Mark Thornton: How Smugglers Made America

I’ve been saying here that smuggling represents “the unintended consequence of economic and financial repression that constitutes part of the informal economy”. 

And because such collation of repressive legislation “protects the financial and economic interests of the entrenched politically connected few”, smuggling signifies a pushback against these highly oppressive arbitrary policies. 

When seen from the purview of economics, smuggling benefits the the overall economy through the provision of additional supply of goods and services to the consumers, thereby increasing real purchasing power (via lower prices)

Yet not only consumers have been benefiting from smuggling; in the case of rice smuggling in the Philippines, the highly politicized rice economy that has led to massive distortions, ironically has even accounted for as “veiled subsidy to politicians in terms of prolonging their tenure through the attainment of temporary social stability”. Without smuggling there could have  already been a rice/food crisis.

Smuggling has been played a very important role in contributing to the history of wealth accumulation in the US economy. Austrian Economist and Professor Mark Thornton in a book review of Peter Andreas’ Smuggler Nation: How Illicit Trade Made America share elaborates on this.

Here is a slice: (bold mine)

Whenever I receive a book to review that is written by some hotshot ivy leaguer, I brace myself for all the deception and tomfoolery that I will have to endure. Peter Andreas’s Smuggler Nation, however, turned out to be a very pleasant surprise. Indeed, I can recommend this book to anyone interested in a true history.

Reading Andreas’s account we can note first of all that smuggling in America has been around since colonial days and will continue into the foreseeable future. Moreover, smuggling has played a very prominent role — not just a subsidiary one — through our history. Indeed it has often played a pivotal role in important events and historical episodes. And finally, Andreas’s account illustrates how smuggling is the result of prohibitions and protective tariffs. The cumulative impact of these policies has been the driving force for the establishment of big government and the police state in America.

Andreas makes it clear that the policies that create incentives to smuggle are irrational, ineffective, and often counterproductive. He also makes it clear that Americans have been duped into supporting various prohibitions to suppress vice by self-promoting politicians, self-interested bureaucrats, moralistic crusaders, and a compliant press. It is also interesting to note that smugglers were often considered heroes, if not by the majority, then certainly by consumers they served. It is also important to point out that readers will find that many of the wealthy and prominent families in American history, including several of our founding fathers, first grew rich on the profits from smuggling.

Pls read the rest here

Bottom line: The solution to smuggling is to emancipate the marketplace from politicization. In short, embrace economic freedom.