The American Protectionist Society
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An Open Letter to Congressman Ron Paul, and Any Open Minded Libertarian
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October 3, 2008
An Open Letter to Dr. Ron Paul and any other open minded libertarian with a desire to promote a free and independent United States
of America.
FREE TRADE: THE DESTRUCTION OF THE UNITED STATES
Let me first thank you for the tremendous work you have done in your career fighting for liberty, freedom, and defending our
Constitution. We join you in that fight and because of this fact I feel compelled to reach out to you and address an issue that we
feel is of pressing concern in the fight to preserve and protect the Constitution, and our national sovereignty.
Like you, we support market capitalism. Like you, we admire and accept the contributions to the science of economics made
by Adam Smith, and also the contributions made by the Austrian economists including Ludwig Von Mises. Like you we seek to see
to it that the United States remains prosperous, free and independent, sovereign and a place where the benefits of liberty can be
passed on to future generations. I would like to clear up some misconceptions about what protectionism is, and what it seeks to
achieve. Obviously we are not the isolationist, autarkist, xenophobes that some in the media and philosophical internationalists
would paint us as being. Indeed, we would seek to have vigorous trade with any nation, so much so that it would fund our Federal
budget; so long as that trade is beneficial and healthy.
But we cannot progress beyond the point at which we digress, and it is on the question of free trade where that occurs. We
know from years of study of economics, philosophy, history, and the science of logic itself that the philosophy of free trade is
inseparable from internationalism, and in fact ends with the destruction of the United States. I'd like to outline only a few of the
relevant points that lead us to that conclusion that stem from our common ground, in the hopes that you will honestly and
thoroughly examine them and begin a dialog with us so that we can work together to advance a truly cohesive movement to protect
liberty and the sovereignty of our nation.
Let us first establish the definition of an unhampered market economy, which I will quote from Percy Greaves' Glossary to
Human Action, written by Ludwig Von Mises. Having previously heard your praise for the Austrian school of economics, I feel
confident you will accept this definition of the unhampered market economy.
“Market economy, the free or unhampered. A pure or unhampered (i.e., free) market economy is an imaginary construction
which assumes: (1) The private ownership (control) of the means of production; (2) The division of labor and the consequent
voluntary market exchanges of goods and services; (3) No institutional interferences with the operation of the market processes
which generate prices, wage rates and interest rates which reflect the actual conditions of supply and demand for all goods and
services; (4) A government, the social apparatus of coercion and compulsion, which is intent on preserving market processes while
protecting peaceful market participants from the encroachments of those who would resort to the threat or use of force or fraud.”
We certainly agree with Von Mises where he discusses economic science. For instance, when he illustrates that “every
political intervention, other than that needed for the preservation of the market society, must lead to malinvestment” we agree. But it
is where he becomes a philosopher that we have to disagree and refer back to our first principle; the preservation of our
Constitution and Declaration of Independence. Where Von Mises and the Austrian school inadvertently seek the destruction of the
United States and our Constitution is when they enter the realm of philosophy, leaving economics behind, asserting that the market
economy is the entire world. Indeed, the market economy is rightfully a national construct, and the tariff protecting the market
economy from external institutional interferences (one particular example of #3 above) in effect establishes the boundaries of the
division of labor (#2 above). For cohesion in the peaceful operations of the market economy, the government function (#4 above)
is to preserve the market internally, and protect it externally. Indeed, this was the success of our Constitution (and the failure of the
Articles of Confederation to boot). Our Constitution created as closely as could be accomplished a national free market economic
system, protected by a tariff to prevent harmful external interference and establish a division of labor. And our nation prospered as
no other nation in history has prospered. It is only more recently, with the advent of the Federal Reserve and free trade agreements,
that this has been broken down. Indeed it is an historical, verifiable, and undeniable fact that our greatest period of growth and
prosperity came while a 40% average tariff was in place.
It is no accident that when free trade agreements are constructed they come with international governing institutions and
jurisdictions that violate the sovereignty of the trading partners. Indeed they must; adhering to number 4 in the definition of an
unhampered market economic system, there must be a government with the power of coercion. Multiple, competing governments
and jurisdictions cannot accomplish cohesion. It is purely in keeping with the goal of free trade to create those international
institutions. As such open borders also logically follow, and the pressure to create them in the NAFTA zone should be no surprise.
