Adam Smith's Wealth of Nations (1776) is an 800-page book in favor of free trade -- free trade at every level, in every realm of life.
Ever since Wealth of Nations was published, the #1 litmus test of free market economic logic has been low or no tariffs. He who calls for tariffs to make a nation richer is an non-economist.
Today, we still find conservatives who support tariffs as wealth-producing taxes. These are people who say they believe in the free market. But they get to the invisible border separating nations, and they say,
Here, the logic of economic freedom ends. Here, we need a government official. We need sales taxes. We need a man carrying a badge and a gun to stick the gun in the belly of every person on this side of the border and say: "I will not let you trade unless you pay me." They say that this man with the gun will make all of us richer.
The conservative thinks that economic logic ends at a national border. Logic is only for inside national borders. Yes, it applies to city borders, county borders, and state borders. But it does not apply to national borders.
Adam Smith asked: "Why not?" For over two centuries, the answer has been: "Because I say so." Ludwig von Mises called this polylogism: multiple logics. He had no use for it.
Do you suffer from polylogism?
Do you want the man with the gun and the badge interfering with your town and the next one up the road? Do you think everyone would be richer if there were border patrol officials with badges and guns manning the highway and collecting a percentage on everything offered for sale? No? Good. You believe in economic liberty, free trade, and the division of labor.
What about border patrol officers between counties? No? Good. You're a free trader.
What about more officers, guns, badges, and sales taxes separating state lines? No? Good; you're a free trader.
We have reached the border between our nation and the one across the invisible line. Do you want guards, badges, guns, and sales taxes?
At this point, most conservatives would say, "yes." Why? "Because that's good for America!"
It's not good for towns, counties, and states. But it's good for America. Why?
They have no answer. They do not see the connection.
"Everyone knows that sales taxes are bad between towns, counties, and states. But everyone knows tariff barriers between countries are good. So, I don't have to answer. There is no problem here. Everyone knows that."
Polylogism strikes again.
I have found that there is no logical cure for polylogism. The affliction defies a logical cure. A logical cure assumes a single logic. The polylogist rejects this idea.
But some people get upset with bureaucrats with badges and guns, so I always talk about tariffs in terms of badges and guns. The power of these images overcomes polylogism . . . once in a while, anyway. Not often, but once in a while.
Should we build better roads? "If there are net benefits." What are the benefits? "More trade."
Should we post guards with guns and badges on the highways -- not to pay for the highways, for which tolls work fine, but to restrict trade? "No." Why not? "That would restrict trade."
How about bridges across rivers? "Yes." How about train tracks across state lines? "Yes." Why? "Because they increase trade." Is increased trade good? "Of course, dummy. Everyone knows that."
We are now at the Canadian border. "We need men with guns and badges!" Why? "To impose tariffs." Why? "To restrict trade." Is decreased international trade good? "Yes. Everyone knows that. It makes everyone better off." On both sides of the border? "Yes." But not at the state border. "No." Not at the country border. "No." Only at the national border. "Yes."
Polylogism strikes again.
The afflicted person is literally unable to see the logical disconnect here. Why not? I don't know, but I have dealt with this for 50 years. I don't expect it to change.
I see the case for tariffs as a substitute for the income tax. It gets the IRS out of my personal life. But that's not what the pro-tariff conservatives say. They defend tariffs as being good for people in their nation because tariffs restrict international trade.
Jones manufactures socks. Wong manufactures socks. Smith plans to buy socks from Wong. The socks are cheaper. Jones pulls a gun on Smith. "You ain't gonna buy no socks from no Gook. You gonna buy them from me. Got it?"
Conservatives are enraged. "It's a violation of property rights."
So, Jones gets organized politically. He gets the government to impose tariffs on socks from China. The government sends out men with guns and badges to keep Smith from buying socks from Wong. The armed men say to Smith: "This is going to make America richer. Pay us a tax." To save money, Smith buys from Jones.
Conservatives cheer. "It's a way to make Americans richer."
Polylogism strikes again.
You may think I am exaggerating. I am not. In 1976, when I was on Ron Paul's staff in Washington, I attended a dinner. It was held at the home of a man whose daughter was on a conservative Congressman's staff. There, I heard a guest say this:
I believe in free trade. Free trade is where I hold a .45 to the head of some Gook, and say, "We're going to trade on my terms."
That is the pro-tariff position: no frills, no sugar coating, except for one thing: the man with the badge holds the gun at the head of the American, not the Asian. The American lives on this side of the border.
Adam Smith argued against tariffs in 1776. Henry Hazlitt argued against them in 1946. Mises argued against them in 1949. Milton Friedman argued against them in 1962. Thomas Sowell argued against them in 2004.
A lot of conservatives don't read economics books. They don't believe what they don't understand, and they don't understand economics. They think they do, but they don't. They resist the main thesis of Adam Smith's Wealth of Nations: trade benefits everyone. Government restrictions on trade harm most people.
Polylogism still reigns in Washington. So does mercantilism: Keynesian and conservative.
Freer trade is not NAFTA-regulated trade. It is simply a reduction of tariffs and import quotas on either side of a border.
Here are my articles on the topic.
They will not persuade a polylogist.
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