Tax Britannica: Nineteenth Century Tariffs and British National Income

Abstract

The literature on British economic history presumes thatBritain was a free trader after the repeal of the Corn Lawsand that her tariff levels were thus below those which wereoptimal for maximizing utility. Presumably, if the optimalBritish tariffs had been positive and greater than the levelsestablished by mid-century, a reduction to zero of all tariffsthat remained would have lowered British welfare even further.In this paper, we use a simple computable general equilibriummodel to simulate a drop in all British tariffs to zero. Theresulting substantial net increase in British welfaresuggests that British tariffs were much higher than would beconsistent with an optimum tariff policy. More important, thesize of British losses from her high tariff levels suggeststhat British policy was not consistent with the stance of anideological free trader. Copyright Kluwer Academic Publishers 2004