Quotation of the Day…

by Don Boudreaux on August 5, 2011

in History, Trade

… is from page 22 of the first volume of Eli Heckscher’s Mercantilism:

[Mercantilism's] first object … was to make the state’s purposes decisive in a uniform economic sphere and to make all economic activity subservient to considerations corresponding to the requirements of the state and to the state’s domain regarded as uniform in nature.

Economic nationalism in service to the state.  What a lovely goal.

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Kirby August 5, 2011 at 9:35 am

I fail to see the difference between whatever Muirgeo suggests and Mercantilism.

Don Boudreaux August 5, 2011 at 10:15 am

I agree. Indeed, if recall correctly, Muirgeo embraces mercantilism explicitly, as does the proud protectionist Ian Fletcher.

Greg Webb August 5, 2011 at 10:28 am

But, don’t all statists, regardless of what name they use, essentially embrace mercantilism?

Greg Webb August 5, 2011 at 11:07 am

And, for that matter, isn’t mercantilism the same as feudalism, which began when Roman Emperor Diocletian changed the Roman system of government from a more flexible “principate” to a truly authoritarian regime with a command and control economy?

kyle8 August 6, 2011 at 8:09 am

You are basically correct. The medieval markets were not in any way free markets, but the feudal states in Europe controlled them in a variety of ways. In that there was some freedom only in so far as the feudal state lacked the resources, bureaucracy, and sophistication to actually go out into the hinterland and tax and control people.

John Sullivan August 5, 2011 at 3:11 pm

Protectionism is the essence of mercantilism. Exports good, imports bad, ad nauseam.

But Muirgeo is not a mercantilist, per se. He is a socialist. He stands against profits on principle.

Capitalism emerged in Europe within the legal framework of Mercantilism. The populations would have died from disease and starvation had not that occurred. The socialists wrote romantic tracts denouncing the ‘factory system’ in England that, for example, made cotton clothing that the lower classes could afford and that would never have been made available without the subsistence level wages that were required to keep people alive. Why would a capitalist pay such low wages that the laborers couldn’t afford his products? This question was never adequately answered by the Beatrice Webb’s of then and now. Low wages equaled low prices.

Capitalism began in the countryside, outside of the cities and ports where mercantilistic regulations coupled with guild socialism monopolized both labor and industry.

The alternative to the low wages of the capitalistic ‘factory system’ of that era was starvation and death. But, true to form, just like today, the regulators (dictators) like to look back at what capitalism created and condemn it. They saw poor people and blamed capitalism. Perhaps those people were better off dead under mercantilism and feudalism.

On another point from the other day–since most have moved on–regarding the posts on confidence fairies and animal spirits, where I encountered some vitriol from free marketers for some opinions that countered the ‘cafe hayek’ status quo on that topic, I request that they read David Malpass’s article in today’s WSJ, about how the monetary policy favors debtors over savers, and all the implications involved, which I clearly outlined in the few posts I made on the topic.

I’ll repeat, it is disengenuous of large corporations to claim that they are holding large sums of cash and purposely holding back expansion plans due to a lack of confidence regarding the ‘future’ regulatory environment because it implies that there exists sufficient ‘present’ consumer demand to justify those capital investments, which is false.

My point was that the ‘confidence’ card was being streched for its affect. More to the point, the monetary policy that has been in effect for a few years has stifled consumer demand by extending the recovery of consumers due to a weak dollar strategy.

Further, plant expansions usually come after demand provides the needed signals, not before. And as Malpass said, the large corportions, who I say are singing this ‘condfidence’ tune, don’t really employ that many people to begin with. The bulk of employment comes from small companies who don’t gain from the zero interest policy and who are hurt from the reduction in purchasing power of their customers.

Greg Webb August 5, 2011 at 3:50 pm

John, I agree with much of what you said above. I will read David Malpass’s op/ed piece in today’s WSJ even though I was not engaged in your previous discussion about confidence fairies and animal spirits. Thanks for pointing it out.

John Sullivan August 5, 2011 at 4:03 pm

Most people argued because they thought I was defending Paul Krugman, so they must be forgiven automatically.

Slappy McFee August 5, 2011 at 10:27 am

What really scares me is that the overwhelming majority of the population would read that and AGREE!!!

