1/9/2024 0 Comments Iobserve internet equivalentI may say that this is not an isolated story. About three weeks after he came out for a tariff on these grounds, Britain went off the gold standard. ![]() His political judgment was like that of many economists, flawed. And so Keynes came out for that concealed form. That's an indirect and concealed form of devaluation. But Keynes thought that was politically infeasible and it comes to the same thing, to introduce a tariff on imports and a subsidy to exports. That's one way to do it and the best way. In that way, it would redress the problem of the balance of payments they were facing. If on the one hand the price of the pound sterling was changed from the four dollars and eighty some cents, which then was its price, to let's say four dollars, that would make British goods cheaper to foreigners it would make foreign goods more expensive to British residents. Tariffs can be an alternative to devaluation. But Keynes, an economist, made the political judgment that it was not politically feasible for Britain to go off the gold standard. In his view, the right policy for Britain at that time was to go off the gold standard, end a fixed exchange rate, allow the pound sterling to be a free market currency whose price would be determined in the market, as it now is, of course, in a world of floating exchange rates today. He did so not because he thought that was in and of itself the best policy, but because he thought that the best policy was politically infeasible. In 1931 in the course of the depression, John Maynard Keynes, who had been a free trader all his life, came out in some articles in Britain in favor of departing from free trade and of introducing tariffs. Perhaps the most famous such deviation was by the most noted and some would say notorious of modern economists, John Maynard Keynes, the English economist who gave his name to the Keynesian Revolution. Almost always those deviations have reflected not a disagreement with the fundamental message of Adam Smith, not a disagreement that in the good world free trade would be the best of all possible courses, but they have tended to reflect special circumstances of the time. Of course, complete unanimity is hardly ever possible, and every once in a while there have been some deviations from the straight and narrow path. Ever since the father of modern economics, Adam Smith, published his great book, The Wealth of Nations, in 1776, the same year in which the Declaration of Independence was issued in this country ever since then the economics profession has been almost unanimous on the subject of the desirability of free trade. With respect to the area of international trade, with respect to the question whether it is desirable for a country to have free trade or to have tariffs and other restrictions on imports and exports, in that particular area economists have spoken with almost one voice for some two-hundred years. ![]() The subject I am going to talk about today, however, is one subject with respect to which that is not true. There's a standard cliche, which I am sure you have all heard, that if you have two economists in one room you are bound to have at least three opinions. I shall try to do so without offending you. ![]() Flinchbaugh wears, and from several other things around here, that if I am going to be in Kansas State tradition, I must speak purple prose. ![]() Thank you, President Acker and all of you on the platform. Milton Friedman, Nobel Prize Winning Economist Landon Lecture
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