The kind of pressing need which is nearly always stronger than fear of revenge or remorse can also occur in the working classes, either because of a want of salary, or because of a temporary mismatch of their salary with the necessities of life; and even, it is most common among these people. For agriculture is, after all, the most productive of all professions for individuals, while for states, it is the unique source of real and lasting wealth.
But now we have conclusive evidence that lack of salary or insufficient salaries were caused nearly entirely by prohibitive laws hampering commerce and industry. Those laws, at the same time, were harming the well-being of all by collecting, little by little, in the hands of a few, wealth that then became in those hands a means of oppression, and which otherwise, through the free movement of interests would have remained if not equal, at least common to all. The unequal division of taxes at last overwhelmed the inferior class who, with no property and no liberty, was reduced to rely on fraud and would cheat remorselessly, because our conscience cannot survive when it is in chains. The incentive to behave unjustly, when it is based on need, is therefore extremely rare in the absence of bad laws, as even when they are present, this incentive is weak, its effects are the least widely spread, and it is to be feared the least.--Sophie de Grouchy (1798) Letters on Sympathy, translated by Sandrine Berges (forthcoming).
At the end of the first quoted paragraph, De Grouchy embraces a core physiocratic doctrine--that agriculture is the main productive industry and that it is the source of national wealth. This shows she had not fully assimilated or accepted Smith's criticism of physiocracy in Book 4 of Wealth of Nations. I quote the paragraph because I want to show, first, that in context she is interested in addressing some of the sources of poverty among the working classes such as unemployment or a fall in wages. Second, she clearly rejects here (and in this she does echo Adam Smith), the view of the working poor as naturally profligate. This view, much beloved by Victorians and conservatives of all ages, is often deployed to argue for sin-taxes on the consumption favored by the working poor or deployed by those fond of paternalistic regulation of the diversions favored by the working class (see Sam Fleischacker on Adam Smith). By contrast, De Grouchy argues that any mismatch between income and expenses is "temporary." This entails she thinks the working poor are naturally, responsible, calculating agents and subject to ordinary incentives. She understands the criminal code and the tax code as a system of incentives that can create perverse effects; it can induce bad and immoral behavior in those it purports to regulate. (That is, not unlike Smith is a methodological analytic egalitarian; for more on De Grouchy as a proto-public choice theorist, see here.)
As an aside, not unlike Smith, she thinks that free markets have an equalizing tendency. This is a natural thought when the status quo is deeply hierarchical and in which the aristocratic rich have economic and tax privileges and deeply entrenched legal exemptions. These privileges and exemptions do not just have an economic and political effect. In Letter VIII, Grouchy argues that these also undermine the impartial rule of law and threaten its authority because they convey the thought that even the criminal law itself is instrument of the rich against the poor: "the people are tempted to see criminal laws as made against them and in favor of the rich, as the result of an association designed to oppress them." (Grouchy here seems to draw an implicit contrast between an illegitimate association and a legitimate union.) She argues that one of the unintended, but foreseeable, consequences of laws that favor the wealth is increasing contempt for the law and so increasing lawlessness.
Okay let me turn, to the main point of this post. As the headline above this post suggests, my reason for returning to these passages is not merely antiquarian. Regular readers know that my posts are,when not personal diversions, often oblique impressions on the daily headlines. One striking feature of our age is that we are seeing the return of trade barriers as a bargaining ploy to alter the the terms of trade. (There is also a more vindictive and even racially charged use of such barriers, but that's for another occasion.) Most contemporary critics appeal to the economic costs of such barriers: they raise prices for consumers across the board (directly because the barriers increase costs and indirectly by changing the terms of trade) and by creating distorting signals and opportunity costs, they reward inefficiencies. As the quoted passage suggests, these economic effect were well understood at the end of the eighteenth century even before Ricardo articulated his theory of comparative advantage. As De Grouchy notes, trade barriers facilitate the creation of (what we may call) artificial monopolies, which enrich the well-connected few at the expense of the many. As I already noted before the Presidential election, given that now President Trump (and many of his voters) explicitly embrace a zero-sum world, this is not a bug, but a feature. Critics would do well to pay attention to that.
For, as De Grouchy, notes the significance of trade barriers is not just economic; they have important political implications: monopolies are the source of political power. They do so in two ways, by concentrating wealth they concentrate power. Because the power is concentrated it can more easily mobilize resources to prevent a (return) to free trade principles. So, it is a potent rent-seeking power. And, more important, the wealth itself can but political influence for other ends ("wealth... became in those hands a means of oppression"). That is to say, the embrace of strategic trade barriers is not merely instrumentally dangerous -- one can get stuck in sup-optimal trade-wars --, but it is politically dangerous: it is a source of concentrated economic power (I owe the term to Samuel Bagg) and, thereby, a power that has the capacity of entrenched control and transformation of the political system in favor of the influential few.
Critics that only focus on the effect of trade barriers on income and growth miss the political dangers. Because the political intelligence of President Trump is systematically underestimated, his critics fail to see the true danger here. De Grouchy knew better.
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