Greg Webb August 5, 2011 at 10:35 am

Slappy, I’m not so sure about that. I think that most people that acquiesce to a gradual increase in state control tend to object if it is significantly increased immediately. That’s why statists keep changing their name to nice-sounding names like “liberal” or “progressive” and generally slowly increase the size of government at least until a crisis comes. If they said that they were from the command and control party, an overwhelming majority would vote against them

Slappy McFee August 5, 2011 at 10:47 am

I wish I shared your optimism but you touched on a very important point here:

“If they said that they were from the command and control party, an overwhelming majority would vote against them”

They do say this. They just frame it this way. “We want to command and control those people, you know, over there, hiding behind the tree. We don’t want to control you, we want to help you.”

This is how you get signs like “keep your government hands off my Medicare” and support the troops bumper stickers. Politicians have mastered the “you can have your cake and eat his too” way of thought.

Seth August 5, 2011 at 1:00 pm

I’m not sure I agree with this, as well. I think the majority of the population might exhibit a cognitive dissonance on this.

They would admit this is a bad idea in aggregate, but often support half-baked, idealistically rationalized ‘greater good’ government impositions on a case-by-case basis, becoming an effective tool for statists.

Slappy McFee August 5, 2011 at 3:00 pm

Ok I amend my original comment — I meant what Seth wrote.

Greg Webb August 5, 2011 at 3:13 pm

Slappy and Seth, they do! But, you have to learn to educate and persuade them to your view. Much as Milton Friedman did with his wonderful book and PBS series entitled “Free To Choose.” Professor Friedman always choose to persuade and educate, and, in doing so, he used logic, facts, charm, and wit. He was such a marvelously optimistic man who never gave up the fight for freedom despite the disingenuous personal attacks of stupid politicians and their statist cronies. We, who believe in individual freedom and free markets, should strive to be more like Milton Friedman.

Seth August 5, 2011 at 5:07 pm

I agree Greg. That’s one reason I started my blog. For some of my close friends and family who shirk at live political conversations, it acts as a window into a world and thinking they wouldn’t be exposed to otherwise.

Greg Webb August 5, 2011 at 11:04 am

Slappy, I am rationally optimistic! I think this country will muddle though as we have always done. Our Republic has never operated perfectly primarily because imperfect (and imperfectible) human beings live in it. But, I believe that the country’s geopolitical advantages will allow it to remain one of the most free for individuals and the strongest nation for at least another hundred years. The former is essential for the latter to be true.

You are right about politicians and the constant reframing of issues. But, it is up to us to continue to teach the message of individual liberty and free markets. And, I believe that this message is much louder and more well received now than it was in the 1960s or in the 1990s. But, Benjamin Franklin noted that keeping the Republic would always be a fight when he replied to a woman asking what the Constitutional Convention had given the nation by saying, “a Republic if you can keep it.” Embrace and enjoy the debate!

Josh S August 5, 2011 at 11:09 am

Our republic has never had an entrenched entitlement class, either. The problem is that whatever it is that you’re selling, it can’t mean taking away the trough from the entitled.

I have a cousin, for example, who belongs to his local Tea Party. He’s head of the local NRA. He’s extremely active in conservative politics. He is also a corn farmer whose primary market is ethanol. He loves to talk about free markets and liberty…until you mention ethanol subsidies, and then he completely changes his tune.

Conservative senior citizens are exactly the same way with their benefits.

Libertarian college students act the same way about student loans.

So, good luck saving America from Americans. Maybe we’ll do better than the Romans did.

Dan H August 5, 2011 at 11:27 am

Never doubt the ability of someone to “rationalize” their subsidy. It makes me sick.

Greg Webb August 5, 2011 at 11:46 am

Me too!

SheetWise August 5, 2011 at 3:02 pm

That is, of course, the strategy.

Regarding the “entrenched entitlement class” — I’d say Yale, Harvard, et al have done well.

John Sullivan August 5, 2011 at 3:57 pm

This is right on. I’ve posted many an argument that libertarianism is hypothetical, or a compromise between totalitarians competing for something more illiberal, than liberal.

