If you read the papers these days, you'll see an abuse of the term "free trade." More or less, the assumption is that "free trade" means "no duties on imports" --unless those imports are "unfair" or dumped. It turns out, however, that the old economists meant exactly the opposite thing was free trade.
No kidding; when Bastiat mentions "free trade," he simply means that the power of the state is not used to prohibit certain items from being imported, and that duties are calculated to generate revenue, not to prevent items from being imported. Examples from Bastiat include French laws to prohibit the importation of British cloth, and duties designed to make Belgian iron cost more then French iron.
The moral argument behind this is simple; the circumstances of another nation, be it blessing or foolishness, do not require us to curse ourselves by refusing to accept the blessings that we are offered from abroad. At the same time, if a tariff is the most efficient means of raising revenue, by all means use it.
The bitter irony here, of course, is that supposed "free trade" agreements like NAFTA and GATT prohibit a revenue tariff, but endorse the use of heavy duties to prevent "dumping." With 28000 pages or so in GATT, would we expect any different?
Personally, I favor a return to free trade with a 15% revenue tariff on all items entering our country, accompanied by elimination of corporate welfare and a huge cut in income taxes. Good luck getting modern "free traders" to agree to such a scheme, though.
Hot Gear Friday: The Swiss Army Guitar
-
The word “iconic” is overused these days. I try to avoid it. It’ll be hard
in this next bit. If you are not a guitar player, and someone says
“electric gui...
13 hours ago
2 comments:
That's really helpful. I've always reacted against tariffs, since in my lifetime they have without exception been connected with control of the flow of goods rather than simply the acquisition of revenue from the free flow of goods. When you point it out, it makes complete sense that it need not be that way. The problem is, of course, that we are probably not going to see in our lifetimes any case of revenue-only tariffs being proposed without an inextricable accompanying purpose of trade engineering. Still, it's helpful to understand that it's not a logical necessity for it to be so.
Agreed that we're probably never going to (sigh) see anything so sensible, and also that it's counterintuitive for most of us.
I've struggled for years on this--and to be honest growing up in steel country and going to school in car country doesn't make it easy to swallow the fact that imports aren't taxed at all, but my work is taxed 40% before it ever gets to a customer.
And thus it's very nice to learn that free trade doesn't man "no duties," at least historically speaking.
Post a Comment