Economic Sophisms

by Frédéric Bastiat

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 should have asked the protectionists why they direct their tariffs chiefly against England and Belgium, the most heavily taxed countries in the world? Am I not warranted in regarding their argument only as a pretext? But I am not one of those who believe that men are prohibitionists from self-interest, and not from conviction. The doctrine of protection is too popular not to be sincere. If the majority had faith in liberty, we should be free. Undoubtedly it is self-interest which makes our tariffs so heavy; but conviction is at the root of it. "The will," says Pascal, "is one of the principal organs of belief." But the belief exists nevertheless, although it has its root in the will, and in the insidious suggestions of egotism.

Let us revert to the sophism founded on taxation.

The State may make a good or a bad use of the taxes which it levies. When it renders to the public services which are equivalent to the value it receives, it makes a good use of them. And when it dissipates its revenues without giving any service in return, it makes a bad use of them.

In the first case, to affirm that the taxes place the country which pays them under conditions of production more unfavourable than those of a country which is exempt from them, is a sophism. We pay twenty millions of francs for justice and police; but then we have them, with the security they afford us, and the time which they save us; and it is very probable that production is neither more easy nor more active in those countries, if there are any such, where the people take the business of justice and police into their own hands. We pay many hundreds of millions (of francs) for roads, bridges, harbours, and railways. Granted; but then we have the benefit of these roads, bridges, harbours, and railways; and whether we make a good or a bad bargain in constructing them, it cannot be said that they render us inferior to other nations, who do not indeed support a budget of public works, but who have no public works. And this explains why, whilst accusing taxation of being a cause of industrial inferiority, we direct our tariffs especially against those countries which are the most heavily taxed. Their taxes, well employed, far from deteriorating, have ameliorated, the conditions of production in these countries. Thus we are continually arriving at the conclusion that protectionist sophisms are not only not true, but are the very reverse of true.*

* See Harmonies Économiques, ch. xvii.

If taxes are improductive, suppress them, if you can; but assuredly the strangest mode of neutralizing their effect is to add individual to public taxes. Fine compensation truly! You tell us that the State taxes are too much; and you give that as a reason why we should tax one another!

A protective duty is a tax directed against a foreign product; but we must never forget that it falls back on the home consumer. Now the consumer is the tax-payer. The agreeable language you address to him is this: "Because your taxes are heavy, we raise the price of everything you buy; because the State lays hold of one part of your income, we hand over another to the monopolist."

But let us penetrate a little deeper into this sophism, which is in such repute with our legislators, although the extraordinary thing is that it is just the very people who maintain unproductive taxes who attribute to them our industrial inferiority, and in that inferiority find an excuse for imposing other taxes and restrictions.