Speaker 1: I want to welcome everyone back to the Pekingona Show
and returning and it's a quick return. Hey Wendyle, how
are you doing.
Speaker 2: Hey, I'm doing good. Glad to be back. Pete, thanks
for having me on.
Speaker 1: Well, thank you for coming back on. Uh, this is
the one I'm really looking forward to. Started looking into
Friedrich List about a year ago, but I haven't really
had a chance to go too deep. And I know
that the first time that we ever talked, you seem
to have and a really good working knowledge of the
work and the life of Friedrich Lists. So let me
just let's just jump right in. I'll we'll start with this.
Friedrich List was German. He was an economist. How would
you describe his theory of the economy?
Speaker 2: Well, List is a really interesting early example of you know,
while in German, he was also American citizen and really
his work stemmed from his time here in America and
his perhaps founding contributions to the so called American school
of economics. So I guess just to give the background
on List, and the biography of List is remarkable and
really quite telling as to the founding differences between the
orthodox economists of the time and this emerging generation of
protectionists or you know, nationally oriented economists who had a
lot of skin in the game, right. These weren't economists
hunched over in the ivory tower with a candle and
the quill pen coming up with theoretical figures about the
price of corn in Austria or something like that. List
was very energetic, and you know, he had his humble
origins as a professor of economics during the end of
the Continental system. At the time, Germany had been conquered
by Napoleon and was being released in the mid eighteen hundreds,
and this was coterminous with the United States war against
England as well. That's who Napoleon was, you know, his
chief antagonist was England. And List, like the American system
thinkers or American School thinkers who he would encounter in
the next decade, began to kind of envisage a maintenance of,
in his case, Napoleon's Continental system embargoing against British trade,
and had these ideas of maintaining napoleon system, which while
had been meant to embargo British trade with the continent
of Europe controlled by Napoleon, it had created a system
of manufacturers on the European continent itself, being bereft of
trade with the world's workshop England at the time. And so,
you know, initially as a professor of economics, he was
concerned with at the time that you know, Napoleonic forces
withdrew from continental Europe, that he would try and usher
in a domestic economic framework which would later be called
the Zolverine. About twenty five years later his dream came
true and what is now Germany and what was then
a bunch of mediatized palatinates. Napoleon had drastically reduced the
number of principalities within German Germany itself, and so they
all had different customs in terms of internal trade, they
all had different costs of doing trade with one another,
different essentially internal taxes. And so Liszt was advocating for
a system of free trade in a domestic market, only
envisaging that this would buy in together the German people
and their industries and prevent what was beginning to turn
up at the time, this wave of British manufactured goods
from wiping out all the progress they had made in
creating a productive economy for themselves. Of course, under the
dual issue of being conquered by Napoleon and the embargo
he had emplaced on continental Europe against British goods as
his chief weapon against British trade power. So that's kind
of the start of list. And at the same time,
across the Atlantic you have thinkers like Matthew Carey also
rediscovering founding ideas of American economy that had been put
to rest to the point that it weakened America to
be reinvaded by the British during I guess that theater
of war. Britain, of course at war across the entire
Atlantic in the mid eighteen hundred, I guess the eighteen
teens kind of an awkward way of saying it, And
the same thing was happening after the Treaty of Ghent.
America hadn't just been under an embargo and reinvaded by
the Brits during the course of the War of eighteen twelve.
In the run up to the involvement in the war,
they had a series of embargos before we were at
war with Britain as well. We nearly went to war
with both Britain and France during that time, and so
the United States was cutting itself off as a country
with no industry, very small native industry that had not
grown yet in the wake of independence, cutting itself off
from the two major global manufacturers, and found itself in
a similar position being cut off from trade with Britain
and to a lesser extent, France. Meant that the United
States enjoyed this unforeseen increase in agricultural production, land price lowered. Obviously,
they had to substitute for manufactured goods, substitute for the
import of these by domestic manufacturer. The Treaty of Ghent
kicks in again. The wave of British exports rolls in,
and this is a kind of favored method of the
British Empire at the time, and still a favored method
of major manufacturing countries today. Incomes the wave of imported goods,
gradually destroying all this new American production. So I guess
that's probably the best place to start with List is
as a professor, he becomes interested in governance, and this
is the same unifying aspect of many protectionists. Unlike academic
theorist economists, they are primarily drawn into ideas of econometrics
political economy establishing facts rather than theory what you call
inductivism versus deductivism by the need to try and engage
in good governance if no one else will. Becomes a
bit of a rabble rouser. Not only is he advocating
for a customs union between dozens, at that point of essentially,
you know what are analogous to the modern German states saying,
dissolve your tariffs, you know, create a common domestic market,
an internal free market. He's observing what the source of
England's global economic power is the protection of their home industries.
Essentially free trade within England, proper but aggressive protection of
its ability to import raw goods from the entire world,
which it keeps from manufacturing anything by dumping. Then the
value added exported goods on them at prices low enough
to keep them from ever having to manufacture anything on
their own. So List is advocating for this domestic customs union,
and he gets into trouble, you know, as one does
when they begin to I guess, with a mind geared
toward efficiency improvement, enter the halls of government, issues dozens
of new rules that he would like to see the
Parliament abide by. It ends up getting him I think
convicted something like a two year sentence, and he goes
on the lamb and this becomes a theme throughout List's
life for the next something like near thirty years until
he dies. He's just in constant motion between Europe and
the United States, and he becomes, you know, he attempts
to become a farmer. At some points, he becomes one
of the earliest railroad men in the United States, and
in Germany he's a coal miner. He does all of
these things. So you know, there's a great modern biography
of Lists by Jugen Vendler that's W E N D
L E R. And if anyone's interested, I'm kind of
front running the Wildlife of Friedrich List because it in
and of itself would would take hours to relate. So,
you know, needless to say, he was very active. He
wasn't just someone who laid down a founding theory of
protectionist economy or economics. He was very transatlantic, and he's
almost like the Forest Gump of early nineteenth century political economy.
