Dec 14, 2010

A Little Great Book

I want to signal a book that I find worth of reading.
It's small, well written and quite smart.
It's a book that anticipates the Adam Smith's "Wealth of Nations" by 11 years and Pietro Verri's "Elementi del Commercio" (Elements of Trade) by 4 years, being published in 1765. Smith was probably not aware of this book. If you have read some parts of Adam Smith's work, I am sure that you are going to enjoy it. It's amazing to see how similar ideas are presented and discussed in short and easy terms.
In one word: brilliant.

The author is not very famous, at least I had never heard his name until I found that book; sure he is not one of the big names in the history of economics. He was born in Finland (it was Sweden at the time) and his name is Anders Chydenius. The title of the book is "Den Nationnale Winsten" (The National Weath [literally "gain"]). Do I need to say more?

Unfortunately I don't know if you can easily find this book in English. So here you have some quotations, freely translated by myself from my Italian edition. (Editor Lirelibri)

About subsidizing exports:

A vendor always tries to get the highest possible price for its products. The owner and the foreigner agree on a price, say, 6 riksdaler for the article; but for that he receives a 2 riksdaler premium, a thus he gets 8 riksdaler in total for his product.

Now, if a swedish wants to buy the same good, we must not deny that he has to pay to the vendor as mush as he would get by selling it to the foreigner, that is 8 riksdaler, else the vendor would think he lost money in its transaction.

A foreigner will therefore buy for 2 riksdaler less because of the export premium, and always because of that a swedish will be taxed twice, that is 2 riksdaler for the fund aimed at helping foreign purchases and 2 riksdaler to compensate the seller.

As a consequence, it may even happen that foreigners are able to make more profitable trade with our own products in our own country. Let's stick to the little example discussed: packaged swedish products, sold to straingers for 6 riksdaler, can immediately be sold back to a swedish for 7.5 rikdaler, with a 25% profit, to a swedish who, then, buys them for half riksdaler less, that is 8,33% cheaper than the direct purchase at the producer workshop, and thus there will never be lack of buyers. (...)

Therefore, I sincerily whish that english people and other nations could not only keep their export premia, but that they may even be increased on all the goods that can be sold to us; but, on the other hand, that my own country may be get rid of premia and constraints that prevent us from taxing our neighbours freely and often.

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