I can elaborate extensively on this, but in short, It’s reduced to human nature. It’s philosophy, and not very new at that, for those who haven’t studied much philosophy.

I wrote once here that there wasn’t a difference between a slave fighting for his freedom and a free man fighting to keep his slave, except for their relative circumstances. This needs to be meditated upon by lovers of liberty, or at least by people thinking that they are. It requires an extensive self examination. I went so far as to draw comparisons between the maximization of profit with that of owning slaves. We maximize our profit ‘power’ until we are stopped by others, usually through competition, like in the marketplace and voting booths.

There have been some brilliant works of philosophy regarding the concept of ‘spontaneous order’ and many great minds have discussed it in other works. They basically argue that ‘equity’, as a libertarian would understand that term to mean, is not something that a bunch of libertarians thought up, but was historically the result of social compromises between groups competing for power who had become equalized.

Let’s look at a simple example: card check. Back when power was held by companies over labor, and due to the intimidation that the companies would exert over the laborer when a union vote was to take place, the labor movement fought for there ‘liberty’ to vote for or against the union using secret ballots to escape the threat of intimidation.

But once the dynamic of power switched from the companies to the powerful unions, now the unions are the ones doing the intimidating of laborers, and secret ballots thwart them, so they want to eliminate them.

I recall writing…Once the slave is free, his next objective is to enslave someone for himself. Isn’t card check a prime example of this?

Libertarians struggle with this. They think they’re different, but aren’t. Knowing this, is anyone really a libertarian, who can do better?

SheetWise August 5, 2011 at 6:49 pm

I wrote once here that there wasn’t a difference between a slave fighting for his freedom and a free man fighting to keep his slave, except for their relative circumstances. This needs to be meditated upon by lovers of liberty, or at least by people thinking that they are.”

I don’t know if the markup works or not but when you wrote “I wrote once here …

SheetWise August 5, 2011 at 6:50 pm

Did you mean that you thought that worth repeating?

Dan J August 5, 2011 at 10:11 pm

Interestingly enuf, a WSJ book review this week was about a clever man who was a slave in the US and kept eluding capture or escaping due to his cleverness. He eventually found freedom with the quakers protecting him. Long story short, one of his quotes, was about how white man should endure his turn at being enslaved. Now, I do not know if this comment was to invoke empathy, punishment, or anger…… I did not read the book.

Kirby August 6, 2011 at 8:29 am

That’s a brilliant example of stupidity at its finest.
Let’s take 80*% of society’s income tax payers and try to force them to work in menial jobs. Oh, did we mention that the 80% of tax payers have 75% of GDP?*
Also, he would have been talking about the very Quakers that saved him, and white people who never supported slavery.

Kirby August 6, 2011 at 8:29 am

* numbers pulled out of my ass

Dan J August 6, 2011 at 3:41 pm

Likely, that he made tha statement in anger.

Greg Webb August 5, 2011 at 11:46 am

Josh, Americans have already done much better than the Romans did. There is much more individual liberty in today’s America than there ever was in the Roman Republic. And, Americans are enormously more wealthy and, as a result, more healthy and educated than the Romans were or, for that matter, than the majority of citizens in other countries today.

No one is perfect, but at least your cousin is on the right side. If you are looking for perfect solutions, then you will never find them. But, that desire for perfection may make you susceptible to the statists old “bait and switch” tactic of promising a perfect society, then delivering a command and control system that leads to poverty and a more class oriented society.

I am sure that people in the 1780s thought that slavery would always be with us and that you could not convince others to change their views. But, they did peacefully in Great Britain though the efforts of a Christian-lead political movement and, tragically, a terrible war in the United States. We shall overcome…though, most likely, not perfectly nor completely…and not easily.

DG Lesvic August 5, 2011 at 2:00 pm

We shall overcome, you say, but be specific. How? That means, by what message. What is the first thing we should say? Again, be specific. Shouldn’t we attack the enemy where he lives, right in the old breadbasket. Isn’t it the economy, stupid? And isn’t the bottom line of it all, as Prof. Boudreaux has said, redistribution? Isn’t that the root of the problem, and are we just going to go on and on attacking the branches without ever getting at the root? And how do you attack it? First you identify it. What is redistribution about, not in the minds of the politicians but their clients, the voters, and not just the special interests, but the majority? Is it to take from the poor to give to the rich? Isn’t it to take from the rich to give to the poor? If that is not, as I say, the essence of it, isn’t it at least a part of it? Isn’t that a proposition that should be attacked, and not half but whole heartedly, not partially but completely, and with the one and only proposition that would wipe it out altogether? And what is that but the proposition that almost all of you here have been resisting tooth and nail as though it would be disastrous for yourselves rather than your enemies?

