Economic Sophisms/52

40

V.

OUR PRODUCTS ARE BURDENED WITH TAXES.

have here again the same sophism. We demand that foreign products should be taxed to neutralize the effect of the taxes which weigh upon our national products. The object, then, still is to equalize the conditions of production. We have only a word to say, and it is this: that the tax is an artificial obstacle which produces exactly the same result as a natural obstacle, its effect is to enhance prices. If this enhancement reach a point which makes it a greater loss to create the product for ourselves than to procure it from abroad by producing a counter value, laissez faire, let well alone. Of two evils, private interest will do well to choose the least. I might, then, simply refer the reader to the preceding demonstration; but the sophism which we have here to combat recurs so frequently in the lamentations and demands, I might say in the challenges, of the protectionist school, as to merit a special discussion.

If the question relate to one of those exceptional taxes which are imposed on certain products, I grant readily that it is reasonable to impose the same duty on the foreign product. For example, it would be absurd to exempt foreign salt from duty; not that, in an economical point of view, France would lose anything by doing so, but the reverse. Let them say what they will, principles are always the same; and France would gain by the exemption as she must always gain by removing a natural or artificial obstacle. But in this instance the obstacle has been interposed for purposes of revenue. These purposes must be attained; and were foreign salt sold in our market duty free, the Treasury would lose its hundred millions of francs (four millions sterling); and must raise that sum from some other source. There would be an obvious inconsistency in creating an obstacle, and failing in the object. It might have been better to have had recourse at first to another tax than that upon French salt. But I admit that there are certain circumstances in which a tax may be laid on foreign commodities, provided it is not protective, but fiscal.

But to pretend that a nation, because she is subjected to heavier taxes than her neighbours, should protect herself by tariffs against the competition of her rivals, in this is a sophism, and it is this sophism which I intend to attack.

I have said more than once that I propose only to explain the theory, and lay open, as far as possible, the sources of protectionist errors. Had I intended to raise a controversy, I