So I guess I'll start there, you know, and this
is eventually how he ends up in the United States.
But I'll come up for air here and let you.
Speaker 1: Respond well, I think when anyone who knows anything about him,
even a very vague understanding of his economics, tariffs on
imported goods are what anyone who might know who he
is will talk about. Can you can you defend the terroriffs?
Defend tariffs from a List's standpoint.
Speaker 2: Yeah, List, I guess at the root of it, most
important concept of List in terms of wealth was that
wealth is a matter of national productivity and not the
hoarded material wealth of individuals within the state itself. It's
what a nation can produce. So I think there are
obvious ties to someone who wanted to create a unified
Germans German customs Union to bring the people the kind
of disparate German people together. List is still seen as
a founding father of federal Germany. List, you know, was
held in the greatest esteem by founders of modern Germany
in its various phases like Bismarck, and was a I guess,
a prominent fixture of the economic theories of nineteen thirties Germany,
which itself was extremely nationalist. So you know, that's something
that he would go on to share with his American
counterparts and probably pick up in America. He before coming
to America only had this kind of concept of a
domestic free trade union. But in the United States itself
he enters into the tariff debate. Comes to the United
States in I think eighteen twenty six as a guest
of Lafayette, the great French revolutionary, and Lafayette has met
List and his bizarre itinerant flight from justice in Europe
and invited him to the United States, where Lists immediately
is met with the I believe it's Richard Rush, who
was leaving his position as consul to England and was
Secretary of the Treasury. So due to Lafayette's stature, this
is the fiftieth anniversary of Lafayette's heroism in the War
of Independence. They say at times List in Lafayette are
traveling in carriages surrounded by as many as two thousand
men in per aids. He's meeting with all the heads
of state of the United States. He's you know, becomes
known to all the presidents. But he's dropped then into
this emerging tariff debate that within a year will be
known as the Tariff of Abominations. And so the United
States is split along sectional lines of basically, you know,
in the South, they preferred to continue the status quo
trade arrangements with England where they would provide raw goods
to England and England would provide industry. And in the
North there's a much more anglophobic sentiment and independence segment
sentiment of creating your own goods and limiting England's continued
engagement and interaction with American commerce and governance. And so,
you know, list understands in this circle in Pennsylvania headed
by Matthew Carey, known as the Pennsylvania School of Protectionists,
that to ensure national sovereignty and strength, you have to
build up the so called infant industries. So in the
case that you don't have the ability to produce finished
goods out of resources yourself, you have to somehow create that.
And while the tariff enforces that, and the tariff has
to be set high enough to reduce, you know, the
ability of a state with massive subsidies to insert their
products no matter essentially what your tariff is, and terriffs
can essentially become bands at some point, right you're levying
increased taxes on the value of imported goods that sometimes
can increase over the value of the finished good itself
in the first place. Like right now, President Biden has
one hundred percent tariff on incoming Chinese electric vehicles, which
is clearly meant to prevent Chinese electric vehicles from entering
in the United States and potentially wiping out, you know,
a key component of American manufacturing. So this is basic protectionism.
You have to protect your infant industries. You have to
get to the point that you have national industry so
you can join the world of advanced economies. And in
list time he says, there's just one. It's England. He
has the you know, And this is probably his most
important contribution to the corpus of protectionist ideas is he
is the first to codify protectionism. So while dealing with
the Pennsylvania schoolers, although not caucusing with them politically, he
asides with their opponents, the Democrats, you know, to the
point that his friendship with Andrew Jackson and Martin van
Buren results in their appointment of him as their consul
to Germany, which is an entirely different saga and comedy
of errors and lists unfortunate life in Europe, I guess
in his final decade, but you know, it's this concept
that bringing people together who have not learned to think continentally.
The United States is thirteen relatively disparate states at that point.
There's an early admonition in seventeen ninety one through Hamilton,
First Secretary of the Treasuries report on Manufacturers, that you
have to engage in a series of behaviors to draw
people together. You know, he says, you have to learn
how to think continentally. We're no longer at thirteen confederated states.
We are now a single union of states. And Liszt
is attempting to solve the same problem with these German palatinates.
But of course now he's living in the US, and
he becomes kind of a representative of German Americans and
kind of contributes materially to delivering their block vote to
the Democratic Party. So, you know, this idea that there
are phases through which any society or civilization has to
pass to become a world leading economy kind of provides
a roadmap for later on and after List's life. He
only really spreads these ideas to France and back to
Germany in his own lifetime, but List becomes the kind
of founding father of many nationalist economic movements deep into
the twentieth century, and you're still seeing his imprint now,
particularly in China. So you know the necessity of moving
out of being just simply an agrarian state. This is
the first phase where you can only engage in farming.
Your human capital is essentially manual labor. That's all people
can do. You don't have institutions, you don't have means
of elevating human capital like university systems. You don't have infrastructure,
and you don't have anything to do with that stuff anyway.
You don't have a means of exporting anything other than
raw materials that's exported for you by foreigners, and you
have to go through that phase of subjecting yourself to
exporting your natural resources to be returned to you as
finished goods is the kind of first stage of ennoblement.
