TO THE EDITOR OF LA PRESSE – II

The Americans are powerless in spinning cotton only because they earn more in doing something else.

Frédéric Bastiat
Complete Works, Volume 7, pages 148 to 152 (in French)
Courrier français, September 2nd, 1846

This second letter to the editor of La Presse follows the response that had been made to the first letter from Frédéric Bastiat. In it, he highlights the mistakes that have been made in assessing the ad valorem tariffs and the tariffs per unit, notably because of the ploys consisting in setting ad valorem tariffs associated to a deemed minimum price (we can see how a tariff of 20% morphs into a 100% tariff!). Facing the misunderstanding of his debater, Frédéric Bastiat reviews the concepts of fiscal tariffs and protective tariffs, explaining why, even if a fiscal tariff is sometimes outrageously high, it is preferable to a protective tariff.

I chose today’s quote because, as the justice arguments that are often cited and justify themselves, the economic aspect of protection also pleads against it. We can find here the concept of comparative advantage demonstrated by David Ricardo. Protection’s objective is to steer the economy towards uncompetitive industries (it “subsidizes” non profitable activities) and thus is harmful to the economy of a country as a whole. Without tariffs, industrials have to focus on the production of something for which they have a competitive advantage, allowing for an optimisation of ressources allocation. In the given example, it is irrelevant that the United States do not spin cotton because the ressources that would have to be allocated to such an activity are used somewhere else (it is not necessary to know which one), where they are more productive.

First letter

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