… is from page 38 of my colleague Bryan Caplan’s brilliant 2007 book, The Myth of the Rational Voter (original emphases; footnote deleted):
The root error behind 18th-century mercantilism was unreasonable distrust of foreigners [rather than the false identification of money with wealth]. Otherwise, why would people focus on money draining out of “the nation,” but not “the region,” “the city,” “the village,” or “the family”? Anyone who consistently equated money with wealth would fear all outflows of precious metals. In practice, human beings then and now commit the balance-of-trade fallacy only when other countries enter the picture. No one loses sleep about the trade balance between California and Nevada, or me and Tower Records. The fallacy is not treating all purchases as a cost, but treating foreign purchases as a cost.