The Historical Precedent of Protectionism
Protectionism is a practice that would disproportionately hurt the poor, just like what can be learned from the Corn Laws, which benefited the elite and exploited the low to middle incomer. Now history is set to repeat itself because no one has listened and learned from the past.
The History of the Corn Laws
The Corn Laws existed as early as in the 12th century in the United Kingdom. The most renowned anti-free trade movement, that which is best known as the Corn Laws, occurred in 1813, which restricted and raised tariffs on the grain imported to England. The purpose of this law was to protect the corn prices against foreign imports. The ban on imports was levied when the grain price was under the average selling price of the domestic grain. High tariffs were also imposed to make domestic grains more competitive compared to the foreign grains. These imposed tariffs and restrictions inflated the price of bread to the benefit of aristocrat landowners.
In addition, higher food prices meant higher costs for manufacturing industries as well as consumers. The domestic market was depressed by the high price of food because they needed to spend more of their income on food rather than on other commodities. These people couldn’t afford to purchase or grow their own food and had to pay high rent fees to the wealthy landowners. Middle- to low-income people were most severely hurt by this law and the government was unwilling to help the economy since the majority of the Parliament members were landowners.
Because of this law, Britain cancelled lots of free trade agreements with its neighbours. This action was bad for Britain because other countries in turn imposed high tariffs on Britain’s exports.
Anti-corn Law League
In 1837, an anti-protectionism movement arose. This league consisted of bankers, traders, merchants and middle-class manufactures. They believed that protectionism was bad and they wanted to have more opportunities to sell more goods both in Britain and overseas.
The Potato Famine in Ireland pushed the movement of the anti-corn law. The crop failure in 1845, which lasted for an additional six years, killed nearly a million people in the country, with another million immigrating overseas.
The Corn Laws ended completely in 1846 after a long battle with the Parliament.
Lesson Learned
Protectionism typically afflicts those living at the bottom of the economic pyramid. For them, openness delivers many more benefits than protectionism. For example, immigrants who have arrived in Britain since 2000 have contributed more than $34 billion to public finances. Since the 1840’s, we have learned that closed economies give advantage to the powerful and make the middle- to lower-classes even worse off.
In contrast, free trade also hurts some people. Workers in manufacturing industries lose their jobs to the cheaper competition and they cannot find new ones. There has been too little support for these workers. Countries need to coordinate themselves to a higher degree than they currently are in order to make free trade agreements work. Another thing that they can do is to link the revenue gained from exports to provide public goods e.g. schools, infrastructure, hospitals, and housing, which would create more jobs in their nations.
