OUR PRODUCTIONS ARE OVERLOADED WITH TAXES.
This is but a new wording of the last
Sophism. The demand made is, that the foreign
article should be taxed, in order to neutralize the
effects of the tax, which weighs down national produce.
It is still then but the question of equalizing the
facilities of production. We have but to say
that the tax is an artificial obstacle, which has exactly
the same effect as a natural obstacle, i.e. the
increasing of the price. If this increase is
so great that there is more loss in producing the article
in question than in attracting it from foreign parts
by the production of an equivalent value, let it alone.
Individual interest will soon learn to choose the
lesser of two evils. I might refer the reader
to the preceding demonstration for an answer to this
Sophism; but it is one which recurs so often in the
complaints and the petitions, I had almost said the
demands, of the protectionist school, that it deserves
a special discussion.
If the tax in question should be one
of a special kind, directed against fixed articles
of production, I agree that it is perfectly reasonable
that foreign produce should be subjected to it.
For instance, it would be absurd to free foreign salt
from impost duty; not that in an economical point
of view France would lose any thing by it; on the
contrary, whatever may be said, principles are invariable,
and France would gain by it, as she must always gain
by avoiding an obstacle whether natural or artificial.
But here the obstacle has been raised with a fiscal
object. It is necessary that this end should be
attained; and if foreign salt were to be sold in our
market free from duty, the treasury would not receive
its revenue, and would be obliged to seek it from
some thing else. There would be evident inconsistency
in creating an obstacle with a given object, and then
avoiding the attainment of that object. It would
have been better at once to seek what was needed in
the other impost without taxing French salt. Such
are the circumstances under which I would allow upon
any foreign article a duty, not protecting
But the supposition that a nation,
because it is subjected to heavier imposts than those
of another neighboring nation, should protect itself
by tariffs against the competition of its rival, is
a Sophism, which it is now my purpose to attack.
I have said more than once, that I
am opposing only the theory of the protectionists,
with the hope of discovering the source of their errors.
Were I disposed to enter into controversy with them,
I would say: Why direct your tariffs principally
against England and Belgium, both countries more overloaded
with taxes than any in the world? Have I not
a right to look upon your argument as a mere pretext?
But I am not of the number of those who believe that
prohibitionists are guided by interest, and not by
conviction. The doctrine of Protection is too
popular not to be sincere. If the majority could
believe in freedom, we would be free. Without
doubt it is individual interest which weighs us down
with tariffs; but it acts upon conviction.
The State may make either a good or
a bad use of taxes; it makes a good use of them when
it renders to the public services equivalent to the
value received from them; it makes a bad use of them
when it expends this value, giving nothing in return.
To say in the first case that they
place the country which pays them in more disadvantageous
conditions for production, than the country which
is free from them, is a Sophism. We pay, it is
true, twenty millions for the administration of justice,
and the maintenance of the police, but we have justice
and the police; we have the security which they give,
the time which they save for us; and it is most probable
that production is neither more easy nor more active
among nations, where (if there be such) each individual
takes the administration of justice into his own hands.
We pay, I grant, many hundred millions for roads, bridges,
ports, railways; but we have these railways, these
ports, bridges and roads, and unless we maintain that
it is a losing business to establish them, we cannot
say that they place us in a position inferior to that
of nations who have, it is true, no taxes for public
works, but who likewise have no public works.
And here we see why (even while we accuse internal
taxes of being a cause of industrial inferiority) we
direct our tariffs precisely against those nations
which are the most taxed. It is because these
taxes, well used, far from injuring, have ameliorated
the conditions of production to these nations.
Thus we again arrive at the conclusion that the protectionist
Sophisms not only wander from, but are the contrary the
very antithesis of truth.
As to unproductive imposts, suppress
them if you can; but surely it is a most singular
idea to suppose, that their evil effect is to be neutralized
by the addition of individual taxes to public taxes.
Many thanks for the compensation! The State,
you say, has taxed us too much; surely this is no
reason why we should tax each other!
A protective duty is a tax directed
against foreign produce, but which returns, let us
keep in mind, upon the national consumer. Is it
not then a singular argument to say to him, “Because
the taxes are heavy, we will raise prices higher for
you; and because the State takes a part of your revenue,
we will give another portion of it to benefit a monopoly?”
But let us examine more closely this
Sophism so accredited among our legislators; although,
strange to say, it is precisely those who keep up
the unproductive imposts (according to our present
hypothesis) who attribute to them afterwards our supposed
inferiority, and seek to re-establish the equilibrium
by further imposts and new clogs.
It appears to me to be evident that
protection, without any change in its nature and effects,
might have taken the form of a direct tax, raised
by the State, and distributed as a premium to privileged
Let us admit that foreign iron could
be sold in our market at eight francs, but not lower;
and French iron at not lower than twelve francs.
