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Quotation of the Day…

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… is from an essay by John Maynard Keynes [2] that first appeared in the December 1st, 1923, issue of The Nation and Athenaeum and as quoted on page 246 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler [3]’s classic 1933 book, The Theory of International Trade With Its Application to Commercial Policy [4]:

Imports are receipts and exports are payments. How, as a nation, can we expect to better ourselves by diminishing our receipts? Is there anything that a tariff could do, which an earthquake could not do better?

DBx: It’s true that Keynes later walked back a bit from his earlier position as a staunch free trader. Becoming Keynesian, Keynes became – like too many politicians and ‘men in the street’ – blind to much of that which is not immediately before one’s eyes, as well as mysteriously trusting that the individuals who exercise state power do so with superhuman abilities and motivations.

Nevertheless, the logic of this quotation is incontestable. (It was written before Britain’s 1925 ill-advised return at pre-war parity to the gold standard.)

UPDATE: Keynes was here discussing, not revenue tariffs, but protective tariffs. His purpose was to debunk the widespread protectionist myth that residents of the home country are enriched by the artificial scarcities created by trade restrictions – scarcities no different than those created by natural disasters (save for the fact that latter are unavoidable rather than self-inflicted damages).

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