No Taxation Without Representation (We Mean It)

Speaker 2

Phil Magnus, the economy.

Speaker 1

Old. We made it. We made it this far. Time to celebrate. You know, maybe we'll put together ⁓ I don't know what vanilla ice and nilly vanilli are up to, but if we can get them to perform live, that would be that would be something. And I I can't think of a better way of celebrating the birth of our nation than with my friend Phil Magnus, who has a piece that's running in Reason Magazine's July 4th issue. And Phil, why don't you tell us about that?

Speaker 2

Well, it's an exploration of ⁓ you know, what was the original cause? Why did we break away from England 250 years ago? And part of this relates to current day politics because you know, we've been living in the age of of Donald Trump's tariff agenda. And if you listen to Trump, he's not only justifying these tariffs that he's put in place over the last ⁓ you know, year and a half, coming up on two years now, based on current economic policy, he often appeals to the past. And one of the claims is Well, tariffs are a distinctively American thing, whereas free trade was a British thing. And, you know, we broke away from Britain, so therefore we must be rejecting free trade as the basic argument. We've all heard versions of this. ⁓ so what I do and the reason piece is I actually look at the origins of the revolution, and it turns out free trade is a major cause of the American revolutionaries. Thomas Jefferson even cites it in the Declaration of Independence. He says, King George has cut off our trade with the rest of the world. And you dig into the deeper history behind it, it turns out this is a theme that goes all the way back to 1761, the very earliest stirrings of a revolution in the United States. They happen in the port of Boston. And what's going on there is the ⁓ the Crown Parliament has put in new taxes, and they're ⁓ a lot of those taxes are on trade, on goods that are coming across the ocean. ⁓ because you it's easy to slap a tax bill on something when it arrives in poor. And there was a ⁓ claim by the crown saying, well, ⁓ people are evading their taxes by smuggling. So the king authorized this legal device and it was referred to as a writ of assistance. And a writ of assistance is basically a limitless search warrant to go out and ⁓ dig around and rummage through people's house ⁓ in search of evidence of smuggling. Imagine like the IRS agents, if they were just told, hey, you can just go knock on somebody's door. And dig through their accounts and figure out if they evaded their taxes last year. No court procedure, no due process, no ⁓ demonstration of cause. Everyone has a limitless search warrant. And the Crown starts executing these in Boston in search of smugglers. And that's where James Otis, who's a guy that we hear about in the context of the American Revolution, ⁓ he starts to make his mark. ⁓ he's this ⁓ attorney in Boston, and he's famous for the quote, no taxation without representation. But where he gets a start is in 1761, he files an unsuccessful lawsuit to stop these limitless warrants in search of tax evaders on tiers. And that lawsuit, even though it doesn't succeed, it puts him to the forefront of the cause because he's making a particular claim. He's saying, This new policy, this new means of enforcement, you're violating our rights as Englishmen that we have always enjoyed. And then over the course of the decade, more and more taxes are assessed. And he points out, That if you tax trade, you can also tax our property. You tax our property, you can also tax our transactions domestically. If you tax those, you can eventually tax our income. This type of thing. It's like a slippery slope down the taxation slide. And he's pointing this out. And and he get he gets to the argument. He says, Well, we never authorized you to tax our trade. We didn't vote on that. We don't have representation in Parliament that allows us to approve this policy. Therefore, what you are doing from abroad. Is illegitimate. It's an assertion of authority that you don't have. And this becomes the rallying call of the entire revolution. Thomas Jefferson picks this up from James Otis and Samuel Adams and some of the tax protesters in Boston in 1774. And he writes this pamphlet. He says that the access to free trade is the right of all Englishmen. And he goes through the legislative history and he says, you know, Virginia, when we were founded as a colony. We basically had an agreement with England that said, we're not going to tax your trade. You're not going to tax our trade. We're co-equal partners. Now parliament is asserting itself over us in imposing taxes that we did not consent to. So really what it comes down to is almost the entire story of why we break away from the crown, all the policy instigators go back to that James Otis protest against limitless warrants and non-representative taxation on trade. on tariffs. So if the British government had not been putting tariffs on the American colonies, we might still be part of Britain. You know?