And while England's the only country capable of doing that
in the time of lists writing, he says, you have
to go through this period because you can gradually indigenize
the things that they are bringing back to you. He
mentions that, you know, the United States used to just
send England wol and receive back Linen's you know, or
receive back like completed textile goods, and then the United
States became such a textile power that it threatened England's
ability to produce these things. And you know, he doesn't
really give mention to it, but he was familiar with
the work of Hamilton's concept of bounties, which today you
would hear called intellectual property theft. So that's kind of
the first step. You are examining and kind of reverse
engineering in some way and creating an internal demand to
replicate goods that you are importing. You're trying to substitute
those imports. And then you move to the second phase,
which is a combination of agrarian society, farming, exporting raw
materials still but beginning to in ways where it makes
the most sense enable the production of finished goods from
resources that you control. And eventually, in the final phase,
you move into being a commerce oriented state. You're doing
all the other processes. You're providing your own food, you
are creating not only just finished goods out of your
own resources for your domestic market, but you're even importing
other nations raw materials who are below you. Right, they're
still in that first phase, in the agrarian phase, and
you are producing those for export, has finished goods with
extremely high added value, and you are now engaging in
primarily commerce. And list believed eventually with the exception of
the tropical states, which you know, leads to claims of
racism and imperialism from kind of recent revisionists from a
free trade pro liberationist perspective, like Mark William Palin that
every nation, once it's achieved this final state, this third phase,
then free trade is possible at an international level, and
not just within domestic markets or between master producer nations
and nations learning how to escape the agrarian muck. So
to him, at tariff is a kind of step, it's
an intermediary step. Obviously, we haven't a gaped the national
utility of tariffs on a global level at this point,
so he didn't put a timer on it. He didn't say,
you know, by twenty three hundred, the needs for tariffs
and protection will no longer be in place. But I
guess one of the detractions from a list from an
American perspective is, you know, he's distinctly liberal, he's not
particularly nationalistic. He took pains to kind of delineate between
having excessive national pride or you know what the appropriate
level of national pride was versus exceptionalism. And while a
very early thinker and the first to codify again, the
first to codify the Pennsylvania school of protectionism that he
found himself in, you know, he was roundly denigrated by
the follow on scholars who were his contemporaries, like Matthew
Carey's son, Henry Carey in particular Erasmus Peshine Smith, the
contemporary of Carrey's who was a particularly advanced protection thinker.
And the irony was, you know, in the United States,
our academic institutions were always kind of hewing towards the
status quo of British free trade, British concepts of economics,
and so it's Lists ideas that actually take root in
the academy. And that's in Germany, and this is where
Americans have to go and learn about political economy from
a Listian perspective, you know, in the eighteen seventies, and
bring it back to the United States during a period
where the Democratic parties on the rise again after the
Civil War, and there's an entirely new form of progressive
free trade led by the Cobdenists that's creeping in a
transatlantic sense that it's still Cobdenism is kind of still
what we'd associate with liberal internationalist free trade. So yeah,
I don't know. That's a pretty convoluted answer about the
necessity of terrorists. But essentially, to join the world of
powerful nations to secure your own national sovereignty, you can't
rely on the import of goods and services that that
more powerful nation will hold over you. All Right, we'll
hold as a cudgel against you to compel you to
engage in behavior that they find convenient.
Speaker 1: Well, let me ask this. You just basically went through
his stages of economic development. It was something that he
was also a big proponent of, and you talked to
you mentioned it very very briefly as railroads. Can you
talk about how what his vision for the railroads were
when it came to the nation and the economy.
Speaker 2: Mobility was key in uh List's theory of kind of
economic change and nobleman and that economies of time and space,
as he called them, meant a lot more than just
the transfer of goods, but also the transfer of people.
I talked about human capital, the cultural improvements that Lists
saw as the domain of you know, you know, I
guess neglected to mention that the tariff, of course provides
income for government. So through the application of these moneies
collected essentially from foreign governments or foreign you know, mercantilists
that want access to your domestic market for a high
enough price, you're taking that money and you're investing it
into the development of human capital, so the training and
education of the populace. You're also creating infrastructure what was
known as internal improvements, so you're building out, basically the
arteries of national economy. The primary importance of the free
trade within protectionism is purely domestic, so you have to
find a way of connecting your disparate palatinates in Germany
and your American states. You guys are probably familiar with,
you know, if you've taken a road trip, all the
different industries and resources that are found in the United States, Well,
they have to be connected somehow, and early on those
were canals and railroads. So list becomes the first, I believe,
one of the earliest, if not the first, railroad, you know,
visionaries in the United States. It takes some time, I
believe eighteen thirty three until he can get a locomotive going.
But it's not just the movement of goods. Protectionists also
think of humans as capital. Capital beyond the Adam Smith,
Malthus and Daniel Ricardo concept of something you can exchange
for goods and services, whether it's gold or you know,
other resources. People are also a resource. Wealth is also
held you know, from familiar with the night soilers or
the work of justice libig like within the soil the earth.
So you're not just transferring goods. You can move people around.
You know, you can move them quickly across vast distances.
