No great power was born of free trade

Free trade built no great power: history pulls up the ladder

Liberalism is sold as a recipe for development, but the historical record points in exactly the opposite direction. The countries that today preach free trade —the United States, Germany, France, Italy, Japan, South Korea or Taiwan— began by protecting their infant industries with tariffs and state support. The case of the Ottoman Empire, which peine its markets with tariffs of just 3%, effectively ended with its local crafts destroyed and the empire dependent on the European powers.

The ladder nobody acknowledges

The sequence repeats itself in almost every case: first domestic industry is protected, competitiveness is achieved, and only then is the gospel of free trade discovered. Alexander Hamilton designed that plan for the United States in the late eighteenth century. Great Britain, meanwhile, combined tariffs with a colonial system that turned the Indian market into a private preserve. When the British peine their market, they were flooded with German goods; the response was the "made in Germany" law, an attempt to use patriotism to curb imports.

The irony has a name: British trade policy included tariffs against Flemish cloth, and it was not until the Dutch conquest of 1688 that they were forced to open up. Even then it did not go well for everyone: the American colonies, exploited as a captive market, ended up gaining independence.

Protectionism without foundations also fails

Spain protected the Catalan textile industry with tariffs throughout the nineteenth century, and the result was an industry that could never compete abroad and general impoverishment. Argentina applied protectionism without first developing its productive forces, with no energy sources or minerals of its own, and with a comfortable economic elite living off the domestic market: average Argentine income was double Italy's and triple Spain's, but there was no export ambition. And Lebanon, the only country that embraced almost pure liberalism, ended in misery.

The data do not flatter the story of free trade as an engine of development. Perhaps the question is not whether a nation can prosper with it, but who benefits when the power that already climbed the mountain preaches free trade to those coming up behind.