I just finished What Lincoln Believed: The Values and Convictions of America’s Greatest President by Michael Lind. (http://www.amazon.com/exec/obidos/tg/detail/-/0385507399/qid=1129097993/sr=8-1/ref=pd_bbs_1/102-6558801-7682530?v=glance&s=books&n=507846) It was enlightening in many ways – I never realized how deep-seated Lincoln’s racism was, or that to the end of his life he was committed to “colonization” (deporting all blacks from the country as soon as emancipation had been achieved). But another thing that struck me was this: In 19th-Century American politics, the most important, galvanizing national issue, after slavery, was “protective tariffs.” Both Henry Clay’s Whigs and Lincoln’s Republicans were entirely committed to them, to stimulate America’s infant industry by shielding it from competition from the more advanced manufacturing interests of Europe, especially Britain. (The agrarian interests of the South, OTOH, were always opposed to them – since they manufactured very little, they were in effect bearing the cost of the North’s industrialization, by being forced to pay higher prices for manufactured goods than they would have to pay under an open-borders free-market system. That was one cause of the regional friction leading to the Civil War.) Tariff protection remained the prevailing U.S. policy until after WWII – when our industry had become so fully developed that a free-trade policy in foreign commerce was more to our interest.
Well and good. But I wonder – was tariff protection actually ever necessary? In A History of the American People (http://www.amazon.com/exec/obidos/tg/detail/-/0060930349/qid=1129098284/sr=2-1/ref=pd_bbs_b_2_1/102-6558801-7682530?v=glance&s=books), conservative scholar Paul Johnson expressed deep skepticism on this point – on the grounds that America from the beginning had such a huge internal market that that alone should have been enough to stimulate the development of industry here, regardless of what came into the ports at what price.
Has any modern economist seriously studied this question? And, would the answer have any relevant application to developing nations today?