And a key component of the Pennsylvania school in which
List found himself in Sconsin was the kind of abolition
of class warfare what Henry Carey, his contemporary son of
Matthew Carey, would call the harmony of interests. You know
that you can have a harmony of interest between labor
and capital. You can have a harmony of interest between
the rural farmer and the urban industrialist. But they have
to be connected together through a system of internal infrastructure,
and they have to have equal access to cultural improvements. Again,
like land grant universities beginning to supplant the Ivy leagues,
which as I mentioned had always remained kind of loyalist
in a certain sense. Michael Hudson has some interesting examples
of that throughout his book America's Protections takeoff about the
difficulties that American nationalists had in clawing back the Academy,
and they always failed. And that's probably no surprise to
the audience when you look at the elite American Academy. Now,
they were always a status quo academy and they never
really had anything to do with a national project here
in the United States. So, you know, interconnecting people, interconnecting
their goods. Hudson gives examples of the reduction of feed
costs in the Hudson Valley for milk cows. Once you
could build erie canal, you can move goods and services
that otherwise don't have a comparative advantage because they can't
reach each other. Now you can move those, you know,
and interconnect your domestic your domestic free trade economy. But
also there were security imperatives in Europe, the rails, you know,
this was part of the kind of European orientation that
List had toward a lot of his ideas was you
need to be able to move troops around rapidly, and
the Napoleonic Wars it certainly taught them the value of that.
So you know, I guess that's kind of the rail
thing in a nutshell. But also it represented this massive
expansion of technology that was underway, coal and steam power,
and you know, it represented fundamentally the massive leverage of
a human worker through technology. So you know, it's about continuing.
It's been called by Hudson technological optimism. Some of your
audience and you yourself, Pete, may have seen that be
kind of clumsily wetted to Riccardian economic ideology by the
venture capitalist Marc Andrees and a recent manifesto which I
find quite curious given that its origins are in critiques
of Ricardian economics, but the fact that technology can radically
alter a state's position against other states. But everything is
part of this broader whole. It's you know, it's not
just about building infrastructure, it's not just about building cultural institutions.
It's not just about protecting the people and the resources
from foreign predation. It's a broader system of human being.
And later thinkers within protectionism who followed list quite shortly,
like Erasmus P. Schein Smith, Henry Carey, Simon Patten. They
begin to just associate it with compt concept of sociology,
that this is just part of the human experience, This
is part of man and nature, and it's not actually economics.
So you know, I think the quote from a List
about the real is like the world is in motion, right,
the world's in So he was. He was very much
a mover as well. As I mentioned his travels and
kind of constant itinerants across the world.
Speaker 1: It said that he inspired Kings, John maynerd Kings. How
do you think he inspired Kenes when he he wasn't
a communist?
Speaker 2: Yeah, I think the Keynesian aspect is probably that you know,
Knes believed in subsidies, and you know, you even see
this within protectionism itself. It's a massive spectrum of ideas
where List represents a kind of more liberal position. List,
for example, wouldn't protect agrarian output. Figures like Kerry believed
you had to protect everything. Figures like Simon Patton had
theories of regulatory control and kind of behavior adjustment for
literally everything. Right, we can change the tastes of people
if they want to continue eating important food, right, We'll
figure out how to substitute where to grow a banana
in the United States instead of bring bananas in from
a foreign country. You know, it's so there's this vast spectrum,
but you know it's there is obvious overlap with other
forms of economic ideas. And what's the infamous line about
canes right? Bury about subsidies? Right, just bury jars of
money and the most capable will dig them up. So,
I you know, if that's the alignment, I guess I
would reject that. In that the protectionist concept of subsidies
you usually gets derided as cronyism, but at the same time,
it's an acknowledgment of inequalities that you say you had
one hundred million dollars in teriff revenue to give out.
If you gave it to a million people one hundred
dollars each, nothing happens. But if you give it to
a guy who's champion at the bit set up the
first railway and the United States and he knows how
to do it, you may get a rail man at
the deal. You know, whether or not that's cronyism is
usually a kind of point of political debate. But yeah,
I don't know. I don't see a lot of crossover
other than vague, like you know that there's a kind
of private and public responsibility that both Kanesians and protectionists
delineate in the economy. But yeah, I don't know. I
don't really see a ton of crossover with the Kynesians
other than, like I said, kind of government directed finance
and industry to a degree. But you know, when you
read about List, there are some thinkers who will bring
up like the Juchey regime in North Korea. They'll bring
up Autarctic regimes and say, well, hey, you know they're
marshaling their native resources and engaging in value add manufacturing
in their own country. Maybe they got that from List.
And it's a bit of a stretch.
Speaker 1: Talk a little bit about what you already mentioned that
a little bit him getting in trouble with the law.
What was what exactly was he doing to piss off
the people in charge?
Speaker 2: Well, you know, if you I believe it was forty
two prescriptions for changing kind of the parliamentary rules within Wurtenberg,
where he was from. And also, like I mentioned, just
drawing together all of these disparate states in a common
customs union. This is a time where the aristocracy is
trying to re establish itself with some form of Germanic
independence after you know, at that point fifteen years of
Napoleonic rule, so that was unpopular. Ironically, it's an idea
before its time. He's forced to flee in the late
eighteen teens, in returns in the eighteen thirties, and even
the King of Wurtemberg welcomes him back. It feels bad.
He feels bad that List was treated the way he was.
So I think it's important to note that when you
in this time that he is away, America becomes an
economic superpower, and List is really the first major codifier
of these new ideas at the behest of Ingersoll, who
runs the Pennsylvania Society, and America goes from in eighteen
twenty seven when he writes that to having a handful
of native industries to by the eighteen forties, it's a
serious global competitor in areas like textiles. Iron it has
a functioning railway system. The canal systems have been built out.
