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Why Americans Abandoned Smuggling in Favor of Lobbying and Welfare

Summary:
The American public’s hunger for liberty has decidedly diminished since colonial times. How has a people who once embraced subversive behavior in the name of liberty become complacent with an intrusive government? The difference between the attitudes of colonial smugglers and contemporary Americans toward their respective governments provides some insight. In colonial America, smuggling was ...

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The American public’s hunger for liberty has decidedly diminished since colonial times. How has a people who once embraced subversive behavior in the name of liberty become complacent with an intrusive government? The difference between the attitudes of colonial smugglers and contemporary Americans toward their respective governments provides some insight.

In colonial America, smuggling was pervasive and largely embraced by the public. George H. Smith in his article “Americans with Attitudes: Smuggling in Colonial America” notes that smuggling was not restricted to a small class of otherwise immoral outlaws, but was practiced even by upstanding and religious merchants. Swaths of merchants had no qualms about defying British trade restrictions and were often supported by a sympathetic colonial legal apparatus if they were brought to trial. Smuggling was practically an institution in colonial New England, where merchants could even buy insurance policies to cover their losses in the event of a seizure by British customs authorities.

Essentially, smugglers reduce the cost of government interference. For example, the Molasses Act was mercantilist trade restriction that imposed duties on molasses from the Dutch, Spanish, and French West Indies in an effort to prop up more costly British substitutes. Smuggling supported New England’s rum industry, which was dependent on molasses for the production of the colonies’ most important export. The benefits of smuggling were not restricted to New England, as Smith also notes that at one point at least three-quarters of the tea consumed by Americans was smuggled into the colonies.

Besides the obvious economic gain from smuggling, Americans saw English interference with commerce as something akin to foreign aggression. Trade restrictions in the colonies were enacted by the British Parliament for the purpose of promoting British industry, leaving Americans of all stripes without motivation to comply. This made enforcement incredibly difficult for British customs authorities, who had few accomplices in the colonies to carry out the Crown’s bidding. Smith notes that it was not uncommon for American colonists to trade with the French even while the latter were at war with Britain.

British authorities looked the other way for some time, many accepting bribes, but they cracked down on smuggling when Parliament passed the Sugar Act of 1764. Smith notes that the act brought increased regulation and bureaucratic costs that made compliance nearly impossible. Accused smugglers had to pay for their trial in advance (nonrefundable even if exonerated), were presumed guilty until proven innocent, and their prosecution did not even require evidence. However, colonists stood firm in their support for smugglers, which was a major contributing factor in the Revolution. One prominent example is found in American merchant and founding father John Hancock, who was hailed as a hero across the colonies when a smuggling case against him was dropped.

So, what happened to our will to resist an intrusive government? Today’s Americans seem quite complacent with, or even embrace, extensive government intervention in the market. Excessive taxation and burdensome regulation continuously pass through the halls of Congress without much of any meaningful resistance from the public. Today, one can hardly imagine popular support for a bootlegger or tax evader, much less the emergence of an insurance industry to cover such offenses.

The late great Walter E. Williams dedicated an entire collection of his essays to this phenomenon entitled American Contempt for Liberty. Williams asserts that a major contributing factor in Americans’ rejection of liberalism is a decline in morality. He writes, “The moral tragedy that has befallen Americans is our belief that it is okay for government to forcibly use one American to serve the purposes of another.”1 He also notes that around two-thirds of the federal budget is allocated toward this purpose.

This drastic increase in Americans’ dependence on government can be traced back to the shift in political institutions brought about by the American Revolution. Prior to the Revolution, only a very small number of Americans could hope to lobby Parliament, located across an ocean, for special favors. But today the American government is very much geared toward doling out privileges to a wide array of American special interests.

Benjamin Franklin warned, “When the people find they can vote themselves money, that will herald the end of the republic.” Williams notes that Americans use the political system in this manner to avoid the market discipline of profits and losses. He writes, “That’s why they [businessmen] descend upon Washington calling for government bailouts, subsidies, tariffs, licenses, and other special privileges.”2

America’s transition from a British colony to a democratic republic was marked by an increase in public participation in government. In Democracy: The God that Failed, Hans-Hermann Hoppe explains how intervention can become rampant in a society where government office is open to the public. He writes, “Privileges, discrimination, and protection do not disappear. To the contrary. Rather than being restricted to princes and nobles, privileges, discrimination, and protectionism can be exercised by and accorded to everyone.”3

While colonial merchants resisted government overreach by the British, contemporary Americans subject each other to similar government intrusions for their own benefit. The erosion of America’s desire for self-governance can be attributed not only to a decline in morality, but also to the poor economic incentives fostered by our political institutions.

  • 1. Walter E. Williams, American Contempt for Liberty (Stanford, CA: Hoover Institution Press, 2015), pp. xviii–xix.
  • 2. Williams, American Contempt for Liberty, pp. xviii–xix.
  • 3. Hans-Hermann Hoppe, “On Monarchy, Democracy, Public Opinion, and Delegitimation,” om Democracy: The God That Failed: the Economics and Politics of Monarchy, Democracy, and Natural Order (New Brunswick, NJ: Transaction Publishers, 2001), p. 83.

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