Quote of the day (mostly for Aretae)

From Friedrich List:

The pow­er of pro­duc­ing wealth is there­fore in­finite­ly more im­por­tant than wealth it­self; it in­sures not on­ly the pos­ses­sion and the in­crease of what has been gained, but al­so the replace­ment of what has been lost.

List is talking about power to create wealth at the national level. He has a much more nuanced view of free trade, as summarized in the introduction to the book:

In the first stage they [a developing nation] must adopt free trade with the more ad­vanced na­tions as a means of rais­ing them­selves from a state of bar­barism and of mak­ing advances in agri­cul­ture. In the sec­ond stage they must re­sort to com­mer­cial re­stric­tions to pro­mote the growth of man­ufac­tures, fish­eries, nav­iga­tion, and for­eign trade. In the last stage, ‘af­ter reach­ing the high­est de­gree of wealth and pow­er,’ they must grad­ual­ly re­vert to the prin­ci­ple of free trade and of un­re­strict­ed com­pe­ti­tion in the home as well as in foreign mar­kets, so that their agri­cul­tur­ists, man­ufac­tur­ers, and mer­chants may be pre­served from in­do­lence and stim­ulat­ed to re­tain the suprema­cy which they have ac­quired.


6 Responses to Quote of the day (mostly for Aretae)

  1. aretae says:

    I like the quote.

    The 2nd half…I’m suspicious of. My understanding is that the empirical data we have suggests that commercial restrictions and such simply fail more often than they work. I linked to a study a while back, but I can’t even remember it. but 2/3 pro-free-trade positions is about 90% better than most folks…so I’ll smile and say little.

    Hayek, Hayek, Hayek. http://www.econlib.org/library/Essays/hykKnw1.html. Or Kling if you prefer modern writers :-). Knowledge is distributed, and governments don’t EVER have the knowledge necessary to make the decisions of this type. Though they think they do, and there are (a) massive political advantages from distributing protectionism favors, and (b) perhaps advantages when preparing for war.

    • Foseti says:

      I would have totally agreed with everything you said a couple years ago. Now I’m not so sure, particularly given Germany’s strong economic position right now compared to other developed countries. I’m waiting for free traders to explain away Germany’s success and I’m not hearing anything.

  2. aretae says:

    I thought the German economy was recovering mostly because their government wasn’t being stupid and bailing out everyone and their dog.

    Also, according to Heritage, Germany’s trade freedom credentials are above those of America, but below that of Hong Kong. Seems like Germany is a good argument for more free trade?

    • Foseti says:

      That’s true, but it’s the German’s have a heavily unionized, non-employer friendly corporate structure. They still manage to export way more than the US in absolute terms.

      Germany is a good argument for List’s third stage – once you’re fully developed, free trade will help.

      Germany is using the free trade requirements within the Euro zone to crush the other economies in the zone, notably the Italians. The Italians simply can’t compete with the Germans.

  3. icr says:

    A US businessman’s take on German employment law:
    “Ever since I’ve been in the business world, Germany has been one of the worst countries for companies to do business in.”

    “The labor laws are so egregiously one sided (supporting employee interests) that one has to wonder how companies there actually survive. I remember a few years ago when we actually looked at the possibility of opening up an office there. After a week of being educated, the decision to stay out became the easiest call in Peppercom’s 15 year history.”

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