Tuesday, November 07, 2006

Another (Brilliant) Rebutall of Trade Flat-Earthers

For consistently great writing and sound economics, plus his daily smidgen of chutzpah-like impudence, you can’t beat Tim Worstall at: http://timworstall.typepad.com/timworstall/

His targets are the snooty, sloppy, and suspicious behaviours of those who write economic nonsense or pathetic justifications of tyrants. ‘Guardian’ columnists offer the most repetitious of his targets, with the British government and the ‘rulers’ of the European Union, running them a close joint second.

In The Times (London) today he has a op-ed on trade that is so well-done he has every right to be pleased with himself (and is; never let it be said our Tim is mealy-mouthed about his star qualities). I quote two paragraphs only:

Because it is imports that we desire — exports being simply the tiresome labour that we must ship abroad to pay for them — negotiating with other countries about their tariffs and quotas is ludicrous. Why should we care if the foreign governments make their own citizens poorer by denying them the products of the globe? We should concentrate on what makes us richer, the abolition of all those barriers to our own wealth that we impose upon ourselves.

Joan Robinson, the Cambridge economist, once pointed out that trade negotiations are conducted on the basis that we’ll stop throwing rocks in our harbours when you stop throwing rocks in yours: this is not rational

If you can beat that then your talents are hidden under a bushel somewhere. The rest of the posting is just as good. But what a mind shift it involves! Apparently too much for governments.

Smith also got the appropriate view of trade absolutely right in his lectures and books, and he trounced the notion that there was anything significant in contemporary theories of the balance of trade (a fault in Richard Cantillon’s 1734 Essay that is not often, if at all, commented on by those who otherwise sing his praises).

That the ‘balance of trade’ fallacy remains active in the minds of people today is testimony to the apparent irreducible stubbornness of ignorance long after its fallacies are exposed, in this case over two centuries ago. Ricardo’s Principles of Political Economy and Taxation (1817) finalized the rebuttal of ‘exports good, imports bad’, which with Smith’s Wealth of Nations should have been enough to finish off the ‘flat Earthers’ of trade theory and practice long ago.


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