We’ve written a few times about a little hobby of mine, the English economy in distant times, seen from an Austrian Economics perspective. The theme of this article is going to be about the advantages of international trade.
Here’s another installment, again from Hume, describing the reign of Henry IV, in the early 1400’s:
Commerce was very little understood in this reign, as in all the preceding. In
particular, a great jealousy prevailed against merchant strangers; and many restraints
were by law imposed upon them; namely, that they should lay out in English
manufactures or commodities all the money acquired by the sale of their goods; that
they should not buy or sell with one another, and that all their goods should be
disposed of three months after importation. This last clause was found so
inconvenient, that it was soon after repealed by parliament.
Yes, nothing has changed these last 600 years. Let’s have another look at what Hume says, and its relevance to us:
Commerce was very little understood in this reign, as in all the preceding.
Commerce, meaning economics, is still very little understood in the reign of Obama, as in all the preceding. Just mosey on over to reddit.com and have a look at their economics subreddit. Such a disgrace. Even among Austrians commerce is very little understood, at least parts of it. I refer to the love of bitcoin over at the Mises crowd. Bob Murphy, Hoppe, and other prominent Austrians just don’t get it, despite Smiling Dave’s valiant efforts to explain. Not to mention the Monetary Disequilibrium crowd, starring George Selgin and others, who have fallen in love with inflation. You just can’t reason with some people.
In particular, a great jealousy prevailed against merchant strangers and many restraints were by law imposed upon them;
Meaning imports. To be against imports, you have to have a level of ignorance so profound, you don’t understand the concepts of Division of Labor and of Comparative Advantage. And this ignorance is directly costing you money. And lest someone think this ignorance is not almost universal, ask yourself this. How many people do you think believe Buy American is a great idea, that will help the American economy? Almost everyone, right? Profound ignorance, the same as the English barbarians [Humes’ description] of the Fifteenth Century. [See for example here about why Buying American is bad for America].
And yes, we still have many restraints imposed upon them by law. Let’s look at the one Hume mentions:
…namely, that they should lay out in English manufactures or commodities all the money acquired by the sale of their goods; that they should not buy or sell with one another…
I mean, how stupid can you get? You want to empty your country of its wares and give it to foreigners. And if you think only the stupid barbarians in England did that in 1400, no. The US govt does it every day of the week. It hands out foreign aid. But that aid is not dollars. It is coupons, meaning Egypt, say, when it gets a billion in foreign aid from the USA, has to spend the whole billion on American products. That’s right. Instead of giving them useless paper and hoping they use it to clean out some other country, the US govt gives away its wares. And why do they do it? Because they think it’s good economics.
But maybe I’m not being generous enough. Maybe Obama is smarter than he looks or talks. Maybe he realizes it is terrible for his own country, but as long as it is good for his buddies, that’s why he does it.
…and that all their goods should be disposed of three months after importation. This last clause was found so inconvenient, that it was soon after repealed by parliament.
I can’t think of a paralell to that nowadays. Maybe we did learn something.
Now why was that so inconvenient? Probably because it discouraged the importers from bothering to show up. Which is of course a catastrophe. I mean it’s not like England was in great shape without them. The Flemish had all the good stuff, and the English traded with them. All the English had that anyone else in the world wanted was raw wool. Anything else English was despised. So that it was the English who benefited most by trading with these merchant strangers. And they soon realized it.
BTW, guess what happened to the Flemish, who traded with everyone?
From the twelfth century onwards, Flanders and Brabant were the most prosperous part of Northern Europe. The leading cities of Flanders (Bruges, Ghent and Ypres) were the major centre of the European woollen textile industry, making very high quality draperies, tapestries and furnishing materials, which were sold all over Europe. The raw materials were to a substantial extent supplied by imports — wool from England and alum (a cleansing agent indispensable in the cloth industry) which Genoese traders brought from Chios. Woad and other dyestuffs, fuller’s earth and other items were mainly local products. In the middle of the fourteenth century English wool exports were running at nearly 7 000 tons a year, most going to Flanders via the English port of Calais. [Source]
Guicciardin tells us, that the Flemings in this century learned from Italy all the
refinements in arts, which they taught the rest of Europe. The progress, however, of the arts were still very slow and backward in England.