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Here is some great info on French & British Mercantilism that I learned during my Comparative Political & Economic Systems class at Georgetown this summer:


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French Mercantilism
·Complex tax system based economy. Different taxes include:

Taille – a tax on land. It allowed many (250,000) clergyman and politicians to be exempt. Collected by private parties (that had no rules or regulations) who kept a percentage of the tax

Gabelle – a tax on salt. This came out of the government’s monopoly on salt production. Those who did not pay the tax were turned into government slaves.

Corvee – a labor tax (forced labor). Required poor people to work 14 days a year of unpaid work. They would not let people leave France because they needed the work generated from the Corvee.

Internal taxes and tolls – taxes on crossing regions within France. Run by private officials who set up toll collection everywhere. Made it extremely hard to travel.

Monopoly Guilds – half of all the money collected by the king came in this form. The king made people join guilds or else they were arrested.

Royal Positions – people were able to buy royal titles. The king could, at any point, make people re-buy the title.

Inflation – a tax on the value of money. The French greatly monetized inflation. There were a series of hyperinflation schemes. Assignets were set up (titles of property being traded like money), which caused an inflation rate of about 12,000%

Tariffs – the average tariff on things that could be imported was about 100%.

·In 289 years, the standard of living declined by 80%. All the aforementioned taxes added up to create an 80% tax rate on income. During mercantilism, france suffered 8 periods of famine. The average per capita income was $209 U.S. PPP. 90% of the population spent 90% of their income on bread alone.




British Mercantilism
·c. 1500 – 1760, consisted of a series of public policies that mirror the French, which were the dominant law of economics at the time.

·Policies under mercantilist England:

Statute of Artificers – enacted by Queen Elizabeth in 1563. In the mid 1300s the bubonic plague killed one third of all European. This caused a massive decline in the amount of agricultural laborers, and a corresponding increase in the price of food. The statute was set to provide a maximum wage rate below the market equilibrium. This was justified by the sentiment that the king could determine just prices. The main purpose of this is to save money for aristocratic landowners. However, competition in the labor market still existed due to non-price incentives. In an attempt to suppress this:
§ Anyone who worked the land that was under the age of twelve had to remain there for the rest of their lives. Crippled competition due to worker immobility.
§ All craftsmen, servants, and apprentices had to harvest wheat for the aristocracy.
§ All unemployed people were forced into agricultural labor.
§ Workers were prohibited to quit without written consent of their employer.
§ Monopoly guilds are set up (based on the work of your father), where workers had to join. This makes it so peasants cannot join city guilds. This creates a monopsony for employment opportunities (which causes wages below equilibrium levels, the square is the “level of oppression”).

Poor Laws – the first poor laws were within parishes in 1536 and by 1572 they were throughout Britain. Poor laws required merchants to pay taxes for the welfare of poor people. Problems that arise:
§ There are disincentives to work because if people know they will receive benefits below a certain (poverty) line of income, they will systematically remain below it.
§ Since taxes differed among parishes, poor people would “shop around” to get the most benefits. This puts more pressure on taxes, which then causes merchants to leave areas of high taxation. Begins the idea of outdoor relief (as opposed to indoor relief), which led to the pauperization of society (an individual could make 3 times as much money on benefits than the average merchant).
§ This ends up causing parishes to go bankrupt, so the next law is enacted.

Settlement Act of Relocation and Removal – set up in 1662 to help the financially strapped parishes. It allowed by force to return anybody who came into the parish (bound poor people to their residences). This basically reestablishes serfdom. Massive deadweight loss is created because surpluses and shortages between parishes could not equilibrate due to labor immobility.

Guilds and Monopolies – basically the same as France. Half the king’s income was generated through guilds. Private parties had monopolies on collecting taxes and electing under sheriffs (and of course giving percentages back to the king). Exact parallel to France. The crown basically just supported certain industries through which they could tax farm. Example:
§ Woolen Industry – export restrictions were set on wool (so that only domestic manufacturers could buy it), causing monopsony power in the industry (which depresses the prices of wool for suppliers). Under Elizabeth, the wool manufacturers had a monopoly on woolen products (due to import tariffs) and a monopsony on the purchase of wool. This causes an enormous dead weight loss. If anyone was caught breaking the law, there were serious punitive measures taken.

Colonialism – the British established colonies throughout the world. Colonialism is a rent-seeking endeavor for special interest groups with possible benefits that could arise. The populace, however, loses in paying taxes to support colonial powers (and getting nothing in return).

Navigation Acts – 1651. Required all exports and imports to be run on British ships. This acts as a Posner tax- because a monopoly is created, people must pay more than in competitive settings just to support British ship companies.

Tariffs/Export Subsidies – taxes on trade (tariffs) in conjuction with export subsidies to encourage a positive trade balance (a favorite of mercantilists). Both create deadweight losses to society. Tariffs protect local monopolies from outside competition, however they are more efficient than quotas (which were set on things like cutlery, hardware, flax, hemp, tar, etc.). This is “policy schizo;” the government does not allow you to buy foreign goods, but promotes exports through tax farming (foreign aid in a way), both domestic producers and exporters receive benefits.

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StevenMichael said:
No shit, sherlock, that's why I asked about the effects of the basic fundamentals of mercantilism in MODERN AMERICA, not a history report on mercantilism in the past, everyone knows that already cause we went to school. Jesus fucking christ


ps- Will a mod please not lock this but move this thread straight to the actual Dump? Next time I wanna ask how to not get scammed from a "make money from home" scheme or how to calculate sales tax I'll be back in here.

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