NAFTA in effect seeks to create a single division of labor among Canadians, Mexicans, and Americans. As such, institutional
interferences like separate currencies, borders, and regional labor laws must be incrementally broken down. Robert Pastor, an
avowed internationalist and supporter of the Security and Prosperity Partnership (also now referred to as the North American
Union) clearly understands this point, and has stated that NAFTA is the building block of the SPP, and needs to be further
expanded. Frederick Bastiat was also very clear that free trade is more than simply preventing government from restraining
exchanges. Bastiat wrote famously to Richard Cobden that what he desired is “the general philosophy of free trade; the ecumenical,
indissoluble union of the peoples of the world”. It is obvious that this runs counter to the Declaration of Independence, which
asserts that the United States is a free and independent nation.
We also agree with Von Mises where he establishes from the science of economics that it is the per capita, capital investment
per worker that leads to increased wage rates and standards of living. Free trade supporters contend that our trade deficit does no
harm, because although we are investing our capital in production centers abroad, that capital comes back to us later as investment.
But it was you yourself who I personally heard correctly state in a speech at CPAC in 2007 that those dollars coming back into our
economy from China are not being invested in capital, but instead are financing our budget deficit, and will have to be paid for with
interest by future generations. Indeed the transfer of wealth to China and other nations from our trade deficit in manufactured
goods and oil is leading to a situation where foreign nations and investors are literally buying our corporations, buying our real
estate, and financing our over consumption. Only by protecting our market from unfair trade can this be remedied. We must re-
institute the tariff and protect our market from institutional interferences from abroad. Our fragile wage and price structure, and
our social nexus are being distorted. These nations and trading partners who are given a free lunch access to our valuable
consumer market have workers who are under capitalized; this amounts to interference and distortions in our market. It creates a
situation where labor arbitrage becomes possible, and profitable. In effect, labor is pirated in much the same way intellectual
property is often pirated. Von Mises indeed would concur so long as his comments are contained in the science of economics. He
correctly concluded that over time, the unhampered market economic system will equalize wage rates and standards of living within
its boundaries. But note... his philosophy would have recommended a merger into a single market with China, with no tariffs or
quotas, “real free trade”, with the same laws, the same government, the same social construction of private property, and eventually
an equalization of wage rates and standards of living. We must remember the definition of the unhampered market economic
system. Our philosophy on the other hand would recommend a protection of our own market economic system and sovereign and
independent United States and Chinese nations. The tariff prevents the distortions of our system. Our divergence is philosophical,
not economic. It should be understood that the tariff does not simply protect capital investment (although this is a noble goal); it
protects the consumer, the laborer, the government, the borders, the fragile wage and price structure and the entire system. We
protect our nation from foreign invasion, from theft of intellectual property, from disease, from internal strife, from excessive
unhealthy immigration, and we should protect our economy as well. They are all components of a cohesive, independent nation.
Many critics of protectionism and tariffs claim that protecting the market hampers specialization, but this is not at all true.
Within the boundaries of the unhampered market {again, the region of private property (#1), division of labor (#2), protection from
institutional interferences (#3), and a coercive government (#4)} specialization is preserved. In our nation of roughly 300 million
people, there is more than enough capacity for specialization and raw materials to create a healthy and fully functioning market that
promotes prosperity. And indeed so long as our market is functioning properly and freedom and liberty are preserved, the best,
brightest and most talented would be entrepreneurs and intellectual capital will (and in the past did) flock to the United States to best
utilize their skills. There is no loss to specialization or entrepreneurial ability in the protection of our market through tariffs.
Other critics assert that tariffs cause prices to rise. We really feel this argument is of the most transparently surface level and
fallacious of all criticisms of our American system of a protected free market economy. Indeed, historically inflation was incredibly
low under our tariff system, and it was the distortions of this system like the Federal Reserve, free trade, deficit spending and the
income tax that have created inflation. Further, any price increases due to the imposition of a tariff are purely politically motivated
by the trading partner to influence Congress, and are only sustainable in the very short run. Corporations attempt to sell their
products at the most profitable price per their own estimation, whether tariffs are present or not, and the market will punish or
reward their judgment over time. In fact, a tariff is absorbed by the foreign firm selling their product, and if they raise prices they
create an incentive for domestic firms to enter the market. We must remember what we have learned from the marginal theory of
value and reject the false labor theory of value (which Ricardo used in his build up of comparative advantage, a theory that is also
provably false and which is increasingly being rejected by economists). Some of these critics would immediately (and fallaciously)
assert that “if you do not support tariffs between Ohioans and Kentuckians, you should not support tariffs between Ohioans and
China”. But this is a very silly argument when you understand the definition of a market, and understand that our system was
created to establish a national unhampered market economy. In no way is an exchange between an Ohioan and Kentuckian trade: it
is an example of the peaceful operations of the market economy; exchanges within the division of labor. But an exchange between a
wholesaler in the United States and a government owned Chinese manufacturer is purely international trade, taking place between
two different economic systems, with separate governments and regulations, separate divisions of labor, separate wage rates and
standards of living, separate fragile wage and price structures, and separate social constructions of the ownership of the means of
production.
