Mar 1, 1978
Tariffs and Reciprocity
The mythical villages of Stulta and Puera explore the possibilities of free competition and trade.
In this age of protectionism and nationalism, the whole rich legacy of classical liberalism desperately needs to be rediscovered. With worldwide protectionism on the rise, however, no one is more relevant today than Frederic Bastiat, the great French pamphleteer, economist, and politician. Born in Bayonne on June 29, 1801, Bastiat rose to prominence carrying the banner of free trade, pouring out over the years a series of brilliant pamphlets killing statist and protectionist fallacies with caustic wit and naked logic.
As Rose Wilder Lane has pointed out, “His labors were prodigious. He organized the first French Free Trade association, and acted as secretary of its central committee in Paris; he organized its branch societies; he interviewed politicians, collected funds, edited a weekly journal, contributed to four other journals, addressed meetings in Paris and throughout France, delivered courses of lectures on the principles of political economy to students in the colleges of law. He was dying of tuberculosis.” Bastiat died in Rome on December 24, 1850.
“Tariffs and Reciprocity” is taken from Chapter Ten of the first edition of Frederic Bastiat’s Economic Sophisms, translated from the French by Patrick James Stirling. These brilliant commentaries first appeared as a series of articles that Bastiat contributed to the Journal des Economistes in 1844, and attracted attention throughout Europe.
There is no more fitting testament to the genius of this man than that offered by Lane:
“Frederic Bastiat is one of the leaders of the revolution whose work and fame, like Aristotle’s, belong to the ages. Aristotle, too, was a pioneer in an unexplored continent of human knowledge; he did little more than blaze two trees where the Wilderness Road began; he showed the way to a new world that he did not reach. What modern science owes to Aristotle, a free world will someday owe to Bastiat.”
We have just seen that whatever increases the expense of conveying commodities from one country to another—in other words, whatever renders transport more onerous—acts in the same way as a protective duty; or if you prefer to put it in another shape, that a protective duty acts in the same way as more onerous transport.
A tariff, then, may be regarded in the same light as a marsh, a rut, an obstruction, a steep declivity—in a word, it is an obstacle, the effect of which is to augment the difference between the price which the producer of a commodity receives and the price which the consumer pays for it. In the same way, it is undoubtedly true that marshes and quagmires are to be regarded in the same light as protective tariffs.
There are people (few in number, it is true, but there are such people) who begin to understand that obstacles are not less obstacles because they are artificial, and that our mercantile prospects have more to gain from liberty than from protection, and exactly for the same reason which makes a canal more favorable to traffic than a steep, roundabout, and inconvenient road.
But they maintain that this liberty must be reciprocal. If we remove the barriers we have erected against the admission of Spanish goods, for example, Spain must remove the barriers she has erected against the admission of ours. They are, therefore, the advocates of commercial treaties, on the basis of exact reciprocity, concession for concession; let us make the sacrifice of buying, say they, to obtain the advantage of selling.
People who reason in this way, I am sorry to say, are, whether they know it or not, protectionists in principle; only, they are a little more inconsistent than pure protectionists, as the latter are more inconsistent than absolute prohibitionists.
The following apologue will demonstrate this:
Stulta and Puera
There were, no matter where, two towns called Stulta and Puera. They completed at great cost a highway from the one town to the other. When this was done, Stulta said to herself: “See how Puera inundates us with her products; we must see to it.” In consequence, they created and paid a body of obstructives, so called because their business was to place obstacles in the way of traffic coming from Puera. Soon afterwards Puera did the same.
At the end of some centuries, knowledge having in the interim made great progress, the common sense of Puera enabled her to see that such reciprocal obstacles could only be reciprocally hurtful. She therefore sent a diplomat to Stulta, who, laying aside official phraseology, spoke to this effect: “We have made a highway, and now we throw obstacles in the way of using it. This is absurd. It would have been better to have left things as they were. We should not, in that case, have had to pay for making the road in the first place, nor afterwards have incurred the expense of maintaining obstructives. In the name of Puera, I come to propose to you, not to give up opposing each other all at once—that would be to act upon a principle, and we despise principles as much as you do—but to lessen somewhat the present obstacles, taking care to estimate equitably the respective sacrifices we make for this purpose.” So spoke the diplomatist. Stulta asked for time to consider the proposal, and proceeded to consult, in succession, her manufacturers and agriculturists. At length, after the lapse of some years, she declared that the negotiations were broken off.
On receiving this intimation, the inhabitants of Puera held a meeting. An old gentleman (they always suspected he had been secretly bought by Stulta) rose and said: The obstacles created by Stulta injure our sales, which is a misfortune. Those which we have ourselves created injure our purchases, which is another misfortune. With reference to the first, we are powerless; but the second rests with ourselves. Let us, at least, get quit of one, since we cannot rid ourselves of both evils. Let us suppress our obstructives without requiring Stulta to do the same. Some day, no doubt, she will come to know her own interests better.
A second counsellor, a practical, matter-of-fact man, guiltless of any acquaintance with principles, and brought up in the ways of his forefathers, replied: “Don’t listen to that Utopian dreamer, that theorist, that innovator, that economist, that Stulto-maniac. We shall all be undone if the stoppages of the road are not equalized, weighed, and balanced between Stulta and Puera. There would be greater difficulty in going than in coming, in exporting than in importing. We should find ourselves in the same condition of inferiority relatively to Stulta as Havre, Nantes, Bordeaux, Lisbon, London, Hamburg, and New Orleans are with relation to the towns situated at the sources of the Seine, the Loire, the Garonne, the Tagus, the Thames, the Elbe, and the Mississippi, for it is more difficult for a ship to ascend than to descend a river. (A Voice: Towns at the mouths of rivers prosper more than towns at their source.) This is impossible. (Same Voice: But it is so.) Well, if it be so, they have prospered contrary to rules.” Reasoning so conclusive convinced the assembly, and the orator followed up his victory by talking largely of national independence, national honor, national dignity, national labor, inundation of products, tributes, murderous competiton. In short, he carried the vote in favour of the maintenance of obstacles; and if you are at all curious on the subject, I can point out to you countries where you will see with your own eyes road-makers and obstructives working together on the most friendly terms possible, under the orders of the same legislative assembly, and at the expense of the same taxpayers, the one set endeavoring to clear the road, the other set doing their utmost to render it impassable.