It is kind of the talk of the world. The economy,
the doctrine of high wages exists. Americans are attracting massive
numbers of Europeans who want to come work in either
work in You know, there's a kind of bifurcation, and
it appeals to two types of people can either come
and work in these new American factories, or you can
strike out on the frontier and homestead. Of course, these
are major political issues as well, and by eighteen forty eight,
when Germany undergoes its own liberal revolutionary attempt by a
strange mixture of Liberals and Marxists that fails, it's perhaps
a decade of the Zolverin in the German customs Union
that helps bind it together and as a federal power
resist what otherwise could have been salami sliced and piecemeal
by this revolutionary movement. So you could say it's an
idea before it's time. But you know, in many cases,
when you read about the real politics of the nineteenth century,
it's even zanier than political interaction is now. And you know,
I was reading about the bank war the other day
between Jackson and Biddle, and it really has nothing to
do with Jackson's views on banking, or even that he
necessarily had any that were dogmatic, but really just a
power struggle with someone who was asserting his influence without
being elected president. So there's a lot of rubbing the
wrong way and things like that. So yeah, a List
would variably return to Germany serve some portion of his sentence.
And I mean, he was just all over Europe in
the United States from basically the time of his conviction
until he committed suicide following his failed attempt at reaching
some kind of trade agreement between Germany and England when
he met with the Cobb dunits. So it's pretty hard
to qualify, you know, what exactly lists personal issues were
when his modern biographer is doing so from a kind
of perspective of a fest scrift right that this is
like a celebration of lists prominence as an early German thinker.
The forward to that Vendler book is written by a
recent president of Germany and the introduction is written by
the mayor of List's hometown. So yeah, I don't know that,
I don't know that there is anything more to it
than rabble rousing and kind of I don't know.
Speaker 1: Post crisis, do you think that he one of the
reasons you could call him or one of the reasons
he was so popular and was because he foresaw exactly
what was happening with the technological what the industrial revolution,
and that he was able to, you know, basically craft
a kind of economic theory or economic approach around it.
Speaker 2: Yeah, and it gave a lot of inspiration to nationalist thinkers.
So List, and it's not just List, it's the German
historical school of economics that follows List and takes their
cues from him. You know, anyone that's read the report
or the National System of Political Economy Lists magnum Opus,
you'll know that the whole first third is just it's history, right,
It's a historiography of various nations and their evolution toward
whatever trade system they find themselves in now and system
of economy to find themselves in now. So you know,
List is very much oriented not on theory, not in
this idea that theory comes first and you're restrained by theory,
which is the hallmark of the deductive theorists of you know,
Adam Smith, Malthus and Ricardo, the orthodox of English economic
literature and teaching at the time. But instead that you
start from observation and you end in theory, which is
actually the structure of the book. So you start with observation,
and for nationalists, we're seeing this kind of growing sentiment
that starts with the receiving of Napoleonic power from continental
Europe that, as I mentioned, it mediatized in Germany and
then places like Italy. It brought I think for the
necessity of an invading conqueror to maintain a political control
over these places. It brought these groups closer together. There's
a notion of economic competition. There's Salon culture throughout Europe
that's tracked by some of the other chroniclers of Lists.
I guess the penetration of his ideas into countries like Japan, China, Italy,
Russia all during the nineteenth century, and they're literally reading
a codified version of what they are seeing in the
United States having accomplished, and so they're thinking, like, Okay,
I need to start to examine. I need to start
to have my universities have people who examine some of
these important goods. I need to maybe bounty the copying
of this technology, like the United States to textile mills
early on. I need to somehow implant industry. Need to
have other scholars who are kind of yoped to state
incomes that are providing for their education to go and
examine whether or not we have resources and what they
can be turned into. And so this is all kind
of inherent and lists work, and it's celebrated as a
means of providing the fulcrumb that these early kind of
national experiments can use to first bind the populace together
in a common domestic market while protecting as they industrialize,
that common domestic market from being invaded again or reinvaded
by cheap imports. And once you have, once you're producing things,
you have this very compact what Kerry called the harmony
of interest, right, you have a very compact domestic market
where you are feeding say suburban farm is feeding a
growing or exurban farm would be feeding a growing industrial
kind of conturbation. Like as a city grew around a factory,
and if you place that factory near the resource that
it's adding value to, then you know, you might have
an iron mind grow into a small city. The iron
minds being fed by a farm. The literal waste from
the iron mind workers is being sent to the farm
to fertilize it, to reconstitute the food that's now going
you know, into the mouths of the iron miners, and
those iron miners are producing nails, and those nails are
used to build right the rest of the things. You
get the idea so that you're not supporting any kind
of international trade by winning off workers from your economy
to go and I don't know, work on merchant marine ships.
You're not sending your resources overseas. You're not feeding a
foreign country. You're not relying on a foreign country to
feed you in cases where you have to import food.
So it does create a very compact, insular nugget from which,
you know, a seed from which this kind of national
feeling can grow. I believe in the forward of Imperium
Press is publication of National system by List Francis O'beerni
I believe his name is. I don't know if I'm
pronouncing that correctly. He brings in James Gregor's I believe
it's called like reactive nationalism right where Gregor talks about
the utility of List in the mid nineteenth century as
all these various European nations begin to try the country thing, right,
So that's kind of lists utility there. As I mentioned,
List is not the most complete nationalist thinker or protectionist
thinker from the American school. I think in large part
lists prominences owed to the fact that he was able
to leave America and write his ideas down in France,
where they took root in the eighteen thirties. Again, the
Forest Gump like quality of List in meeting Adolph Tears
as a historian at the time who then becomes Prime
Minister of France is quite propitious. And from there, you know,
he's got a safe haven to write his book National System.