Speaker 1

I was going to ask that in an alternate reality where the Crown and the British were like, ⁓ yeah, you know what? You're right, Americans. Yeah. What does that world look like? And as fun as that is, ⁓ James Otis seems to have been also looking into the future when it comes to taxation, because guess what? We are taxed on every single one of those things that ⁓ that he put out. Uh-huh. At the time, was the United States doing

Speaker 2

Exactly.

Speaker 1

better commercially w than England was? I mean was there a tension there where the English are like, wait a minute, this the colony is doing way too well. We need to be getting a little bit more of that. So

Speaker 2

There are a couple of things going on there. ⁓ first off, the American colonies are among the lowest taxed portions of the empire in that era. In fact, it had been basically like a period of benign neglect from Jamestown until about the 1760s. ⁓ Britain kind of said, Okay, we're gonna leave the colonies. They'll ⁓ do what they want to do, they're free to develop. Yes, we're gonna have some involvement in their affairs. ⁓ we appoint governors and things like that. Yes, we're involved in the defense of the colonies. There's a major war with France right before the outbreak of some of these tensions, and it's often seen as an impetus for it. But one of the major advantages of the North American colonies is they had a lower tax rate than England proper. And this is sometimes done for i intention. It's like we want to attract settlers to our new colony. How do you convince someone to sail across the ocean into like this disease-infected, swampy place called South Carolina. How do you convince people to go to Georgia? How do you convince people to go to Virginia? ⁓ that's really the frontier of ⁓ of civilization in that era. That there are records of colonies that get abandoned in North America and then they just disappear. Famous lost colony of Roanoke. You know, it's settled and then they come back a few years later with the supply ship and they're Where well, where are they? And we don't know what happened to them. So significant risk. Well, one of the ways that you get people to to come across the ocean. Is you offer them advantageous tax systems. You offer them better chances to gain property. So in England proper, it's a very stratified ⁓ society where you're ⁓ either a a nobleman, you're a lord, you're a gentleman, or you're the the rabble, you're the serf. ⁓ that was the old Middle Ages. And to kind of break some of those paradigms, it's like, well, you go to the New World. Yeah, you can start anew. And if you're fresh off the boat as an immigrant from ⁓ a working class family in Ireland, ⁓ but you have some ingenuity, you can take advantage of the favorable colonial system and ⁓ make something out yourself. So yeah, it it's it's actually an appealing place to be, but that also creates a paradox. It's like, well, why if they had the lowest taxes in the empire, why are they having a tax revolt? And that's only part of the question. Well. They're not having a tax revolt because of the severity of the taxes. They're having a tax revolt because of the way that they were imposed and the creeping cla ⁓ claims of them, that slippery slope. They know that, all right, well, ⁓ maybe it's a modest tax right now, but you're going to keep ratcheting it up. And in a couple of decades from now, ⁓ we will be taxed at the same level as the British Empire, if not worse.

Speaker 1

Yeah, I was gonna ask, what did those taxes look like? How how high were they? And in particular about on T, the T tax. Because obviously we hear that's the one that really got people riled up.

Speaker 2

Yeah, yeah. The Boston Tea Party. You know, it's it's not a big tax on in like your pocketbook. It's not something that it's not like Donald Trump's tariffs of ⁓ Liberation Day where he was putting like a fifty percent surcharge on ⁓ goods from certain countries he didn't like because he got mad at their social media feed or something. It's a very modest revenue measure, but it was the principle of the way that it was collected. And it was seen okay, first it's coming in from abroad in a way that we had no say over. ⁓ they're just suddenly asserting this authority to tax us. Where did that come from? And the second they're looking at it and they realize that the tax works to the advantageous position of certain favored companies that were involved in the trick T trade. ⁓ in other words, companies that were chartered by the Crown, maybe had members of the British Parliament on their boards. ⁓ it's a really kind of a racket. It's a mercantile racket rather than a market. And they're asking, well, well, wait a minute. You you're saying not only are you taxing tea that's coming into the colleys, but we have to buy this certain type of tea from this certain company whose director is the nephew of a prominent politician. ⁓ that doesn't look all that above the board. And they're like, well, why can't we get our tea from other countries that are offering it to us at cheaper? And They said, ⁓ no, that's forbidden. That's banned by the Navigation Act. So that's banned by this restriction on trade. All trade must go through London, or else it cannot go out to the European continent. And the colonists are kind of like, Well, we've always traded with the Caribbean. We've always traded with other countries, with ⁓ ships coming from other countries. ⁓ why are you asserting this now that we have to follow your new rules that we had no say in? And there's the instigator. I

