The Declaration of Independence is often misunderstood, which I wrote about here. One of the most important, yet overlooked, sections of the document is the list of indictments against King George III. The indictments are further evidence that the Declaration was never meant to be a revolutionary statement. From the Magna Carta to the colonial constitutions, George III was indicted for violating existing laws. Jefferson listed a total of 27 indictments against the King. Throughout February, we’re going to look at one indictment a day, why it was levied, and why it is still relevant.

Indictment #16 reads as follows:

For cutting off our Trade with all parts of the world

Why was the indictment levied: Great Britain passed the Navigation Acts in 1660 and they were amended several times over the years. The Navigation Acts fostered mercantilism – the idea that all trade within the empire is regulated by the empire through protectionism (tariffs). The empire (or state) can restrict or eliminate trade to any outside bodies. Defenders of mercantilism claim that maximizing exports and minimizing imports enriches the empire.

At this point in world history, Great Britain, France and Spain were the major players on the global economic stage. The colonies economically benefited from free trade with France and Spain, however this was put to a stop by the mercantilist policies of the Navigation Acts. Great Britain amended the Acts to exclude the colonies from trading with France and Spain entirely. They were only allowed to trade with Great Britain.

Britain then excluded New England from trading with subjects of the Empire by banning trade with Ireland and the West Indies. They also blocked them from fishing in Newfoundland. This expanded to include all of the colonies, essentially making them completely dependent on Great Britain for trade. “Cutting off our trade with all parts of the world.”

Why is this important today: Unfortunately, mercantilism has been an aspect of American politics since day one. We learned little from Jefferson’s indictment. Alexander Hamilton, later Henry Clay, then later Abraham Lincoln, all wanted a mercantilist system in the United States. “Protecting” American economic interests means that the Federal government gets to pick winners and losers in the market. This benefits government bureaucracy, but the costs are passed down to the people. For example, let’s say another country produces grapes more efficiently than we do:

• Geography discriminates. Every nation is going to be better at certain things than others due to differences in ease of cultivating natural resources. Certain countries will have a better climate for grapes than others.
• In an effort to protect the American economy, the Federal government places a tariff on grapes that come from “Country X.”
• American citizens could have bought cheaper grapes from Country X, but they will be forced to pay a higher price for grapes that are grown not as efficiently here.
• If they can buy grapes from Country X, they pay a higher price due to the tariff (tax).
• If they can’t buy grapes from Country X, piracy and black markets fill the void. When government runs afoul of these individuals, they are fined or imprisoned.
• The Federal government does not just raise prices by closing us off to Country X. They pick which grape makers we can purchase from internally. Once tariffs are imposed, this gets the attention of organizations that want their specific grape company protected from competition. They lobby government to get anti-competitive measures on the books.
• Innovation then screeches to a halt. If an entrepreneurial citizen figures out a way to grow grapes more efficiently than Country X, the companies that are already protected by government anti-competitive measures can lobby to shut down that person’s innovation.
• This creates monopolies. All monopolies are government created. Regardless of what progressives teach you to believe.

And this is just grapes. Grapes can be food or wine. Imagine if we take these policies and apply them to something that has a large variety of uses, like oil. Oil affects transportation, which impacts travel, distribution and commerce. It’s also used to refine grain. It’s also used in plastics, which are used in medical devices, prosthetics, vehicles, computers, containers and numerous other essentials. When we implement “protectionist” measures on oil, it gets bureaucrats rich, but passes the costs down to us. Identical to the measures that Great Britain perpetrated against the colonies in the 18th century.

There will always be someone in another part of the world that can do something better and cheaper than we can. That should be an incentive for free market entrepreneurs to innovate, not an excuse for government to regulate. Mercantilist policies have disparate impacts. When we shut off those areas of the world to trade, we are “cutting off our trade with all parts of the world” and hurting our own citizens as a result.