Home > Boards > Stock Clubs > Market Trends and Strategies > Super Hero Justice League Team America.

Honest Abe's spending legacy is a cautionary tale

Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
overachiever Member Profile
 
Followed By 303
Posts 32,207
Boards Moderated 1
Alias Born 08/29/06
Kids and the Covid-19 Vaccine: Is it Safe and When Can They Get It?
The U.S. Food and Drug Administration authorized the Covid-19 vaccine from Pfizer Inc. and BioNTech SE for use in children 12 to 15 years. The shot is the first cleared for administration in the younger age group, after the FDA last December approved the vaccine for ages 16 and up. Here is everything you need to know about Covid-19 vaccines and children:
NBC Says It Won't Air the Golden Globes in 2022
California Governor Proposes Tripling Spending on Stimulus Checks
FDA Authorizes Pfizer-BioNTech Covid-19 Vaccine for 12- to 15-Year-Olds
Top Stories of the Day
Top Company News of the Day
Mortgage Startup Better to Go Public in SPAC Merger
New Jersey Lawmakers Threaten to Strike Back Against Congestion Pricing Plan
Tech Stocks Pull Nasdaq Composite Down More Than 2% -- 2nd Update
Tech Stocks Pull Nasdaq Composite Down More Than 2%--Update
Biden Disputes Argument That Enhanced Unemployment Benefits Are Hampering Economy
Tech Stocks Pull Nasdaq Composite Down More Than 2%
Trial Begins for Lawyer Who Sued Chevron Over Ecuador Pollution -- Update
USDA Crop Progress: Corn Progress-May 10
USDA Crop Progress: Winter Wheat Condition/Progress-May 10
USDA Crop Progress: Spring Wheat Progress-May 10
USDA Crop Progress: Soybean Progress-May 10
Wheat Drops as Funds Prepare for WASDE
Biden Administration to Start Doling Out $350 Billion in Aid to State, Local Governments -- Update
NTSB Raises New Questions About Fatal Tesla Crash in Texas
Duke Energy on Track for Record High Close -- Data Talk
State Prosecutors Warn Against Facebook's Plan to Create Instagram for Children -- Update
Elliott Management Has Stake in Duke Energy -- Update
Producer Price Index Growth Expected to Slow -- Data Week Ahead Update
Duke Energy Shares Rally on Report of Elliott's Involvement
Unions Say Mexican Auto-Parts Maker Is Violating Trade Deal
Elliott Management Has Stake in Duke Energy
Biden Administration to Start Doling Out $350 Billion in Aid to State, Local Governments
overachiever   Wednesday, 01/21/09 10:16:27 PM
Re: None
Post # of 6222 
Honest Abe's spending legacy is a cautionary tale


NEIL REYNOLDS

Globe and Mail Update
E-mail Neil Reynolds

January 21, 2009 at 6:00 AM EST

In February, 1861, three weeks before his inauguration, U.S. Republican president-elect Abraham Lincoln assured the troubled country that his first priority as president would be higher tariffs - an economic policy he had championed throughout his political career. In 1832, announcing his candidacy for a seat in the Illinois legislature, Lincoln had said: "I presume you all know who I am. I am humble Abraham Lincoln. My politics are short and sweet, like the old woman's dance. I am in favour of a national bank, the internal improvement system and a high protective tariff."

Honest Abe indeed. For 30 years, he pursued these three policy objectives with remarkable consistency and dedication. As a state legislator and as a congressman, he promoted the internal improvement system, a euphemistic phrase that meant deficit spending to fund extravagant economic stimulus programs. As president, he established a central bank to print paper money not supported by gold (the first easy-money "greenbacks") and raised U.S. protective tariffs to the highest levels in the country's history.

Taken together, these policies changed U.S. history perhaps as much as his Emancipation Proclamation. Charles Dickens certainly thought so, asserting as early as 1861 that Lincoln's high tariffs must be regarded as the fundamental cause of the American Civil War.

In 1860, the United States had one of the lowest tariff schedules in the world (average rate: 17 per cent). In 1861, it raised tariffs twice, the first time to 26 per cent, the second time to 36 per cent. In 1862, it raised tariffs to 48 per cent and levied them on a much broader range of goods (including every single farm crop). They remained in effect until the First World War.

Economists say 80 per cent of the costs imposed by these tariffs fell on the import-dependent southern states. In his inaugural speech, Lincoln explicitly promised these states that he would not invade them - provided they paid all "the duties and imposts" that the federal government levied on them.

Perhaps more instructive of Lincoln's economic instincts, though, was his commitment to the internal improvement system. Railways and canals were the fashionable infrastructure projects of the time - and the great American debate in the years preceding the Civil War was less about slavery than about using public debt to fund the laying of private railway track.

Historically, presidents had strongly opposed this abuse of the public purse as unconstitutional. (Thomas Jefferson and James Monroe both exercised presidential vetoes.) State governments, however, borrowed huge sums of money for grandiose projects - with inevitably unfortunate results.

In 1837, the Illinois legislature authorized the expenditure of $10.4-million (U.S.) to build 1,341 miles of railroad to connect by rail the towns and villages of the state. Lincoln was an enthusiastic proponent.

One historian wrote: "In the log-rolling of this bill through the legislature, Lincoln was one of the worst pork-barrelers."

In the end, only 26 miles of track got laid. The scheme collapsed amid graft and corruption, leaving the state bankrupt. Historians date the introduction of "spoils" - public spending corrupted by corporate graft - to the internal improvement system that squandered hundreds of millions of dollars in Illinois, New York, Pennsylvania and other states.

The essential nature of the internal improvement system was a neo-mercantilism - an alliance of government and industry in which government dispenses public money to private companies, imposes high tariffs to protect them from competition and regards central banks as an indispensable mechanism to ensure never-ending growth through continuous inflation.

Almost two centuries later, the only part of the internal improvement system that the U.S. has emphatically discarded is the commitment to high tariffs (which aren't compatible with globalization).

President Barack Obama has stage-managed his ascent to the presidency by wrapping himself in Abraham Lincoln's monumental mantle. He will find in Lincoln much of great worth to emulate. But he will find much to shun. Lincoln was more than the stone statue that overlooks Washington's National Mall. Much of his economic legacy was perversely destructive - as was much of his executive legacy.

Lincoln suspended habeas corpus and the constitutional right to free speech (closing newspapers and jailing editors), imprisoned thousands of people for treason, censored telegraph communications and operated a secret police force.

Lincoln's conscription law permitted the buying of exemptions from military service for $300, making Union forces significantly mercenary. (In 1863, "draft riots" in New York City left more than 1,000 people killed or wounded.) Lincoln put civilian American citizens on trial in military courts.

In comparison, President George W. Bush was the model of executive restraint in wartime.

In the posthumous postwar years, historians say, Lincoln's inflationary greenbacks helped precipitate the Panic of 1873 - a severe depression that lasted several years. Mr. Obama, please take note.

Lincoln's high tariffs, on the other hand, compelled Sir John A. Macdonald to adopt precisely the same economic policy for Canada. Lincoln designated his strategy as "the America Policy." Macdonald designated his as "the National Policy."

In this sense, Canadians must regard Lincoln as an honorary father of Confederation.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090120.wreynolds0121/EmailBNStory/robColumnsBlogs/

We are apt to shut our eyes against a painful truth... For my part, I am willing to know the whole truth; to know the worst; and to provide for it. --Patrick Henry, Patriot and Hero of the American Revolution
Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
X
Current Price
Change
Volume
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist
Consent Preferences