Speaker 1

Good friend from Canada. Canada still ⁓ you know has an allegiance to ⁓ to the crown. And ⁓ he laments the lack of tea culture in the United States. And I and I wonder if, you know, after 250 years, if there's been a concerted effort in sort of the minds of Americans to say, we are not. Tea people anymore. We are coffee people. And ⁓ you would probably need to give me a lot of coffee before I would dress up as a Native American and start throwing boxes over the over the over the side of the ship. And c can you talk a little bit about, you know, the Boston Tea Party? Because that's one of the details that always sticks out is you have Americans who got dressed up, who donned the outfits of natives and and went on, you know, this ⁓

Speaker 2

Of civil disobedience, I guess is the way that we say it. It's one of the most famous ones in history. You know, they ⁓ that they get on board these ships and they throw the cartons overboard as a protest against the tax and as a protest against this kind of quasi-state monopoly ⁓ control of the trade. ⁓ so it is a signal intended for the crown. It's like ⁓ you know, it's it's a small amount of T, relatively speaking, ⁓ but there's money associated with it, and it's obviously ruined when it's thrown in the harbor. ⁓ but that wasn't the point. The principle was the show of protest. And really what happens afterward is what gets the revolution into full swing. Because ⁓ you know, parliament looks at this, they get news of the Boston Tea Party, and they're always like, ⁓ yeah, you think you're going to thumb your nose at us and flaunt our authority and ⁓ defy us in this way? Well, we're going to show you. So there are a series of retaliatory measures, ⁓ intolerable acts, as they're called. That basically say, all right, well, until Boston repays the tea, we're going to shut down the entire port of the city. And if you have these rabble rousing groups running around ⁓ throwing tea in the harbor and making these protests, we're gonna take away your right of home government and we'll impose a a a colony. So they actually remove the authority of the colony to govern itself. And you think about this, okay, colony wide, that's a big deal, but it's also a big deal for the New England town culture. Because especially in that era, most governance is done at a very localized, extremely localized level. It's you go down to the town meeting hall or assembly hall once a month, and it's the 50 people that live there voting on things and deciding what they're going to do. ⁓ so it's very community oriented. And if you strip away that structure of government, it centralizes it under a ⁓ an authority that's appointed from England. I mean, I mean, you're giving away the whole game. It's like everything in their life is now disrupted. And These putative measures that are taken against ⁓ the colony of Massachusetts, every other colony, the other 12 are sitting there like, ⁓ something's not right there. ⁓ if they can do that to Boston, one of our big ports, they can also do that to Philadelphia. They can do that to any other city and colony in the New World. And then they start seeing signs of it. So ⁓ right as Lexington and Concord's happening in Massachusetts, the colonial governor of Virginia. Who's one of these crown appointees? He's loyal to the crown, Lord Dunmore. He sends his troops to go take away all the gunpowder store ⁓ that was in Williamsburg. And it's almost like the same week Lexington and Concord happens. ⁓ he goes in in the cover of night and they remove all the gunpowder and they move it onto a British warship sitting off of the coast. And the colonists are sitting there looking, he's like, Well, what's going on here? What is this guy preparing for? Well, it's a sign that what is happening in Massachusetts is could be coming here. As well that the crown is getting ready to enforce its authority through military means rather through than through ⁓ some political discourse. And that's the signal that hey, we need to break away. This isn't working, this is ⁓ pure flex of authority from abroad over us in a violation of our rights. So all the other colonies start to bind together and they follow suit.

