Alternate title: "Lessons we should have learned 250 years ago."
Alt. title II: Careful with those visionaries.
From Politico, October 16, 2022:
An 18th century economic crisis underscores the danger of ideological purity.
World markets continue to reel from the British government’s free market reform fiasco. New British Prime Minister Liz Truss believed she could cut taxes without taking into account the policy’s immediate effects on the market, or its actual overall cost. The result has been a full-fledged economic disaster. One might call it a free market reform that the market rejected. It’s a funny concept, but it’s not the first time such a thing has occurred.
Indeed, the first attempt to liberalize an economy was based on the same idea: that liberalizing markets was all that it took for markets to function. In fact, it turned out, markets need much more tending and plenty of governmental care. The French found this out the hard way in the 18th century after new free-market reforms led to market failure, uprisings and famine — and perhaps even the first sparks of the French Revolution. The ensuing government reversal bears an eerie resemblance to Britain’s crisis today.
In the 1760s, Anne Robert Jacques Turgot began a series of reforms to liberalize the French economy. Turgot was a famed French philosopher and high government administrator (known as a royal intendant) whose responsibilities were to manage the monarchy’s legal affairs, taxes and political questions in the provinces. A leader of Enlightenment thought, he believed in religious tolerance, the abolition of slavery, secular public schools, free speech and more democratic representation. Most of all, Turgot was influenced by the new French free-market school of thought called physiocracy, which held that all wealth came from farming (as opposed to commerce and industry), and that, therefore, landowners and farm laborers should be freed from taxes and regulations so that farming could prosper and produce capital investment for improvement and progress.
Turgot was a visionary of economic liberalism. He wrote that the state should never opt to go “bankrupt” because it could take on debt or raise taxes. The most important reforms it could make were to cut spending and use better accounting to manage public finances. While there was growing interest in these ideas, France was still a feudal country dominated by landed aristocrats — who, by privilege, paid no taxes — and their peasant serfs, who paid high taxes to both the royal government and to their noble masters. The idea that fabulously rich nobles paid no taxes infuriated Turgot who wanted a fair, proportional tax system that favored economic growth and productivity by spurring the farming sector and consumer demand.
At the center of France’s agrarian economy was the grain trade. Since the 1400s, rules were in place to make sure famines did not get out of control. That meant grain merchants were heavily regulated so that they could not make large profits. Turgot saw this as the fundamental problem of the economy. “It is an error,” he wrote, “to sacrifice the rights of owners just to alleviate a bit of the suffering of the poor by forcing a product to be sold under its value.”
While France’s population began to explode in the 1720s, its agricultural production and industrial expansion didn’t keep up and wealth inequality became acute. Jobs and food were scarce. The country lived in fear of famine, and the crown guaranteed bread prices and distribution. By the mid-century, wages lagged and grain prices skyrocketed. Turgot saw the state’s control of the grain trade as a hindrance to economic growth. Like his contemporary Adam Smith, Turgot believed that capital and economic growth came solely from farming. Therefore, he thought, if the grain trade were free, then France’s economy would grow in turn. One of the first advocates of the term laissez-faire, he hoped that a rationalized taxation scheme would free “capitalist entrepreneurs” to invest in farming and fuel an economic expansion....
....MUCH MORE
From an October 14 post, the quick-n-dirty summary of those years:
If you've never studied mid/late 18th century French economic history it can be summarized as:
Food got expensive.
There were riots.
(oh, and Necker)
Pericles Press: France - The Economic History
—Chronology of Economic Events
1768
Government efforts to deal with shortages lead to popular rumors of a 'famine pact' among the nobility to starve the people.
Poor harvest in the fall.
Bread prices in Paris increase by over 50%..
Rioting starts at Beaumont-sur-Oise, spreads to Paris..
Hundreds arrested, two executed, before order is restored.
June 11 - Coronation of Louis XVI.
....MORE(we haven't even gotten to 1789 and those years yet)
