Gerard Jackson
28 November 2022

Peter Smith¹, Steve Kates², John Quiggin³ are economists. Smith and Kates are on the right while Quiggin is on the left. Despite their political differences all three have serious doubts about the benefits of free trade. I’ll begin with Steve Kates who made this important observation on free trade:

But you know what was also current then [in the nineteenth century]? The gold standard. There are many ways this process of comparative advantage breaks down, but with the abandonment of the gold standard and fixed exchange rates, there are all kinds of ways to cheat in foreign trade relations that are not discussed as part of the basic theory⁴.

Unfortunately, this was too much for Professors Sinclair Davidson and Judith Sloan with Davidson making the absurd accusation that Kates believes the theory of comparative advantage is wrong because the world is not on gold. Sloan wasn’t much better, calling Kates’ point about gold a “dud”. The only duds here are Davidson and Sloan. At a later stage we shall see why classical economists considered gold crucial to maintaining free trade and why Kates’ view that comparative advantage broke down is misguided. Peter Smith, like nearly all economists, does not link the gold standard to the principle of free trade, even going so far as to emphatically state that there is no such thing as “free trade”⁵.

Professor Quiggin, who confesses to being something a “heretic on free trade”, takes a macroeconomic approach to nineteenth free trade, arguing  that it created the  “impossible trinity”, according to which governments

Continue reading The link between free trade, the nineteenth century business cycle and the gold standard →

Gerard Jackson
21 November 2022

The Black Death provides a particularly vivid picture of the effect on wage rates of a sudden and significant drop in the labour supply. By 1348 the Black Death had reached England. The effect on the labour supply was so swift and severe that Edward III issued the Statute of Labourers Acts of 1349 and 1351 which set maximum wage rates based on the average for the period 1325-1331. The statutes were a complete failure. From 1348 to 1377 successive waves of the Black Death slashed the population from 4.8 million to about 2.9 million¹. The result was an increase in the ratio of land and capital to labour resulting in real wages rising by about 50 per cent². Writing in 1375 John Gower, a country gentleman, lamented:

Labor is now at so high a price that he who will order his business aright, must pay five or six shillings now for what cost two in former times…the poor and small folk…demand to be better fed than their masters³

Henry Knighton, a canon of Leicester, wrote in 1388 that

the elation of the inferior people in dress and accoutrements in these days, so that one person cannot be discerned from another in splendour of dress or belongings, neither poor from rich nor servant from master⁴.

In the same year canons in Normandy complained the demand for labour had increased to the point that they

who did not demand more than six servants would have been paid at the beginning of the century⁵.

In 1356 the managers of the Florentine mint reported that the workers

at the mint do not want to work except when it suits them. And if one remonstrates with them, they reply with vulgar and arrogant curse words say they only want to work when it is convenient to  them and provided there are increases in salary⁶.

This brief foray into medieval economic history was necessary to bring home the indisputable fact that the ratio of labour to capital is of vital importance, an importance that is generally ignored. Therefore, we find that large changes in the labour supply relative to the capital structure have significant effects on wage rates. It is also true, as stated previously, that productivity⁷ can for a time conceal the negative effects of a heavy immigration inflow.

Continue reading The globalists’ policy of open borders would be catastrophic for the workers 3 →