Taxation and Domestic Free Trade

Richard Johnsson ()

No 40, Ratio Working Papers from The Ratio Institute

Abstract: In this paper it is argued that the domestic division of labor and trade is organized according to the same principle as the international division of labor and trade – the Ricardian comparative advantages. After all, the ultimate source of these comparative advantages is the individual. The comparative advantages of individuals then lend themselves to groups of people, companies, regions and countries. It is these that make it worthwhile for people to cooperate on any larger scale at all; we all rely on them and they imply that there is room for everyone in society. But just as tariffs ruin the international division of labor, taxes and similar domestic government interventionism destroy the domestic division of labor among people. This is illustrated by means of the ‘division of labor condition’, where taxes enter as a possible restriction to trade, thus creating a Darwinist society of the survival of the fittest. The least productive individuals and those who face the highest barriers to trade run the risk of ending up on the outskirts of society. The more productive ones will run the risk of overreaching as they are forced to perform more and more tasks themselves. The result is not only more home labor and more black markets, but also real barter and situations where nothing gets done at all. To restore the division of labor, and to make room for everyone who wants to participate in it, it is argued that removing barriers to domestic trade is the only possible option.

Keywords: Division of labor; Comparative Advantage; Trade; Productivity; Growth; Taxes; Unemployment; Household Labor; Informal economy (search for similar items in EconPapers)
JEL-codes: B30 B53 D13 D31 D51 D60 D70 E23 E24 E31 E60 F00 F10 F20 F40 H20 H30 J22 J23 J24 J31 J38 J44 J60 O11 O12 O13 O40 P16 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2004-04-29, Revised 2004-06-07
Note: The publication refers to a Swedish version of the paper.
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Skatter & välfärd, Karlson, Nils, Johansson, Dan, Johnsson, Richard (eds.), 2004, pages 140-164, Ratio.

Downloads: (external link)
http://www.ratio.se/pdf/wp/rj_domestic.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.ratio.se/pdf/wp/rj_domestic.pdf [308 Permanent Redirect]--> https://www.ratio.se/pdf/wp/rj_domestic.pdf [308 Permanent Redirect]--> https://ratio.se/pdf/wp/rj_domestic.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ratioi:0040

Access Statistics for this paper

More papers in Ratio Working Papers from The Ratio Institute The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Martin Korpi ().