It is the fallacy of reciprocity that paralyses the efforts of parliament.

Frédéric Bastiat
Complete Works volume I, page 121 (in French)
Letter dated January 13th, 1846

A few months after writing his pamphlet Reciprocity, Frédéric Bastiat expresses in this letter his thoughts about it. This is a fallacy coming from the mercantilist idea that is still around nowadays, viz. that exports is the source of wealth of a country while imports are making it poorer (if anything, the opposite might be true).

He observes that because of this idea, governments (here the chamber of commerce in Bordeaux) do not support free trade by abandoning tariffs unilaterally (the so-called free trade agreement between France and Belgium is the topic) but let it depend on the reciprocal actions of other governments. So-called free-trade agreements are still negotiated nowadays in which the removal of tariffs on a specific product (e.g. the importation of cars) depends on the “reciprocal” removal of tariffs on another product (the export of cheese for instance). This is absolutely idiotic – if Americans fancy a tax on Roquefort cheese, there is no reason that the French buyers of Cadillacs should be taxed.

The source of this idea can be found in the mistaken idea that wealth is money. The application of this doctrine consists in shooting oneself in the foot when our trading partners do it themselves (if Chinese people do not buy “our” cars, let’s not buy the t-shirts “we” need). It also reveals the conceit of our rulers who think that they know better than the consumers what is good for them.

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