Quotation of the Day…
… is from page 285-286 of Edwin Cannan’s 1909 paper “The Incompatibility of Socialism and Nationalism,” as this paper is reprinted in the 1912 collection of some of Cannan’s essays, The Economic Outlook (E. Cannan, ed.):
At bottom they would be very much influenced by a habit we have got into of reckoning as units those areas which have a common fiscal system, especially if that system involves common customs duties with the incidental result of common statistics of imports and exports. Few realise how powerful these influences are. Two areas may be mixed up in the most puzzling way by a tortuous boundary like Manchester and Salford, but if you once give them a separate financial system, the liveliest local patriotism arises in the one which has the lowest rates; when, in addition to an internal fiscal system like that, you set up customs duties, the people begin to think they have a solidarity and common interest which they never thought of before, and which has no foundation in fact.
DBx: Yes.
Suppose that a not very implausible counterfactual history had played out, with the United States including what is today Canada. In that world, no one would think to measure the trade balance of the people living north of the 49th parallel with the people living south of that line. And no one – north or south of that latitude marker – would be any the worse for the absence of such a statistic. Indeed, everyone except rent-seekers would be better off as there would be no meaningless trade-balance statistic for pundits and politicians, north and south, to demagogue.
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