Speaker 1

I'm just wondering how that information got passed around because right now I mean I could text you and say like hey man the British are doing some wild stuff right as distant as people were and it would take you know weeks to get from point A to point B. This information though was getting getting around. ⁓

Speaker 2

indeed and you could see it in the newspaper reports ⁓ based on the date when they travel down the coast or up the coast. ⁓ major battle is fought here and then a few days later it's like however far a horse could ride in that day, if it makes it from New York to Philadelphia, then Philadelphia prints it and then it makes it further down the coast. ⁓ so y it's really interesting that that is playing out and you and you see 'cause the the war itself, the revolution, is fought all up and down The entirety of the colonies. There are major theaters in New York and New England. There's also a major theater in the Carolinas. And they're different successive parts of the campaign. And the armies pivot to respond to each other. So it's moving pretty quickly. ⁓ now, of course, you also have across the Atlantic, that's a multi-week journey at its absolute fastest for news to arrive from London, ⁓ or vice versa. ⁓ so you have that information shield around there and and you know sometimes it tempers things down, sometimes it accelerates it. It's like the ⁓ latest news arrives from London that the crown's ready to make some concessions, but they arrive in a powder keg that's happening here in Boston, or vice versa. So ⁓ yeah, the time pattern is is it's a really interesting dimension of it. You know, I mentioned the Williamsburg gunpowder incident that happened almost the same week as Lexington Concord. But the word had not arrived from Lexington and Concord that these battles had just been fought yet.

Speaker 1

That's so insane. That's so that's so crazy. And you know, to remind our listeners, I mean you you know, you're a you're a historian, so it must be such a fun, interesting ride to look at primary sources from the time to be able actually look at newspapers and and journals and and and letters and and all that.

Speaker 2

Yeah, the old documents, that's the fun one because Lord Dunmore, when he seizes the gunpowder material, of course, everyone in town is like, dude, what are you doing? ⁓ this is our our defense as a colony. ⁓ I mean, it's kind like a a Second Amendment origin story in here as well. ⁓ this is gun control 1775 style. ⁓ take away the gunpowder and they no longer have guns and armaments. They moved it on a warship. So you read the newspaper and the colonists are kind of like, well, Dude, what the hell? Why are you taking away our guns or our self-defense? And then they accuse him and say, ⁓ well, you're serving the crown. And then ⁓ the governor comes back and he says, No, no, I'm doing this for your own protection because I I caught rumors of a slave revolt. ⁓ wow. And so I completely made up nonsense. There was no slave revolt, but he wanted to stoke that fear. And then the award, then the word arrives that this battle has broken out in Lexington and Concord. And everyone in Virginia is like, ⁓ we know what's up. ⁓ you were lying to us. So ⁓ that they really start to protest. And this governor Dunmore, he gets ⁓ so scared of the backlash he's receiving, ⁓ because the legislative branch, the House of Burgesses, is trying to to come together and and and assert its authority against the governor. And the governor's like, well, no, I'm gonna suspend the ⁓ legislature's authority. So that's just a further poke in the eye. Eventually it gets to the point where he knows the population's turned against him. So he flees in the middle of the night and he moves on board his warship. And he's he spends like the rest of the year sitting out in this warship in the middle of the river, pretending to be governor of the colony. except there there are a couple of recorded instances. ⁓ sometimes he he gets in a little rowboat and he gets all his servants to take him back to land to have afternoon tea at his plantation a little further up the river until the ⁓ the American patriots they they catch word that he's doing this so they send a raiding party out at the plantation. So there there there's the revolt against tea.

Speaker 1

He definitely could have used some better propagandists, you know. I I would imagine if there was Twitter at the time or X at the time, you see these tweets come out and then you look for where they're coming or it's like, ⁓ they're coming from the UK. Yeah, okay. Okay Yeah, yeah. We we really do have such a a rich, rich history for just being a nation of two hundred and fifty years. Obviously with that comes interpretations of what happened in the past and why it happened in the past. And representative Alexandria Ocasio Cortez, AOC, had an interpretation about the American Revolution. She said Amazing

Speaker 2

Was founded. You look at Thomas Jefferson writing to Madison in revolt of British aristocracy. The American Revolution was against the billionaires of their time. And we are declaring independence from such an extreme marriage of wealth and power and the state that the voices of Of everyday people did not exit.

Speaker 1

What's going on here? The billionaires of the time.

