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Truly Medieval

Here’s a letter that I sent several days ago to the Washington Post:

Catherine Rampell is correct that Trump’s trade policies are a nest of fallacies that, as she says, were all the rage in the 1680s (“Trump’s trade policy is stuck in the ’80s – the 1680s,” June 1).

But these fallacies are far older than even that. They were current in the 1380s!  In 1381 Richard Leicester worried about the fact that the English were importing more than they were exporting and, therefore, were paying for these extra imports with money. Save for the archaic language in which it is couched (and that it refers to England rather than to the U.S.), Leicester’s solution to this non-problem sounds as if it were from a Trump White House press release: “Wherefore the remedy seems to me to be that each merchant bringing merchandise into England take out of the commodities of the land as much as his merchandise aforesaid shall amount to; and that none carry gold or silver beyond the sea, as it is ordained by statute.”*

What Adam Smith called the “absurd” doctrine of the balance of trade** is literally a medieval superstition.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Quoted in Jacob Viner, Studies in the Theory of International Trade (1937), p. 6.

** Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), Book IV, Chapter 3, paragraph 31.