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Bonus Quotation of the Day…

… is from page 505 of Book IV, Chapter 5 of the 1981 Liberty Fund edition of Adam Smith’s 1776 masterwork, An Inquiry Into the Nature and Causes of the Wealth of Nations:

We cannot give our workmen a monopoly in the foreign as we have done in the home market. We cannot force foreigners to buy their goods as we have done our own countrymen. The next best expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country, and to put money into all our pockets by means of the balance of trade.

DBx: Notice how Adam Smith skewers mercantilists with razor-sharp logic tinged with subtle humor: “to pay them for buying.” Just beautiful!

Using taxpayer money to pay foreigners to buy domestically produced goods and services is presented by mercantilists and by many advocates of industrial policies as a means of enriching the nation. Of course, as Smith argues, such a use of taxpayer money is a means only of making the people of the nation poorer. Sellers who earn genuine profits are not sellers who attract and keep customers only by paying those customers to be customers.