Taking from the rich to give to the poor cannot reduce but only increase income inequality and social injustice.

That is hitting the Left where it really lives, in the old guzatchkuss, and the strongest possible moral and political as well as economic argument against redistribution, interventionism, and socialism, and for laissez faire capitalism and the market.

So let’s here again your “reason” for shunning it.

DG Lesvic August 5, 2011 at 2:11 pm

Some words from Mises and myself a long time ago:

“It is true that outside of Russia and Germany dissenters do not yet risk the firing squad or slow death in a concentration camp. But few are any longer ready to pay serious attention to dissenting views. If a man tries to question the doctrines of etatism or nationalism, hardly anyone ventures to weigh his arguments. The heretic is ridiculed, called names, ignored.”

And not least by the orthodox heretics, afraid of being yesterday’s heretics, the respectable conservatives and libertarians, socialism and the welfare state’s loyal opposition and first line of defense.

New ideas are only for the young, for they rebuke the old.

You’ll make friends aplenty reassuring one group of fossils or another, but precious few challenging them all. For there is an endless market for sectarian cant and flattery, but little for the whole truth.

How do you know when a new idea is right? When no one will talk about it.

DG Lesvic August 5, 2011 at 2:53 pm

And, Greg, don’t weasel out, now. You wouldn’t want us to think you were a despicable weasel, would you, certainly not after the way you have been throwing that epithet around yourself?

John Sullivan August 5, 2011 at 4:15 pm


You know what’s really funny; when you read so much Mises you get a feel for the way he writes sentences and makes his points. If you read him enough, you tend to start to write like him, or to copy his style. At least I do, but not so much to copy him as much as I loved the way he presented his arguments. His line of reasoning is addictive.

I was skimmimg through your post without seeing that it was from you, and read over the paragraph you quoted Mises, without knowing it was a quotation. Just from the style, I new it was expressed by someone well acquainted with the master, so I looked closer and discovered it was a quotation, from you, a true Misean.

In a way, you’re like Churchill, who catalogued his one liner’s. As you said, we’re not really arguing against you as much as we are against Mises, when we choose to differ wih you. Arrogant, yes, but mostly true.

vikingvista August 5, 2011 at 5:18 pm

Quoting Mises and understanding Mises are clearly not the same thing.

DG Lesvic August 5, 2011 at 5:28 pm


No matter what you say I can’t get mad at you. You’ve been one of the really great contributors here for a long time, and I’m sorry that I bring out the worst in you.

Greg Webb August 5, 2011 at 8:04 pm

Vikingvista, you are exactly right! And, you are truly a great contributor! Keep up the good work!

DG Lesvic August 5, 2011 at 5:27 pm


I think that was meant as a compliment, and, coming from you, I value it highly. I think you’re best at the Cafe right now.

DG Lesvic August 5, 2011 at 5:46 pm

And, John, when I say you’re the best here that means you’re the best or certainly among them anywhere, for this is where the best come. Why would they go anywhere else when if they really have anything to say they soon find out that they can’t say it. The Not not me too people may run into a firestorm of vituperation from the Ya me too people, but not from the proprietors of the Cafe themselves, and that’s the difference and what really counts.

So let’s take our hats off again to the best friends economics ever had.

DG Lesvic August 5, 2011 at 5:47 pm


I meant to write

The No, not me too people

DG Lesvic August 5, 2011 at 7:18 pm


I’ve tried not to be arrogant, but couldn’t you just look around and see the impossibility of it?

SheetWise August 5, 2011 at 4:48 pm

DG Lesvic –

“What is the first thing we should say?”

That it was a lie. That the politicians who promoted the programs knew it was a lie, and they repeated the lie anyway. That there always was a “day of reckoning” — and that date was always known — but it was ignored.

