first day.
Really, I ask myself how it was possible for enough strange ideas to have gotten into our heads that we were persuaded to pay many millions with a view to destroying the natural obstacles lying between France and foreign countries and at the same time to pay many other millions to substitute artificial obstacles for them which have exactly the same effect, so that the obstacles created counteract those destroyed, things go on as before and the result of the operation is double expenditure.
A Belgian product worth 20 fr. in Brussels fetches 30 when it reaches Paris, because of transport costs. A similar product of Parisian manufacture costs 40 fr. So what do we do about it?
First, we put a duty of at least 10 fr. on the Belgian product in order to raise its cost price in Paris to 40 fr., and we pay a host of supervisors to ensure that it does not escape this duty, with the result that during the journey 10 fr. is charged for transport and 10 fr. for tax.
Having done this, we reason thus: transport from Brussels to Paris, which costs 10 fr., is very expensive. Let us spend two or three hundred million on railways, and we will reduce it by half.2 Obviously, all that we will have obtained is that the Belgian product will be sold in Paris for 35 fr., that is to say:
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| 20 fr. | its price in Brussels |
| 10 fr. | duty |
| 5 fr. | reduced transport by rail |
| 35 fr. | total, or the cost price in Paris |
Well, would we not have achieved the same result by lowering the tariff to 5 fr.? We would then have:
| 20 fr. | its price in Brussels |
| 5 fr. | reduced duty |
| 10 fr. | transport by ordinary road |
| 35 fr. | total, or the cost price in Paris |
And this procedure would have saved us the 200 million that the railway costs, plus the cost of customs surveillance, since these are bound to decrease as the incentive to smuggle decreases.
But, people will say, the duty is necessary to protect Parisian industry. So be it, but then do not ruin the effect with your railway.
For if you persist in wanting the Belgian product to cost 40 fr. like the Parisian one, you will have to raise the duty to 15 fr. to have:
| 20 fr. | its price in Brussels |
| 15 fr. | protectionist duty |
| 5 fr. | transport by rail |
| 40 fr. | total with prices equalized. |
Then my question is, from this point of view, what is the use of the railway?
Frankly, is it not somewhat humiliating for the nineteenth century to prepare a spectacle of childishness such as this for future ages with such imperturbable seriousness? To be fooled by others is already not very pleasant, but to use the huge system of representation in order to fool yourself is to fool yourself twice over and in a matter of arithmetic, this is something to take down the pride of the century of enlightenment a peg or two.
PUBLISHING HISTORY:
Original title: “Réciprocité.”
Place and date of first publication: JDE 12 (October 1845): 211.
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First French edition as book or pamphlet: Economic Sophisms (First Series) (1846).
Location in Paillottet’s edition of OC: Vol. 4. Sophismes économiques. Petits pamphlets I, pp. 67–70.
Previous translations: 1st English ed., 1846; 1st American ed., 1848; FEE ed., 1964.
We have just seen that everything that makes transport expensive during a journey acts to encourage protection or, if you prefer, that protection acts to encourage everything that makes transport expensive.
It is therefore true to say that a tariff is a marsh, a rut or gap in the road, or a steep slope; in a word, an obstacle whose effect results in increasing the difference between the prices of consumption and production. Similarly, it is incontrovertible that marshes or bogs are genuine protective tariffs.
There are people (a few, it is true, but there are some) who are beginning to understand that obstacles are no less obstacles because they are artificial and that our well-being has more to gain from freedom than from protection, precisely for the same reason that makes a canal more favorable than a “sandy, steep and difficult track.”1
But, they say, this freedom has to be mutual. If we reduced our barriers with Spain without Spain reducing hers with us, we would obviously be stupid. Let us therefore sign commercial treaties on the basis of an equitable reciprocity, let us make concessions in return for concessions, and let us make the sacrifice of buying in order to obtain the benefit of selling.
It pains me to tell people who reason thus that, whether they realize it or not, they are thinking along protectionist lines, the only difference being that they are slightly more inconsistent than pure protectionists, just as pure protectionists are more inconsistent than absolute prohibitionists.2
I will demonstrate this through the following fable:
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STULTA AND PUERA3
Once upon a time there were, somewhere or other, two towns, Stulta and Puera. At great expense, they built a road between the two. When it was completed, Stulta said to itself, “Now Puera is flooding us with its products; we had better look into it.” As a result, it created and paid a Corps of Obstructors,4 so called because their mission was to place obstacles in the path of convoys that arrived from Puera. Soon afterward, Puera also had a Corps of Obstructors.
After several centuries had passed, and enlightenment had made considerable progress, such was the growth of Puera’s awareness that it had grasped that these reciprocal obstacles must necessarily be mutually detrimental. It sent a diplomat to Stulta, who, though his words were couched in official terms, effectively said: “We built a road and now we are obstructing it. This is absurd. It would have been better for us to have left things in their original state. First of all, we would not have had to pay for the road, and secondly for the obstacles. In the name of Puera, I have come to suggest to you, not that we suddenly abandon the setting up of mutual obstacles between us, which would be to act in accordance with a principle and we despise principles as much as you do, but to reduce these obstacles a little, taking care to balance our respective sacrifices in this respect equitably.” This was what the diplomat said. Stulta asked for time to consider this. It consulted in turn its manufacturers and its farmers. Finally, after a few years, it declared that the negotiations had broken down.
At
