Tariffs = Taxes

by Don Boudreaux on September 10, 2019

in Myths and Fallacies, Taxes, Trade

Here’s another letter to a Café Hayek reader:

Mr. Archer:

Thanks for your reply.

I’m sorry, but I still disagree. I see no realistic reason to believe that the best means of lessening the economic damage that we are suffering from taxes imposed yesterday is for us to suffer additional taxes today.

David Ricardo put the case well in 1817:

“Because the cost of production, and, therefore, the prices of various manufactured commodities, are raised to the consumer by one error in legislation, the country has been called upon, on the plea of justice, quietly to submit to fresh exactions. Because we all pay an additional price for our linen, muslin, and cottons, it is thought just that we should pay also an additional price for our corn. Because, in the general distribution of the labour of the world, we have prevented the greatest amount of productions from being obtained, by our portion of that labour, in manufactured commodities, we should further punish ourselves by diminishing the productive powers of the general labour in the supply of raw produce. It would be much wiser to acknowledge the errors which a mistaken policy has induced us to adopt, and immediately to commence a gradual recurrence to the sound principles of an universally free trade.”*

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

* David Ricardo, On the Principles of Political Economy and Taxation (Indianapolis: Liberty Fund, 2004 [1817]), pages 317-318.


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