In this hypothesis there are two ways
in which the State can secure the national market
to the home producer.
The first, is to put upon foreign
iron a duty of five francs. This, it is evident,
would exclude it, because it could no longer be sold
at less than thirteen francs; eight francs for the
cost price, five for the tax; and at this price it
must be driven from the market by French iron, which
we have supposed to cost twelve francs. In this
case the buyer, the consumer, will have paid all the
expenses of the protection given.
The second means would be to lay upon
the public a tax of five francs, and to give it as
a premium to the iron manufacturer. The effect
would in either case be equally a protective measure.
Foreign iron would, according to both systems, be
alike excluded; for our iron manufacturer could sell
at seven francs, what, with the five francs premium,
would thus bring him in twelve. While the price
of sale being seven francs, foreign iron could not
obtain a market at eight.
In these two systems the principle
is the same; the effect is the same. There is
but this single difference; in the first case the expense
of protection is paid by a part, in the second by
the whole of the community.
I frankly confess my preference for
the second system, which I regard as more just, more
economical and more legal. More just, because,
if society wishes to give bounties to some of its
members, the whole community ought to contribute;
more economical, because it would banish many difficulties,
and save the expenses of collection; more legal, lastly,
because the public would see clearly into the operation,
and know what was required of it.
But if the protective system had taken
this form, would it not have been laughable enough
to hear it said, “We pay heavy taxes for the
army, the navy, the judiciary, the public works, the
schools, the public debt, etc. These amount
to more than a thousand million. It would therefore
be desirable that the State should take another thousand
million, to relieve the poor iron manufacturers; or
the suffering stockholders of coal mines; or those
unfortunate lumber dealers, or the useful codfishery.”
This, it must be perceived, by an
attentive investigation, is the result of the Sophism
in question. In vain, gentlemen, are all your
efforts; you cannot give money to one without
taking it from another. If you are absolutely
determined to exhaust the funds of the taxable community,
well; but, at least, do not mock them; do not tell
them, “We take from you again, in order to compensate
you for what we have already taken.”
It would be a too tedious undertaking
to endeavor to point out all the fallacies of this
Sophism. I will therefore limit myself to the
consideration of it in three points.
You argue that France is overburthened
with taxes, and deduce thence the conclusion that
it is necessary to protect such and such an article
of produce. But protection does not relieve us
from the payment of these taxes. If, then, individuals
devoting themselves to any one object of industry,
should advance this demand: “We, from our
participation in the payment of taxes, have our expenses
of production increased, and therefore ask for a protective
duty which shall raise our price of sale;” what
is this but a demand on their part to be allowed to
free themselves from the burthen of the tax, by laying
it on the rest of the community? Their object
is to balance, by the increased price of their produce,
the amount which they pay in taxes. Now,
as the whole amount of these taxes must enter into
the treasury, and the increase of price must be paid
by society, it follows that (where this protective
duty is imposed) society has to bear, not only the
general tax, but also that for the protection of the
article in question. But it is answered, let
every thing be protected. Firstly, this
is impossible; and, again, were it possible, how could
such a system give relief? I will pay for you,
you will pay for me; but not the less, still
there remains the tax to be paid.
Thus you are the dupes of an illusion.
You determine to raise taxes for the support of an
army, a navy, the church, university, judges, roads,
etc. Afterwards you seek to disburthen from
its portion of the tax, first one article of industry,
then another, then a third; always adding to the burthen
of the mass of society. You thus only create interminable
complications. If you can prove that the increase
of price resulting from protection, falls upon the
foreign producer, I grant something specious in your
argument. But if it be true that the French people
paid the tax before the passing of the protective
duty, and afterwards that it has paid not only the
tax, but the protective duty also, truly I do not
perceive wherein it has profited.
But I go much further, and maintain
that the more oppressive our taxes are, the more anxiously
ought we to open our ports and frontiers to foreign
nations, less burthened than ourselves. And why?
In order that we may share with them, as much as possible,
the burthen which we bear. Is it not an incontestable
maxim in political economy, that taxes must, in the
end, fall upon the consumer? The greater then
our commerce, the greater the portion which will be
reimbursed to us, of taxes incorporated in the produce,
which we will have sold to foreign consumers; whilst
we, on our part, will have made to them only a lesser
reimbursement, because (according to our hypothesis)
their produce is less taxed than ours.
Again, finally, has it ever occurred
to you to ask yourself, whether these heavy taxes
which you adduce as a reason for keeping up the prohibitive
system, may not be the result of this very system itself?
To what purpose would be our great standing armies,
and our powerful navies, if commerce were free?