It's not even translated into English and available in the
United States for another decade or so, but that takes
root in Germany and it's spread as it's translated throughout
the continent into Eurasia, and as I mentioned, back to
the United States, not just through the means of the book,
but by the German historical school that crops up in
German universities, the patronage of Bismarck to Lists ideas, and
the rising popularity of figures like Henry Carey in the
United States who has some traction within Bismarcky and circles.
So there's this exchange of ideas that were only possible
even though they come from America if they set root
in foreign countries. It reminds me of the kind of
modern listing and concepts that helped Japan be built into
a economic superpower following the war. You know, you hear
a lot about Japanese management techniques, but if you dig
into the origins of those management techniques, in many cases
they were American management techniques that had no purchase inside
the United States. So I suppose you'd call it kind
of like ideological boomerang effect. And you know, list is
important because he was able to to I guess, have
these ideas spread in ways that the American Academy had
no interest in spreading the ideas of their ideological opponents,
the protectionists in the United States, I guess variously the Federalists,
the Republicans, the Whigs, the Anti Masons, and then the
modern Republican Party. They had a fairly short run. They
were never interested in dominating the Academy or making inroads
there beyond the Wharton School at the University of Pennsylvania,
which becomes mostly short up as a protectionist institution by
again the boomerang that comes back from the German historical school.
So they're interested in governance. They have a great deal
of success in spreading their versions of protectionism, which again
come from the same They're rooted on the same tree.
That lists is, there's a very few degrees of separation
between them, but they mostly do that as an artifact
the state power when they become a dominant Union party
following the Civil War. Throughout the Civil War, when the
Democrats are basically abolished from the field until eighteen seventy seven,
so you know, they used an entirely different method state craft,
in particular Erasmus P. Shin Smith going and kind of
undoing a lot of British work in Japan in the
eighteen seventies as the number three yeor number four man
in the State Department. The strong ties that Seward and
Hamilton Fish, Secretary of State, Fish have with Alexander the
Second of Russia that result in the sale of Alaska
to the United States, that result in Alexander the Second
being the only national leader to support the Union in
the Civil War, sending fleets to San Francisco and New York.
So you know, it's there were other means of spreading
these ideas, but I think the destruction of the Americans,
of the American school proper by the Great Reproachment, the
transplantation of Cobdenism in a transatlantic sense from Britain to
the United States in that period, and it really led
to this just complete burial of protectionist thinking in the
United States until Donald Trump revived it. Also a Wharton
Man right, and Trump comes out of nowhere even as
early as twenty fourteen, digging up strange quotes about learning
to think continentally, getting mocked by the media for calling
himself tariff Man on stage until someone pulls out that,
you know, McKinley. President McKinley, the Apostle of protection used
that as a campaign slogan some you know, one hundred
and twenty years before. So for some reason the spark
was kept lit long enough in the United States to
be revived. And you'll find through a survey of the
literature that it did kind of transfer through the old
right to a degree. There were a handful of American
system American school protectionists in the paleo conservative camp, which
is of course quite a jumble if anybody's ever looked.
But yeah, I think List's popularity and his durability came
from being the kind of I guess like the the
ideological leader of what supports nationalism, the econometrics that bind
a polity together everywhere but the United States. His ideas
were formative here, but they were I guess, done several
times better by his followers like Henry Carey, Erasmus P.
Shein Smith, David Hall, Rice Samuel, or Simon Patton. There
are quite a few of them that were, you know,
much more advanced thinkers and much more granular. And they
had their specific critiques of List as well, but they
didn't with the exception in some cases of Kerrie managed
to break out of the American paradigm. And what's funny
about List, as this kind of father of global protectionism is,
you know, he was critiqued by his American counterparts is
not being universal enough. He was not the kind of
the great generalizer of protectionism. You know. As part of
his historical analysis and his inductivism was saying that there
is no universal principle of economics, unlike what Smith or
Ricardo would have their readers believe that nations are highly specific.
The types of people they have within them are radically
different from one nation to the next, The resources that
contain are radically different. There's a context here, you know,
and this is kind of the root of historicism is
that it is contextualized. So that's a kind of rich irony.
But you can see how that message in a way
leads to a universality and that there's something unique about
you as an Italian, right, There's something you need about
you use a Japanese and there's something unique about the
resources you command as a leader of this country. And
that means, you know, you will be able to develop
a very unique set of industries and either trade for
the rest or as an emerging kind of revisionism of
list that I mentioned from Mark William Palin is implying
lately engage in colonialism. I mentioned that list, you know,
had he recognized the three stages, and that if you're
at the third stage, as England was, you were going
around with your big navy and your merchant marine fleet
and your prominence as the workshop of the world, and
it was in your interest to try and import everybody
else's raw materials and give them back much more expensive
value added manufactured goods, prevent them from ever having an
industrial base, keep them captive control even the amount of
food they can eat. Simon Patten, who I mentioned. He
brought up that monocropping, you know, really reduced a nation's
ability to have hardened itself in a sovereigntist fashion against
this kind of foreign predation. So you know where we
see countries even in Western Africa now that just produce chocolate, right,
I can't remember which one it is, the Ivory Coast
or something where you can watch videos of guys going
around with buckets and sticks and they're just shaking cocoa
beans out of trees. There's no industry there. You know,
the most advanced form of transportation is a mopet, and
yet you're buying chocolate. Chocolate is this global staple at
this point, but not a chocolate bar is produced where
the beans are grown. So list foresaw that. He said,
you know there's places where it's just not probably going
to be possible. And if that's true, then you know,
and you need to garner the foreign resources of other
countries to make articles for export for your export economy.
