Cap'n Arbyte's
Main page

FAQ
Biography
Contact
Essays
Zany stuff
Best blog articles
Technical articles
Blog archives

Advertisements


Blogroll


Non-blog sites
(coming soon)
Friends
(coming soon)

Bastiat on Free Trade

From Frédéric Bastiat's (1801-1850) A Petition:

We are suffering from the ruinous competition of a foreign rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly that we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island [England] a respect that he does not show for us [lots of fog].

We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull's-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.

This is a wonderful, burning satire, and should be required reading for all people who are opposed to free trade because it hurts domestic producers. The conclusion:

When a product — coal, iron, wheat, or textiles — comes to us from abroad, and when we can acquire it for less labor than if we produced it ourselves, the difference is a gratuitous gift that is conferred upon us. The size of this gift is proportionate to the extent of this difference. It is a quarter, a half, or three-quarters of the value of the product if the foreigner asks of us only three-quarters, one-half, or one-quarter as high a price. It is as complete as it can be when the donor, like the sun in providing us with light, asks nothing from us. The question, and we pose it formally, is whether what you desire for France is the benefit of consumption free of charge or the alleged advantages of onerous production. Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!


I support unilateral free trade. There are many people who unfortunately insist on "fair" or "balanced" trade, requiring both trading partners to coordinate in opening their markets. (i.e., "We'll lower our tariffs if you lower your subsidies.") Allegedly this protects the freer nation from being exploited by the more protected one, but this view has it entirely backwards. In a condition of unilateral free trade, the freer country gains the dual benefits of cheaper imports (no tariffs) and avoids paying subsidies. When imports are made cheaper by the other nation's subsidies, the result is that much more fortunate for the freer nation — it makes the cost of those imports that much less. When the other nation's subsidies strengthen one of its industries, the cost weighs on all its others. (They make it more difficult for one domestic industry, but easier for all others.)

President Bush has made the double error of supporting both tariffs (steel) and subsidies (agriculture). But I sympathize with his circumstances — for political reasons he can't be seen taking advice from a Frenchman.

UPDATE 2003-11-10 04:54:49 UTC: Blog synchronicity! GMTA — The Usurer broadcasts his own message in support of unilateral free trade.

And given the opportunity to expand, I should note that in my parenthetical above I neglected to mention that subsidies don't just shuffle around the strengths of industries — they're actually a net loss to the country implementing them, both because they create malinvestment and because the benefit flows overseas.

Tiny Island