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Economic Protectionism Assures Fair Trade

Excerpts from the proceedings at Lyndon LaRouche's lecture to Prof. Wilhelm Hankel's senior adult economics class at the Johann Wolfgang Goethe University in Frankfurt, Germany on May 29, 2006.

Questioner: [translated] If I understand the U.S.A. in the right way, the U.S.A. stands for the principle of the "open market" [in English]. That means it gladly wants to export goods to the whole world. If I understood you correctly, you proposed in the beginning of your speech that you want government support for the auto and machine-tool industries. I would like to know why the U.S.A. on the one hand wants to export to other markets, and still support their most important industries, protectionism for the world's biggest nation. And perhaps a last thought, Friedrich List helped little Prussia with his protective tariffs for sure, but Prussia was a dwarf compared to England at that time.

LaRouche: Well, the United States is actually the world's leading example of a protectionist economy—except in moments when we go insane, then we become an open market economy, a free-market economy. Because, you're dealing with a system, the American System, remember, we are a product of Europe. And the way we came into existence, apart from some indigenous populations of significance in the Americas, as in Mexico or in Peru, for example, and some small populations of so-called American Indians in North America, we are Europeans. We lately have begun to become Asians, as well, through the migrations from Asia.

But, what we represent, to understand us, not some gossip on the street, but what we are, those of us who are serious, who think in terms of preceding generations, and think of our history as a whole, we are the prime example of a protectionist economy: This was called the American System of political economy, to which you refer in the case of Friedrich List, who brought this in. The idea of the credit system, which he also shared with Henry Carey, who was the leading economist, who influenced Bismarck. And Bismarck's system was the American System. Bismarck brought it in 1879, approximately, when Carey was here. And there were a whole group of people around.

And Bismarck, he's misrepresented by people who like to defame Germany, because he's actually a follower in principle of Friedrich Schiller. He actually thought as a patriot and world-citizen. He created Germany, as a state, by statecraft. It was his intention do so. All kinds of factors were involved. And what Bismarck did, was brought the American System to Germany, and as you may recall, the German system under Bismarck was a protectionist system.

Now, Wilhelm II was a different kettle of fish, and changes occurred. He had bad ancestry, he got it from the wrong country. But, that was the problem.

So, what's happened is, is that we have lived under an empire, since actually 1763, since the end of the Seven Years' War, when Britain triumphed by having everybody else in Europe shoot each other. And Friedrich der Grosse was one of the key targets in this process: The British backed him against everybody, and everybody attacked him.

So, the British weakened Europe, and by weakening Europe as a whole, managed to consolidate with the seizure of India and northern North America, Canada, they became an empire. Not the British monarchy, but the British East India Company. And you have an international financier-oligarchy, centered on London, centered traditionally on Venice but centered on London, which dominates Europe; right now, dominates the world. It's the bankers, this kind of bankers.

So, the bankers want an empire. Every nation, in struggling against feudalism, fought, as in the case of the Treaty of Westphalia, fought for a sovereign nation-state. And set up protectionist programs of different kinds. They didn't all agree, but the principle was, we must protect—.

In the case of the United States: We have, in our Constitution, established a system which is a national credit system, not a monetary system. I do not recognize any inherent value in money. Nor does anybody who looks at it from the standpoint of the American System. Money has no inherent value. And when you become the slave of money, you get a phenomenon like you're getting in Europe today on raw materials speculation. It is protectionist measures by government which build fences around sections of the economy, which keep the economy within bounds of safety and balance. The main function, for example, in government is to have low borrowing-costs for long-term investments which are in the public interest, whether private or public. And to secure those things. Our policy is, if an industry is useful, it should be able to be protected to get a price which enables it to continue to function.

We are inherently a protectionist system: We used tariffs. We used selective legislation, tariff legislation, all kinds of regulations, and we called it a "fair trade system." For example, in Germany, when Germany was operating in cooperation with the United States in the immediate post-war two decades, Germany was functioning on that kind of system, on a protectionist system. It's a standard; you must protect your industries.

List was an important phenomenon, but List, of course you know, was killed. He died under very mysterious circumstances after returning from England. And he was killed because he was hated, and feared. And therefore, there was a period of disruption. And Bismarck reversed it, and went to a protectionist system.

So, my view on this thing, is, a protectionist system is essential. We called it a "fair trade system," as opposed to a free trade system. If we employ somebody, if we invest in someone, they have a right to have a fair chance to succeed in retrieving their capital, through production. Therefore, we protect them, in various ways, by taxation, by special concessions on taxation, whatever is necessary. We think about the economy as a whole. The function of government in economy is to think about the economy as a whole. Think about all the essential parts of an economy, and give fair treatment to all sections of the economy which are useful to us.

Admittedly, as your question implies, today it's the other way. But, if we're going to get out of this depression, which is coming on now, the United States is going to have to do it again. And we'll all want to do it, in Europe as in the United States. That's the only way we'll cover it.

Questioner: Thank you.


About LaRouche - the American economist and statesman that has become a legend in our time in the fight to advance civilization, protect mankind, and create a new renaissance: 

" We are at a point in world history. 
At the present time, the international monetary financial system
of the world is in the process of disintegration. That does not mean the end of the world. It means that we either make certain changes, or this
planet will go in fact into a prolonged new dark age, comparable
to what happened to Europe during the middle to late part of the
14th century." (LaRouche, June 15, 2006)

About the series:  Truth versus Guns,
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