I mentioned Chinese electric vehicles. A lot of those resources
don't come from China. They come from other countries. They
are then refined into and that value added into a
complete product. That's the exported but more advanced forms of
protectionist theory, and I see economists like Charles Benoi from
the Coalition for Prosperous America, which is the leading and
perhaps only protectionist lobby in the United States, say, you know,
why would you export any of your energy? Why would
you export oil at all? Right? Why you know these
are limited, finite resources within your own national boundaries. Why
would you even export food? Why would you allow the
Chinese to buy Smithfield and not only export, not only
own the largest American port producer, but also purchase like
two thirds of America soybeans to feed their own pigs.
Why would you take nutrients out of your own soil?
Why would you take or out of your soil to
export it? So in a very i guess, almost autistically
granular system of protection, you're seeking the maximum advantage on
a global scale by only refining for export things that
you're getting from lesser countries, and that way you're not
actually reducing or removing natural resources from your domestic market
or economy. And you know this leads to accusations of imperialism.
You know, Palin has multiple examples of nations in a
kind of circumstantial sense like Japan who get on board
with American school ideas and then immediately roll up on
their lesser developed neighbors. So that is, I guess, a
kind of emerging theory. And I'll note that Palin is
attempting to do this, and you're going to roll your
eyes at this peek to develop a kind of ultraliberal
third worldist free trade movement. Right, it's kind of a
very new thing. Like think about wokeism and free trade together.
So that's where these critiques of list are coming from,
these emerging critiques. Somebody put me onto that recently. They said,
he got to check out this group of globalist like
like woke college students or whatever around Palan. They're all
into free trade, you know, rather than free trade being
this kind of bugbear. I'm sure you remember the wto
riots kind of traditional left orthodoxy that emerges from Marxist
critiques of free trade that used to predominate. And this
is the kind of new idea. Fix A is boiling Palan,
boils everything down to Cobdenism versus Listians. And while he
acknowledges some of the other contributors to protectionist theory, they
are all kind of condensed into list, you know, through
the name list in itself.
Speaker 1: Well, I assume that the fact that so much of
our manufacturing, American manufacturing is overseas to even institute a
proper Listian kind of approach to our economy. Now, say
we had someone come into power who this is what
they wanted to do. To see it succeed the way
it should, we'd probably need to build a whole much
more manufacturing factories and everything. Can you see it being
done with the level of manufacturing we're at right now
as a.
Speaker 2: Nation, Well, it is being done through the kind of
extension into the Biden administration of Trump's trade policies and
then also the ira and the Chips Act, these massive
subsidies from the Biden administration toward securing a new high
end manufacturing sector for semiconductors, green technology, electric vehicles, and
the irony there is we've turned from the source of
these ideas. You know, I mentioned the kind of Chinese
predilection for using nineteenth century American political economy to build
its export based economy, to establish its tariffs, establish a
strong domestic market infrastructure. They do this through bountying technologies.
You know, in almost every case, if it's their high
speed rail network that was done by having the China
the Japanese come in and build out high speed rail
networks to a limited degree reverse engineer. Those don't need
to buy Japanese trains or rail anymore. You're building it yourself, right,
and now you can export that like they're planning on
doing to places like Vietnam. So China's using what Hudson,
you know, titled his text them his protectionists takeoff. China
is using these techniques Hudson at the beginning of that book,
he's I don't know, I don't want to say clueless,
but Hudson, you know, a typical academic. He talks about like,
you know, it's funny. There's no real market for these
concepts in the United States, but they sure do love
me in China. They bring me over there all the time.
So United States is in this hilarious position where and
maybe protectionists can take advantage of this or will just
naturally benefit from it that China, as a competitor to
the United States, is now creating the rules much like
England did for someone like Friedrich List two hundred years ago,
and the sad irony I suppose, depending on how you
feel about it, is that reindustrialization in America is being
driven by nations that we industrialized, because in the mid
twentieth century, this was our export. As we switched to
a global free trade economy, as we gradually abolished tariffs
and de industrialized, that future investment was going to places
like Japan to prevent it from falling into communist hands.
Japan at a very active communist party. The United States
needed to not only maintain Japan militarily, which created great
savings for the nation of Japan. It didn't really have
a military until recently. The United States was securing it.
The United States was ensuring that communists couldn't take over
Japan through its patronage or vassalization of the one party system,
the LDP, the nineteen fifty five system as they call
it there. And you know, Japan built this highly protected
economy that used central banking to deflate its currency to
drive exports. Now we hear those lines from Robert Leitheiser,
who was Trump's United States Trade representative, Right, we need
to deflate our currency to drive exports. You know, we
need to engage in punitive tariffs to achieve this middle ground,
which is closer to list I would say a fair trade,
as Peter Navarro and Leithheiser call it, where you only
use a tariff to abolish a foreign tariff, which does nothing,
of course, to replace the income tax, which everybody in
the GOP believe's theft. Right, this post nineteen thirteen system
that pivoted from the collection of duties from foreign manufacturers
who wanted access toward domestic market to instead picking the
pocket of American workers. So, you know, these are half majors,
and they're really just meant to compete with a country
that's using what it learned from America's shift out of
an agrarian society that was disconnected into the kind of
envy of the manufacturing world. And so where are these
industries coming back to the United States from? Well, Europe?
