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Quotation of the Day…

… is from page 393 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler’s classic 1933 volume, The Theory of International Trade With Its Application to Commercial Policy; here Haberler is speaking of the home government selectively lowering and raising tariffs on imports from individual foreign countries in a scheme to impel foreign governments to lower their tariffs on exports from producers within its, the home-governments’, jurisdiction:

[I]t springs only from a naïve belief that the preferential system provides a means of reaping part of the advantages of Free Trade without hurting anybody, a way of increasing the volume of trade without any reshuffling and without any of the pains of transition, a method of increasing exports without importing any more than before. So long as such notions prevail, so long as people fail to realise that increased exports involve an extension of the international division of labour, an increase in imports, and a reshuffling of home production, a conversion of opinion is out of the question and no substantial reduction of tariffs can be hoped for by way of preferential duties.

DBx: Haberler’s warning of nearly 90 years ago, while correct and wise, obviously remains unheeded. For evidence that this warning is unheeded, witness Trump’s disdain for the World Trade Organization – an organization that, despite its many shortcomings, has proven to be an effective means of reducing trade barriers in this world of ours in which mercantilist myths govern nearly all thinking about trade (and, hence, in which mercantilist myths govern trade policy).

The public’s, the punditry’s, and politicians’ understanding, in the 21st century, of the insights into trade of Adam Smith is as close as was the public’s, the priests’, and the prince’s understanding, in the 11th century, of the insights into genetics of Gregor Mendel.

Ancient superstitions, fallacies, and fears are regular fare today in the commentary of even serious people. Bilateral trade deficits and surpluses continue to be spoken of as if economic meaning inheres in these accounting detritus. Imports continue to be begrudgingly tolerated as the means of achieving the supposed end: as many as possible opportunities to export. National economies are thought to be in competition with each other. Workers in low-wage countries are portrayed in high-wage countries as possessing an advantage – often one “unfair” – over workers in high-wage countries. Foreign-governments’ tariffs on their countries’ imports are believed to enrich those foreign countries at the expense of countries whose governments do not “retaliate”  – or “retaliate” with sufficient vigor and resolve – against those higher foreign tariffs with tariffs of their own.

The list of still widely accepted antediluvian misconceptions about trade is long.


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