Thread by @adamsmithworks

#AdamSmith has spent a few days talking about why the mercantile system is not a great idea in general, but today he starts to get into specifics by talking about the policies through which it's implemented. We begin today with...drawbacks! (IV.iv.) #WealthOfTweets #SmithTweets

Merchants and manufacturers are not, of course, content only to have a monopoly over the home market. They also want an advantage in foreign markets.

Also: we're calling them M&Ms now. (IV.iv.1) #WealthOfTweets #SmithTweets

M&Ms don't hold sway over foreign governments, so they've gotta settle for getting their home government to pay them to send goods abroad.

Drawbacks are a refund on tariffs already paid. Smith likes them because all they can do is eliminate the tariffs and put things back to normal. They can't offer more encouragement to be in an industry than the market would provide. (IV.iv.2) #WealthOfTweets #SmithTweets

(Because if you get the maximum possible drawbacks, you just stop getting drawbacks if you keep exporting. At that port the exportation is for profits, not drawbacks.) (IV.iv.2) #WealthOfTweets #SmithTweets

Drawbacks can be refunds of duties paid on foreign goods that are re-exported, but M&Ms argue against even these to discourage foreign goods coming into the country at all.

...are we the only ones now imagining evil candy, or...? (IV.iv.3–8) #WealthOfTweets #SmithTweets"

Adam Smith provides (more) evidence that the British and the French were not tradin' frens. (IV.iv.8–11) #WealthOfTweets #SmithTweets

Smith thinks drawbacks are probably the result of governments trying to encourage the carrying trade to bring gold into the country. He says that's silly.

But he thinks it undoes some of the harm that tariffs do. That's good. (IV.iv.12) #WealthOfTweets #SmithTweets

You might think that drawbacks are bad for public revenues, says Smith, but it depends. If the drawbacks are partial, trade volume could increase enough to make up for it. (IV.iv.13–14) #WealthOfTweets #SmithTweets

If the drawback takes back *all* of the revenue from tariffs, then yeah. OK. Sure. It will reduce public revenue. But, says Smith...#WorthIt.
(IV.iv.14) #WealthOfTweets #SmithTweets

Drawbacks on goods exported to British colonies have no justification unless you're an evil M&M. (IV.iv.15) #WealthOfTweets #SmithTweets

See you tomorrow! What's coming? Just this...

*sigh* This is not political commentary. We're just going to talk about bounties on trade tomorrow. And Boba Fett is a bounty hunter and...

...we need more tea.

Love, the SmithTweeters