The question before us now is — do we perpetuate the lie, or do we assert the truth?

I think we could “buy out” every social security account holder by simply normalizing dollars, taking their contributions over the years, imputing interest, deducting benefits received (if any), and settling for dollars. Let’s admit it was a lie, and then quit.

If we have to print money and inflate the economy to do it — fine. One time. Rewrite the rules. Can anyone think of a better way? Maybe send the program into bankruptcy and let the court begin liquidating assets.

The problem is that our political “leaders” — who know the truth — want to maintain the fiction.

“What is the first thing we should say?”

It was a lie. You were lied to. They knew it, and did it anyway. You were scammed. Caveat emptor. So sorry — move along. Do your due diligence. Promises made to yourself are unenforcable. Etc., etc…

DG Lesvic August 5, 2011 at 5:31 pm

What was a lie?

The assertion that taking from the rich to give to the poor would reduce inequality. For it would not reduce but increase it, and the goddamned libertarians as well as the liberals have know that for a long time but just wouldn’t say so.

SheetWise August 6, 2011 at 1:21 pm

“What was a lie?”

We’re from the government and we’re here to help you.

Josh S August 5, 2011 at 3:51 pm

Yes, we are more free than the Romans, but the trajectory was the same. Cicero and others lamented the lost of thrift, industry, and motivation as the Roman welfare state crept into more and more facets of ordinary life. In the last decades of the Empire, the typical inhabitant of Rome produced almost nothing hismelf and lived entirely on the fruits of others collected from other ares of the Mediterranean.

Is my cousin really on the right side? He and everyone in his district are for cutting any welfare except their own. When everyone is on welfare, and everyone says, “You can cut any welfare except mine,” that means no welfare gets cut. If you won’t pull your own nose out of the trough, you can’t expect anyone else to volunteer to go first.

What’s really changed with the Tea Party is that you’ve got a group of people who really, really resent the *other* guy’s welfare. They love their own just fine.

Greg Webb August 5, 2011 at 4:05 pm

Government has so intruded into economic life that it affects almost everyone. But, that does not make us all cronies. What has to be done is to stop creating new welfare programs and begin eliminating one welfare program at a time. These programs came into being by political cronies taking advantage of crises and coalitions. They can be extinguished the same way.

It is a traditional tactic of the statist to work on these natural feelings that the battle will be too difficult to cause those who believe in individual liberty and free markets to voluntarily give up the fight. They do that because they know that they are on the wrong side of history and understand just how vulnerable their position really is.

DG Lesvic August 5, 2011 at 7:13 pm


It was over an hour betwen the time that I had issued my challenge to you and you made this posting, without having met the challenge. What should we infer from that?

Greg Webb August 5, 2011 at 7:55 pm

DG, you should infer that Don Boudreaux asked us to stop arguing, and I,unlike you, am respecting the request of our good host. But, your failure to respect the wishes of our host is a continuing testament to your despicable and disingenuous behavior here on Cafe Hayek.

DG Lesvic August 5, 2011 at 8:51 pm


There you go again, putting words in Don’s mouth.

He could hardly have asked us to stop arguing about economics, since that was not what we were arguing about. And he could hardly been asking us not to start arguing about economics, since that is what he is here to promote.

All he asked us to do was to stop the squabbling that had nothing to with economics, and I fail to see how you’re continuation of it shows respect for his wishes.

So, I ask you, as Don asked you, to stop the squabbling that has nothing to do with economics and start the arguing or debating or discussing, or whatever you want to call it, about economics.

How about it, without any more red herrings, just a simple yes or no.

Greg Webb August 5, 2011 at 9:47 pm

DG, you said, “There you go again, putting words in Don’s mouth.” That is your false accusation.

Then, you said, “He could hardly have asked us to stop arguing about economics…”. With this statement, you put words into Don’s mouth, which is exactly what you falsely accused me of doing.

Don actually said, “Please stop it, you two.” And, I replied, “Okay, Don. I will ignore DG’s comments.” I have been doing that so I did not read, and could not find upon a quick review tonight, your challenge.

I know that, based on your recent history, you do not honor your promises and, apparently, you do not intend to honor Don’s request. But, I will.

