WHEN the European nations first sailed out across the oceans they carried an economic fallacy. First, the Portuguese caravelas bobbed out in the Atlantic, followed by the French, Spanish, Dutch and Brits, with the Germans coming late to the game. Every nation applied a version of what we called The Navigation Acts, by which ships could ply only routes authorised by their national authorities. Colonial ports could trade only with their home country.
The great achievement of Adam Smith (and the other writers of the Scottish Enlightenment) was to demonstrate that this protected trade system was absurd and impoverishing to everyone. We all know about The Boston Tea Party as a valiant first effort to throw off the imperial yoke. It was a tax revolt against the Royal Navy blocking non-British ships from entering the harbour - and stopping American trade being carried on the ships of other nations.
Gradually the conspiracy to close sea traffic in this stupid bi-lateral manner dissolved. It was seen to be an intellectual error based on an erroneous assumption "exports" were virtuous but "imports" sinful. All trade is trade - ie mutually beneficial. If it werenât, it would not happen.
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