#WealthofTweets: Book 4.8
Conclusion of the Mercantile System
18 Feb • 26 tweets • adamsmithworks/status/1362412750543220747
We made it, everyone! It's the conclusion of the discussion of the mercantile system! (IV.viii.) #WealthOfTweets #SmithTweets
The mercantile system tries to maintain the “balance of trade” by encouraging exports and discouraging imports. Counterintuitively, sometimes that's done by encouraging imports. (IV.viii.1) #WealthOfTweets #SmithTweets
Manufacturers demand that their inputs be imported without duties or with bounties. Smith thinks that's a great start, but they should eliminate all duty on manufacturing imports, not just the ones demanded by the manufacturers. (IV.viii.2–3) #WealthOfTweets #SmithTweets
Unfortunately, that isn't going to happen. Manufacturers use politicians to protect their interests above all else, and this is super transparent if you look at what they do. (IV.viii.4) #WealthOfTweets #SmithTweets
To make sure they can sell their wares at the highest possible price they demand:
- Bounties on their exports
- Duties on competing imports
- Prohibition of the stiffest competition. (IV.viii.4) #WealthOfTweets #SmithTweets
To make sure they can buy their imports as cheaply as possible they demand for their inputs:
- Encouragement of imports
- Increased competition for domestic producers
- Depressed wages for workers. (IV.viii.4) #WealthOfTweets #SmithTweets
[We read sections like this and hear Smith’s obvious anger at how the poor are neglected and oppressed and wonder why people dismiss #AdamSmith as some kind of cartoon capitalist who’s out for a quick buck.] (IV.viii.4) #WealthOfTweets #SmithTweets
And now, a history of bounties:
Smith lays on the sarcasm pretty thick as he describes how smart it was to grant all of these benefits to the American colonies under the assumption that it was just an "investment" in British greatness. (IV.viii.15) #WealthOfTweets #SmithTweets
And now, a history of duties designed to discourage export:
Plus! Oppressive trade restrictions, like:
Wool must be in a leather or cloth container with “Wool” or “Yarn” in letters > 3” high. or you forfeit it and 3 s/lb.
No transporting it at night.
We, the SmithTweeters, suspect that all this suggests that at one point, there were bands of criminal yarn smugglers roving the English coast.
We would watch the heck out of that series. Stars @David_Tennant. Scripts by @neilhimself (IV.viii.21–23) #WealthOfTweets #SmithTweets
Merchants claim this was all necessary 'cause English wool was so super special that if it wasn’t exported, English textile manufacturers could monopolize the world wool trade. #WealthOfTweets #SmithTweets
"Our wool is the specialest! It's our super power!" is one of those doctrines “confidently asserted by any number of people” who know nothing about the wool trade and who can't be bothered to learn. (IV.viii.24) #WealthOfTweets #SmithTweets
Anyway, all this pushes down the price of wool. Even at an artificially low price, there's lots of wool because sheep are raised for meat. (IV.viii.26) #WealthOfTweets #SmithTweets
The prohibition on wool exports hurts farmers to protect manufacturers. That’s unjust. The sovereign owes every subject equal treatment.
Even accepting the need to reduce wool exports, a small tax on exports would be more just. (IV.viii.30–32) #WealthOfTweets #SmithTweets
And now, a history of inputs for English manufacturers' goods that have faced similar restrictions:
If you were as mad about anything as Smith is about the mercantile system, you'd make lots of tediously detailed lists, too!
And the capper?! Restrictions that forbid British citizens to go abroad to practice particular protected trades!
You could be fined! Imprisoned! Forfeit your property! Outlawed!
[...We are suddenly worried that SmithTweeting may be one such protected industry. We love you Scotland, but we aren’t sure we’re ready to relocate…but maybe we can stay at @AdamSmithHouse?]
And look, like Smith's been saying: the goal of all these rules and regulations is to advantage the country not by making us wealthier, not by doing better, but by making others do worse. (IV.viii.48) #WealthOfTweets #SmithTweets
This is all silly nonsense, and some of it is downright evil.
Everyone should have the goal of working to increase consumption! Providing for consumers is the end and purpose of all production. (IV.viii.49) #WealthOfTweets #SmithTweets
Look out for consumers, and the country will cut out bounties and duties. It will stop treating colonies as captive markets. It will stop doing a lot of things Smith just spent a lot of time saying shouldn't be done. (IV.viii.50–53) #WealthOfTweets #SmithTweets
And—we know you’ll be shocked to hear this—but this system that ignores consumers in order to benefit merchants and manufacturers?