DG Lesvic August 5, 2011 at 11:33 pm


When you’re ready to talk about the real issues, let me know, and I will treat you with utmost respect, as my equal, regardless of who wins or loses the argument, but as someone who cares as much about economic truth and error and the advancement of freedom in the world as I do.

Greg Webb August 6, 2011 at 12:39 pm

DG, I am always happy to discuss economic issues with anyone. But, it is rude to stray too far from the topics posted by our gracious hosts, Don Boudreaux and Russ Roberts.

Dan J August 5, 2011 at 10:03 pm

Tea party enthusiasts are on welfare?

SheetWise August 6, 2011 at 1:37 pm

This format not only makes it hard to make comments in context, it makes it hard to respond in context. WordPress has potential, but as a turnkey solution it sucks. It sucks even more when it’s poorly administered (not like the administrators would ever be aware). I’ve always believed that programmers should actually use their own software (or, attempt to use — fix — attempt to use — fix …)

Dan J August 5, 2011 at 11:40 pm

Real issues……DG!!!!!!
Downgrade on credit?
What say you?

DG Lesvic August 6, 2011 at 1:22 am


I assume you’re asking me about the effect of recent events on the credit of the US government. If so, I am pretty sure there are people here better equipped to discuss that than I.

I will say this, that I am not celebrating the so called victory of the conservatives in Congress. I think it was in reality another victory for fiscal madness. Hallelujah, no increase in taxes, just the debt ceiling.

What’s the difference?

Dan J August 6, 2011 at 2:16 am

Seems you wish to mostly convince on your opinion in regards to mathematics and economics. Lowered credit rating is a real issue.
Yes, I realize I am not as well learned as you and others on this site. That is precisely why I engage.
The likely effects from this event? How will it affect trade?

DG Lesvic August 6, 2011 at 2:44 am

If you mean me, no, I am against taxation, period.

As for the credit rating of the US government, I am against the US government, period. To, the only real government is the free market, and, the state, not itself government but anti-government.

Dan J August 6, 2011 at 2:48 am

Great! So, what are we likely to have forthcoming from an event like a downgrade in our credit rating. What is the likely result of behaviors in the aftermath of the resulting economic effects.

DG Lesvic August 6, 2011 at 3:04 am


Economics is divided into two parts, epistemology and economic theory itself. Epistemology deals with the way we approach the theory, thru perception or conception, math or “logic,” etc.

While there are other issues of epistemology, I believe that the dispute between the mathematical and “logical” approach is the most important.

In the realm of theory itself, I believe that the issue of redistribution is the most important.

As Mises has said that the mathematical method was “vicious,” and redistribution the essence of the interventionist policy, I would say that the two together are the co-roots of all political evil over the last hundred years.

I agree completely with Mises about epistemological matters, and it is from he that I learned whatever I know about them.

I have differences with him over theory, the most important of which is over redistribution. I don’t think his analysis of it went far enough.

There are other issues of theory on which I disagree with Mises and Hayek, and of epistemology on which I disagree with Don, for one, but I agree with all of them that, as Don put it, redistribution is “the bottom line,” the ultimate issue.

Dan J August 6, 2011 at 2:17 am

So, you were in favor of raised taxes?

Dan J August 6, 2011 at 1:56 am

This is discussion on policy in relation to Economics.

brotio August 6, 2011 at 2:22 am

Kind of diagonal to the topic, but this is an interesting video. You may have to sign up for PJTV to see it.


Dan J August 6, 2011 at 2:29 am

iPad disallows java script. I assume, by reading of comment below video, it is about the delusions of leftists and their delusions about people who are not living in poverty. That is, that the affluent are recipients of ill-gotten gains.

Dan J August 6, 2011 at 2:46 am

This is for the mentally challenged progressives. Absolutely good enuf reason to reduce entitlements, drastically.


KD August 6, 2011 at 6:04 am

Wait a minute! The only thing that matters is that Americans give pieces of paper (the ones that have pictures of dead American statesmen on them) to other people. *girly scream!!!!!* I got a PlayStation3. I feel absolutely ripped off that I traded pieces of paper for a sophisticated computer. Damn you Japan!!! Damn you!!!!!!

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