Surely you must agree that Americans are overtaxed, and that to fund our limited government without income tax on domestic
corporations and laborers would be to promote prosperity. Surely you must agree that the fragile wage and price structure of a
nation should be protected from interference; we simply contend that foreign dumping of products, for example, constitutes an
institutional interference. Surely you agree with Adam Smith when he said that domestic production for domestic consumption
employs twice as much labor as foreign production for domestic consumption. In fact, this was the point of Smith's invisible hand:
that the investor of capital was led by an invisible hand that promoted the prosperity of his nation along with his own interests... by
investing his capital domestically. If not for the (intentional) misquoting of Smith in thousands upon thousands of Samuelson
economics text books, we would wonder where the idea came from that Adam Smith was a free trader.
I certainly know that you have questions and objections to some or much of what I have stated here. Nobody would assert
that this topic is simple or could be fully explained in a short letter. Having studied the 800 plus pages of Human Action over many
years, not to mention The Wealth of Nations, we are very aware of the complexity of this topic. We only hope to earn your
attention and create a dialog.
In so doing I would only point out a few practical considerations before concluding this letter. It should create pause and
concern for anyone who seeks to protect liberty and the sovereignty of the United States to have agreement on such a fundamental
issue such as trade policy with the likes of Bill Clinton, George Bush, Robert Pastor, David Rockefeller, and other self proclaimed
internationalists. All through history, wars have been fought over trade. It is not a small or transient issue. In fact, it is a central
issue in the construction of a nation, any nation. It should be observed that the question of free trade is the only issue where all
internationalists are in complete and unanimous agreement. This would include of course every member of the Bilderberg Group.
In no way will you ever hear an internationalist opposing free trade... whether it is the so-called “real free trade” or NAFTA,
CAFTA, GATT, or other agreements. Really, these agreements are not violations of the philosophy of free trade; they are
incremental steps in the eventual establishment of the full blown philosophy of free trade internationalism. They are compromises,
incremental steps toward a fully integrated world market and world government, which we know from Von Mises' definition of the
unhampered market economy itself are inseparable. The so called “New World Order” has no tolerance within its nebulous ranks
for dissent on this question. We would assert that the “New World Order” is in fact the general philosophy of free trade. Free
trade is the unquestioned centerpiece of the incremental realization of a world government. Make no mistake about that. It is the
means to bring about everything we oppose.
In conclusion, we would only remind you that every President on Mount Rushmore was indeed a self proclaimed
protectionist, including Jefferson who famously concluded as President that his previous personal philosophy would be harmful to
his nation, and instead became a statesman in protecting and promoting our Constitution. We would also like to remind you that the
tariff act of 1789, signed on July 4th by President Washington, was called the “second declaration of independence”. Clearly
Washington and his contemporaries understood that a tax on imports was much more that what it may seem, and in fact preserved
and protected our sovereignty and independence by protecting the market system that was embodied within the Constitution.
I firmly believe that our movement for liberty and a sovereign United States must be cohesive for it to be successful. We
must be pulling together and bring all potential supporters into the fold with a completely intellectually consistent philosophy that in
no way violates the science of logic. In doing so, we cannot fail. We may have setbacks temporarily in our lifetimes, and we may
lose battles along the way, but if our ideals are logically unassailable they will never be destroyed. Governments cannot stamp out
ideas; they will live on and take root, and eventually grow again. In the meantime, I fear, as one of our founding patriots stated
“that if we do not hang together, we will surely hang separately”.
Best Regards,
Wayne Bereman
Executive Director,
The American Protectionist Society
