Thoughts on economics and liberty

England learnt freedom the hard way

Where Adam Smith's ideas did not work, sheer brutal competition finally worked. Continuing my presentation of gems from Wilder Lane's DOF, below. If you want to know about some of the other main reasons why Britain moved from mercantalism to free markets by mid-19th century, please read the section on corn laws in my (draft) DOF.

Either way, it was not the presence of ideas such as those of Adam Smith that ultimately shifted the political parties of England towards greater freedom. It was the impact of the Irish famine, it was the raw brutality of the competition arising from the upstarts in America.

Ideas matter, but economic interests matter more.

Monopolies always destroy incentives to innovate. Hence they quickly become counter-productive. It is ALWAYS best to allow total free competition in everything. That is our birthright – to compete freely with everyone. India's magical mobile phone market – which went from the most expensive calls in the world to the cheapest in just 15 years, demonstrates the MAGIC OF FREEDOM. Get the government out of our hair!

As I write in DOF, "Capitalism grabs the poor by the scruff of their neck and sucks them into a powerful vortex of freedom that leads to wealth, health, and moral outcomes. It enables people to stand on their own feet, it builds capability, it does not spoon-feed. "

EXTRACT FROM WILDER LANE'S DOF

John W. Griffiths, American ship designer, did it. He turned the bow of the sailing-ship inside out.
When his new design, the Rainbow, slid into the North River, New Yorkers gazed at it with the horror that New Yorkers would feel today if they saw the Empire State build­ing standing upside down.
The bows of ships had always been bowls. They floated, they rose to the tops of waves; they stayed on the surface of water. They were safe. The Rainbow’s bow curved inward; the prow was as sharp as a knife. It would cut into the water; with wind in the sails it would drive headlong to the bottom of the sea. Sailors looked, and backed away. Sail, on a thing like that? straight to Davy Jones’s locker?
Griffiths did not intend this ship to rise on the waves. Every rise and fall was a loss of speed. He designed the Rainbow to slice straight through the waves and keep going, fast.
Source: Wikipedia.
A crew of reckless men, hell-bent, took her out through the Narrows, bound for Canton, China. It was a year’s round trip.
Six months and fourteen days later, the Rainbow came clipping into New York harbor, from Canton.
She was a wet ship, she took every sea over her decks, but never since God made the seas had there been such speed. Six months and fourteen days, to Canton and back!
American clipper ships took the world’s sea-trade. Thin slivers of deck cutting through the waves under acres of canvas towering fifteen stories high, they reeled off the miles, four hundred, five hundred miles a day.
The English were aghast. Snugly protected as they still were in the planned economy that had made Americans into smugglers and rebels, the British sea-traders were losing their trade. In every port that was not British, the unprotected American clipper ships were nipping in under their noses and away with the cargoes.
It was not only that the clipper ships were faster, the British ships now second-rate and slow; the Yankee captains were quicker in a bargain. They had no rules and regulations; no red tape. Every Yankee captain sized up a situation, figured in his head, made his price—and loaded the cargo. In all the world’s ports (except the British) the clipper ships came in and went out while British ships lay empty and British traders glumly saw the cargoes snatched away.
The City, the business men of London, were desperate. There was, of course, only one remedy: war. British trade must be protected. British police, the British army, were its only protection; it was safe now, only in British ports. If only the whole world’s ports were British.
But the men in British Government thought of the Navy, the British Navy upon which the Empire’s existence depended. The incredible Yankee clipper ships were filling the seas. Since the last war (which England had not won) American sea-power had increased enormously. In the next war, this new American marine might mop up the British Navy, the very life of the little island’s world empire.
Parliament debated long and earnestly. Desperate situations require desperate remedies. Englishmen boldly advanced and defended new ideas, for which they would have been trans­ported to penal colonies twenty years before. The first reaction to the American Revolution had been The Terror in England; free speech and semi-free press suppressed; habeas corpus sus­pended; books burned, men jailed for being suspected of re­publican opinions; the death penalty for being in an assembly of more than twelve persons, even in a private house. But The Terror was over now. Thomas Paine’s (suppressed) Rights of Man had sold more than a hundred thousand copies in the British isles. Adam Smith had published The Wealth of Nations. Many Englishmen had “traced civil government to its foundation in the physical and moral nature of man.’*
They stood up in Parliament and pointed to the American facts. What had created the clipper ships? Not the American Government. Not protection, but lack of protection. What made the British marine second-rate? Safety, shelter, protec­tion under the British Navigation Acts.
In 1849, the British Government threw British trade to the wolves. It repealed the Navigation Acts, and opened British ports to the world.
The result was catastrophe. American clipper ships ran away with the Indian trade. They ran away with the trade in Eng­land’s own home ports. While the now unprotected British ships waited for weeks on the China coast and their skippers begged for cargoes to England, the American clippers from California on their way home to New England dropped into Hongkong, snapped up a full cargo of tea at twice the freight rates that the British were asking, and ninety-seven days later they unloaded it in London.
All appeals to the British tea-merchants’ patriotism failed. Tea-leaves are loyal to no flag; ninety-seven days from Hong­kong they are more fragrant in the cup than they will be two months later, for any Empire’s sake.
Desperation spurred the ship builders on the Clyde. In a very few years, the Aberdeen clippers were racing those Yan­kees on the tea-trade routes. Now and then an Aberdeen clip­per came in at the finish, minutes or hours ahead.
American clipper ships opened the British ports to free trade. Half a century of American smuggling and rebellion and costly ineffectual blockades; seven years of war in Amer­ica, and the loss of the thirteen colonies; and all the sound and sensible arguments of English liberals and economists, could not break down the British planned economy. American clip­per ships did it.
They were the final blow that brought down that whole planned structure. The great English reform movement of the 19th century consisted wholly in repealing laws. There was nothing constructive in it; it was wholly destructive. It was a destruction of Government’s interference with human affairs, a destruction of the so-called “protection” that is actually a re­striction of the exercise of natural human rights.
In that mid-i9th-century period of the greatest individual freedom that Englishmen have ever known, they made the prosperity and power of the British Empire during Victoria’s long and peaceful reign.
And to that freedom, and prosperity and power and peace, the American clipper ship contributed more than any other one thing.
* * *
BUT THE AMERICAN GOVERNMENT DESTROYED THIS COMPETITIVENESS
 
When free men improved steamships so that not even the clipper ships could any longer compete with them, Americans lost the American mastery of the seven seas.
They lost it because the British had free trade (which Amer­ican clipper ships had given them), but Americans were still “protected” by the Protective tariff.
This semi-blockade of trade, maintained by American po­lice at the frontiers of these United States, raised American prices and wages so high in the artificial terms of dollars, that an American steamship made of American metals by Ameri­can workers could not carry passengers or freight in world trade as cheaply as the British metal ships. Therefore, Britan­nia rules the waves.
And therefore, when the Republic needs ships, this Govern­ment must take billions of dollars from these “protected” Americans and spend the money for Government building of ships—and lacks American seamen to man them.
Held inside the Protective wall, Americans stopped building ships. So no one can ever know what advance, as incredible as the clipper ships, free competition would have impelled Americans (and Eng­lish) to create in steamships. 

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