New York Way back in history they can raise greenhouses and have coal fires and get warm. But you're being paid about it maybe a dollar apiece for the orange never produced and I was suddenly finally Khorasan in Florida for a nickel a piece assuming that we have tariffs between the states which we don't.

Fortunately there would be a cry goes up we've got to put it 95 cents on every arms coming in from Florida where we keep the people in the business or keep the workers in the region I was. Go busy during it but miss the pool you know not he sighed. There would now be a way to get sick before the passion and irony have the courage of every day because they're becoming a political BS it is hype but I think it illustrates that you're not want to protect that because I know that and what you had mentioned when you had started to speak about the terrorists existing between states prior to the Constitution even under the Articles and before that period in our history that there were tarps that were placed with one state with another. And of course one of the things which is

prohibited by the Constitution is that no state may impose a tariff. Well this is leading to perhaps my next question Jerry. This trade no any boundaries or is as far as people are concerned the reasons why they trade doesn't make any difference to people where the goods are coming for exactly what is it that people seek when they do trade whether it's within a given country or a city or even a small cow or even one country to another. What is the purpose of trade. Well when I'm asked a question like that I'd like to bring it down to my own level. I want to find I'd like to ask myself now why would I want to trade it. It's all right to wonder about why the English trade with the French and the one on the US just why should I trade personally. Why should I try to give them what to say I produce tables and I've got enough tables for myself I have enough tables to sell to the

people around my neighborhood and then suddenly somebody comes in from France somehow finds out on the table out of branch and looks at my table and you know I think I could do a good job with good table runs and says I'd like to buy you a table. Alright fine I'll charge a 10 bucks a table on a table you want in French which does not take a thousand tables to start off with $10 $1000 at the start of a trade. Now the function does not have 10000 American dollars. So if you get the dollars to trade you must be able to buy a lot of credit in France some of our station that I made and other words the traders have to be a two way deal. You cannot trade I cannot just south that is right but rather because what is he going to pay me back with now the dollars must represent something that Americans want. In other words this is going back to the business of dumping goods.

Anyway you can only bring those to a country if that country wants your goods. They will not come to your country to bring good unless they want something from you. Trade is an agreement between two people two countries two groups two nationalities it whole and it has no borders. It could be a next door neighbor or it could be somebody in Japan. If I want something from somebody there I've got to give up something else. Now that person doesn't necessarily have to use personally what I give out. He can sell it to somebody else. I'd like to offer another illustration of what trade means going back to your question before Andrew Carnegie always boasted that when he was in the business of making steel rails for the railroads he said that he could sell a steel rail for $11 and make money. But because he managed to get a ton of to keep Japanese rails he was able to sell it for $77 a rail. And this was his boast because he was a good businessman and I could tell his friends are going to deal with it. Not a next question is why it's great

so we got sixty six dollars more for the American worker. But was that the case. If you examine the wage scale of the American worker producing steel rials it was pretty low in fact it was as low as you could make it go. Except with the battle with the unions and so on and all the words that I apprised that the manufacturer gets it does not necessarily follow that he's going to give it to his workers. He will give it to his workers depending on how the low wages works if he has to give up more to get a particular man to do a job he will if he wants it if he has to give up less he will get less and what you're saying is that there are according to you and Wayne and of course to the Writings as put forth by Henry George that there does not seem to be the benefit which goes to the wage earner as a result of protection so that this benefits that accrued to a particular country whether it's to a worker or a manufacturer is not necessarily going

because Andrew Carnegie as you mentioned did not take that seventy seven seven dollars and divvy it up with his workers he will try to get as much as he can and pay the worker as little as he can depending upon what the market place. The man's correct. Now perhaps we can pursue this point a little bit further and Wayne I'd like to continue this line of reasoning with you today. There is steel which is coming into this country. And a lot of the steel is of the same basic quality and it is able to come into this country at a cheaper rate. Now this of course hinges back upon what we have said previously if this deal comes in at a faster rate this means that the various steel companies will have to

lay off some of their workers. Is it not a duty or just out of necessity. Should not the government even if you want to call it subsidies and if this is a subsidy let's call it that if that's what a tariff is should they not protect the steel industry because the steel industry in a sense is the backbone of our economy in our nation. Well it would appear do it but we shouldn't try to protect it. Still yet they can make steel in any country in the world and shepherd 3000 miles or more and sell it on this market cheaper that can be made here then we better make something that we can make cheaper than they. And there are in normal things that we can do in the technological field with regard to all these automated machines that we're making and airplanes that any industry should not be protected merely to protect the investors. The consumer's going to pay

in the end if we do that. I like to think of the engineers and scientists are continually trying to break down the barriers of trade by better ships better bridges better means of transportation and that every government in the world seems to be in their legislative halls are doing just the opposite. They set up these artificial tariff barriers and it seems that. They should see that they're working against each other. That trade as Gerry said is there's an exchange of commodities for commodities and when people get mixed up in a thinker's exchange of commodities for money and they lose the picture. But we shouldn't protect any industry the only time you protect an undocumented separate countries at war. And and you have to I mean preparing for war and I want to make itself independent. But if we had free trade I always say so out the world. We would not probably have any wars like we've had in the past.

Well there's two points I'd like to pose to you Wayne and the first is the one on technology that you had mentioned. Do you feel and is it the feeling of those that are advocates of free trade that tariffs hinder or stop technological progress. For example if an industry knows that it's going to have tariffs is that industry more likely not to pursue progress than it normally would if it had to be involved more in the competitive field such as we know right now that we are getting steel or at least steel is being made in Japan and is being made in Germany quality wise it may be basically the same but it also is that they're able to ship it in cheaper. Do you feel that if our steel industry had to completely compete with the industries

in these other countries and had to compete by that I mean that you would to do away with the tariffs that out of necessity the steel industries would have to become more progressive or Ryles fall by the wayside. They would have to become more progressive because and that's what the competition does. And we should stimulate competition because it's good for the consumer because the best article for is money. And if they're collecting this extra money. Just because there's a tap out there they're taking out of their labors pockets. Wayne I'm sorry to interrupt you I wish that we could continue further with this topic I know that it represents a lot of discussion going on today concerning the whole bit about the Kennedy round and Altera versus free trade but our time is up. I wish to thank

you Mr. Gerry Schleicher and Mr. Wayne Berry for appearing on conversation with Georges Henry George School welcomes the opportunity to send any interested listener a short booklet concerning tonight's contents or information about the free courses that are offered by the Henry George School. Our address is the Henry George School post office box 54 page Long Island that address again is the Henry school Post-office Box 54 page Long Island. Exploring the ideas of protection. Free trade wages taxes automation. And plus. This has been a conversation with George's. Produced by WB Yeats.

See Oxford University and have studied in a laboratory with that rejoined School of Social Science. This is any on the national educational radio network.