America's Prosperous Pasts: The Gilded Age and Trump's Tariff Tango
Yearning for the Past: Trump's Yearning for the Alleged "Golden Era"
American conservatives, especially those backing current President Donald Trump, often harken back to a golden era, seeking to recreate the economic successes of the late 19th and early 20th century by reviving protectionist tariff policies. But is this a viable strategy, or mere nostalgic folly? Let's dive into the Gilded Age, the era Trump's tariff talk invokes, and assess its true impact on the US economy.
The Sparkling Surface of the Gilded Age
Dubbed the "Gilded Age," this period witnessed a transition from raw materials production to manufacturing, earning the US the title of the world's largest economy by 1895. Despite significant income inequality, workers enjoyed a higher standard of living compared to their European counterparts. Yet, the prosperity was peppered with challenges like frequent and prolonged recessions, financial bubbles linked to rapid railroad expansion, and political machinations that we'd now classify as vote-buying schemes.
Tariffs: A Silver Bullet or Sideshow?
Trump claims that protectionist tariffs were the key driver of the US's wealth during the Gilded Age. However, it's debatable whether tariffs were as crucial as other structural factors like population growth, territorial expansion, and productivity advancements.
Tariffs in Action
During the post-Civil War era, tariffs averaged around 50%, safeguarding industries from foreign competition. For instance, American steel producers could sell at $61/ton in 1881, thanks to a $28/ton tariff on British steel, allowing them to reinvest profits [3].
Tariffs: Friend or Foe?
Recent research undermines the idea that tariffs were instrumental to the US's growth. Some scholars argue these policies were "incidental at best," potentially stifling resource allocation and fostering cronyism [5][2]. Even contemporary critics like Henry George likened tariffs to wartime blockades against domestic trade [4].
The Engines of Growth
Beneath the glitzy exterior of the Gilded Age, four primary factors powered the US economy:
- Population Boom: Rapid immigration and urbanization provided a steady stream of cheap labor, driving industrialization and consumer markets.
- Westward Expansion: Settlement of territories, fueled by railroad development and federal land policies, opened access to agricultural and mineral resources.
- Technological Leaps: Productivity soared thanks to technological innovations like Bessemer steel production, electrification, and manufacturing improvements.
Comparative Impact
| Factor | Role during Gilded Age ||-------------------|------------------------|| Tariffs | Mixed: Industry shield, cronyism breeder [2] || Population Growth | Critical for labor supply and demand || Territorial Expansion | Enabled resource access and infrastructure || Productivity Gains | Central to industrial competitiveness [3][5] |
In essence, the US thrived during the Gilded Age despite high tariffs, not because of them [5][4].
To Tariff or Not to Tariff: The Modern Quandary
Donald Trump's tariff agenda is rooted in the belief that it can revive the US to its Gilded Age glory, ignoring the multi-factorial landscape that characterized the era. As the complexity of the modern economy and society has grown exponentially, old-age tools may no longer suffice. Yet, Trump can dream about tariff-free economies, sandwiched between proposals to abolish his own imposed tariffs and boost Pentagon spending to a record $1 trillion.
Editor's note: The views expressed here may not align with the author's
Bonus Reads:
[1] The Real Reason the U.S. Was the Richest from 1870 to 1913.[2] The Folly of Protectionism: A Comparative Analysis of the U.S. Economy during the Gilded Age and the Donald Trump Era.[3] The Unseen Drivers of American Growth during the Gilded Age.[4] Henry George: A Critique of Tariff Policies during the Gilded Age.[5] The Myth of Tariffs: Exploring the Real Catalysts of the Gilded Age's Economic Success.
- Despite president Donald Trump's attempt to recreate the economic successes of the late 19th and early 20th century by reintroducing protectionist tariff policies, it's debatable if this is a viable strategy or simply nostalgic folly.
- In the Gilded Age, tariffs averaged around 50%, safeguarding industries from foreign competition and allowing American steel producers to sell at $61/ton in 1881, thanks to a $28/ton tariff on British steel, allowing them to reinvest profits.
- Recent research undermines the idea that tariffs were key drivers of the US's growth during the Gilded Age. Some scholars argue that these policies were "incidental at best," potentially stifling resource allocation and fostering cronyism.
- Population growth, territorial expansion, and productivity advances were central to the industrial competitiveness and economic success of the US during the Gilded Age, rather than high tariffs.