You know, I watched a documentary the other day from
the fire Financial Times about the countries building plants in
the United States as a result of IRA and Chips
Act subsidies. They're coming from Denmark. We rebuilt Denmark with
the Marshall Plan to prevent it from going communist in
the post war era. That's boomerang back. You may remember
fifteen years ago when Fiat bought Chrysler and the irony
there is. One of the hallmark proposals or projects of
the Marshall Plan was sending automotive manufacturing equipment to Yanni
Agnelli of Fiat in in the nineteen fifties. We built
the Italian auto industry in large part to provide high
wages to prevent it from going communist, you know, when
the CIA wasn't preventing the Italian communists from winning elections outright,
So that's a boomerang that came back. We industrialized Italy,
we export protectionism, We show them how to do these things.
We build from rupple new entirely new economies. And because
we have forsaken our own industrial investment to do that,
because we send the money to build the transistorization or
solid state manufacturing economy in Japan, American financial capital buys
low and builds an entire industrial sector and it doesn't
happen here, and it moves on when it has to
come back for security reasons or energy reasons. You're seeing
German companies now well not reshoring, but offshoring their industry,
their new build industry to the United States, Biden has
refused to export liquid natural gas. This is kind of
seen as a campaign a campaign gift to the I
guess the Greens in the United States, right, he's trying
to maybe buy off environmentalists, But what he's also doing
is massively raising energy prices in Germany. Energy prices in
the United States are very low. Germany is being told to,
you know, withdraw foreign direct investment and economic interdependence from
the Chinese as a security issue, so that cheap labor
from China. Germany's last offshoring target is now offshore to
the United States. But of course we built the West
German economy. They're a vassalized state. Germany has probably more
American military power within its borders than German military power
because we secured them. So we spent all this money,
We spent all this money building these protectionist states, and
now I guess the bills come to and they're reshowing
to the US. Even Trump has floated, you know, while
he wants a massive tariff on Chinese electric vehicles to
prevent their importation here, he would be okay if they
built plants here. So that's the kind of bitter sweet
aspect of these restoring policies. Plus, as a lot of
you guys know, these are high tech manufacturing jobs. They
are there's a high degree of automation inherent to them.
So these new factories aren't taking in you know, one
hundred thousand Phonetians in Arizona are not going to the
Taiwanese semiconductor manufacturing plant and you know, looking through loops
and you know, like a jeweler and carving a semiconductor
out of a piece of silicon. That's how it works.
With each iterative new build of a factory, they're using
fewer and fewer people to do this. But also the
United States has visa carve outs just for high tech
or highly educated foreign foreign workers. So in many cases
each jobs are not going to even go to Americans.
So I don't like a black here, But there is
a boomerang effect where in a way, it vindicates List
and it vindicates the other protectionist thinkers that this is
a way of securing a foreign nation against you know,
securing a nation against foreign intrusion. And maybe the best
way to prevent Japan from going communist was to use
protectionist principles to secure it. Japan then became the industrializer
of the so called Asian Tigers starting in the nineteen seventies,
once Japan began to try and escape right the economic
choke hold and vassalization of the United States. You may
remember the last decade and the bursting of the Japanese
banks in the nineteen eighties and the inevitable transfer then
of Japanese industry or industrial development into China. But you
know that I think speaks to the shrewdness of a
fully financialized or what List would call the third tier
of the third phase, you know, the third part of
the third phase, a commerce nation. So you know, when
List talks about technology, he's not just talking about gadgets
and gizmos. He's also talking about advancement and the most advanced.
Like I said, the third point and the third most
tier or phase of economic advancement is commerce and financial
technology now predominates. And he points out, you know, what's
good for individuals. You know, it's a major Listing kind
of knock against Adam Smith is what's he called cosmopolitanism.
You know, you can't just think about individual benefit from
economy or econometrics and economic policy. You have to think
about national benefit and he says, yeah, to a degree,
we have to understand that technological subsidies may benefit fewer
people inside the nation itself, kind of pointing their presaging
the Cronius argument. But America's financial elite made a lot
of money off global labor arbitrage, finding cheap labor, gaining
cheap subsidies from countries like China, or cheap energy subsidies.
But China built a competitive hedgemon. Right, China is looking
like the US is pacing competitor now, and it seems
like the United States government has coerciing, especially the venture
capitalists who built China's dual use meaning military and civilian
industrial base. There was a scandal about McKenzie and company
basically delivering to the Chinese fifteen years ago the roadmap
that they've used to develop a competitive economy. There's been
a lot of strange stories about venture capitalists like Sequoia
having to destroy their Chinese arm and now they're fully
on board their way in the US flag. They're investing
heavily in defense technology that's meant to contain China's rise.
They're using the same talking points you hear from Chinese
economists about the use of so called government growth funds
in China or hear private public partnerships. So yeah, there's
protectionisms back in a weird distorted way, but it doesn't
really have anything to do with nationalism or America as
you know, again a common domestic market. Yet so it's
very perverse and strange. I don't know, I don't really
know how to qualify beyond those means. I mean, I
guess that's like the kind of the tomorrow of these
Listian ideas.
Speaker 1: Well. I really appreciate everything. Thank you. That's a lot
of information, and I think this is one of those
episodes that some people might even want to listen to twice,
because I know I'm going to go back and listen
to it over again. I look forward to editing it
so I can listen to it again. Tell people how
they can find your work.
Speaker 2: I'm on Twitter at Cozy tv, Wendell all one Word,
and I stream Fridays and hopefully a lot more coming
this fall than just Fridays on Cozy dot tv slash Wendell.
Speaker 1: I will, as I did last time, include your links
in the show notes, and I really do appreciate it.
Thank you. I appreciate the wisdom that you bring and
the I think the way you presented, I think you're
one of the best presenters of information you know that
we have. So thank you very much. Hey, thanks for
having me on h I'll see you next time, all right,
take care,