Speaker 2

Yeah, yeah. Well, yeah, I think this is a classic case of ⁓ you know, it's a syndrome that you see in the socialist world. If everything if your only tool is a hammer and sickle, everything looks like a proletarian revolution against the billionaires. And what AOC is doing is she's trying to shoehorn this modern socialist inequality narrative into the American founding. ⁓ the interesting thing is you look at the American founding, a lot of the major figures that we see of that era. ⁓ Are extremely wealthy individuals. ⁓ the classic case is ⁓ Robert Morris, who's one of the major financiers. ⁓ and he's involved, he's a delegate to several of these ⁓ conventions, is involved in the early formation of the United States. He's also one of the wealthiest men in North America, and he uses his personal fortune to essentially sustain the credit of the new breakaway government at multiple different points. And loses a lot of his fortune in the course of this. So it's like a billionaire is actually subsidizing the revolution in that respect. So there's one area that AOC is completely backward. But the other part of the American Revolution, there are there are also obviously not billionaires that are fighting it, ⁓ but they're fighting on a common cause. ⁓ the the Minutemen out there in Lexington and Concord are not the wealthy elite of Boston, but they were acting on behalf of John Hancock as one of the people that. ⁓ he was a major wealthy shipper in Boston that had been fighting some of these restrictions on his trade, had been accused of smuggling. Well, ⁓ one of the reasons that they have the battle is because the British are dispatched to arrest him and other people that are seen as instigators and to take their arms away. And it's like, no, the local town militia comes out with guns and says, You cannot do that. ⁓ so this attempt to like divide the American Revolution into this weird Marxian class warfare. ⁓ it's a crackpot conspiracy theory motivated by her current politics.

Speaker 1

And also, you know, one of the things that you hear over the years is the rich will send the poor to go fight their wars and the poor will die in in the in the wars of the rich. But meanwhile, every single signatory to the, you know, Declaration of Independence put his name out there and if we didn't win, guys, they would all have been hanged.

Speaker 2

Was Benjamin Franklin ⁓ allegedly had this quip at the end of the signing of the Declaration of Penance. You know, when they had bound their lives and fortunes and sacred honor together, that's what the text says. Franklin stands up and says, Well, ⁓ you're either going to hang us together or we'll hang separately. ⁓ we're in this now. This is for real. And there are numerous documented instances of signers of that document that are targeted. ⁓ their houses and estates are burned. Land and property is confiscated. Some of them face arrest or have to go into hiding and flee to the countryside. ⁓ they actually do pay for it in substantial material ways. ⁓ some do not survive the revolution itself. You know, you're committing treason against the crown, you're committing an act of revolt against the most powerful empire on earth. You don't do that as ⁓ like this weird, just strict economic motivation. There has to be something deeper to it and it comes down to a philosophical principle of what a free society, a self-governing society looks like ⁓ that makes them actually take that step.

Speaker 1

And I find it so interesting the relationship with France, because, you know, ⁓ Americans fought for the crown against the French, but then when the opportunity came for you know the Americans to be be fighting against the British, the French s came and said, All right, what we're here and ⁓ we have to be thankful because if it wasn't for the French, we'd be speaking English. Yeah.

Speaker 2

This is a part of the story. It really is an international war, ⁓ although, you know, the core of it is fought on the continent. But France sent troops, ⁓ France sent ⁓ probably their most significant intervention is they send naval fleets. And the naval fleets help to bottle up the British around Yorktown.

Speaker 1

I was gonna ask about that because the British Navy is

Speaker 2

British Navy versus well, what was the American Navy? It's whatever merchant vessel we can strap a few cannons onto and send out there to fight them. And it's this little scrappy North American Navy versus this giant naval empire. But you throw France into the equation, here's someone who can go head to head with them. ⁓ and that can sail a fleet across the ocean to ⁓ strategically engage and then allow the land forces or the Americans to win. ⁓ the battle, because the British are now either cut off or they're boxed in. So there are multiple instances of that. ⁓ we also know famously the British side, they recruited German mercenaries and put them on hire. So you have multiple instances of other European powers getting involved in varying degrees. ⁓ but France emerges as an ally, because you know they're the historical enemy of Britain, especially in that era. ⁓ they've been off and on at war for centuries. And this is like, ⁓ well, someone's challenging Britain. They're going to weaken them. We should get in on that action too. So ⁓ yeah, they dispatched their fleet, they send military assistance.

Speaker 1

Well, it's been 250 years. I don't know when the next revolution will happen, but until then, this has been Happy Hour Econ. We will see you next week. God bless America.