I am very much enjoying browsing through Cyclopædia of Political Science, Political Economy, and the Political History of the United States, circa 1870. There’s a lot of fascinating history and important lessons in this old work.
At one time, the USA was a leading player in international shipping, rivaling Great Britain. It helped having vast supplies of timber. The lack of an established merchant marine tradition seemed to allow a great deal of innovation which made US shippers tough competitors.
It did not last. The age of steam power and steel ships saw the dimming of the American ocean shipping. British technology was better early in the Industrial Revolution. And, although the British happily sold their technology all over the world, America could just not make a go of it.
What went wrong?
There were a lot of contributing factors, but mostly it was government actions, tariffs, regulations, and taxes. Two motives seemed to be behind most of the terrible policy.
The first was a desire to save American jobs. Sound familiar? Policies did save jobs for a while, but as everyone other than politicians should know, saving today’s jobs usually sacrifices tomorrow’s jobs.
The second was a desire to tax the rich. And boy, did they – not through an income tax, which didn’t exist, but through a complex set of tariffs, fees, excises, duties, etc. The result was that being an American shipper wasn’t as profitable as a lot of other lines of business, which in turn meant a decline in capital investment, which made American shippers less competitive, which meant fewer shippers, which meant fewer jobs. Wash, rinse, repeat.
It’s anyone’s guess as to how much more prosperous we’d be today if we hadn’t abandoned the shipping business through bad policy. This sad story paints a picture (one of many, actually) of where “save American jobs” and “tax the rich” really leads.