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A Modest Member of Parliament [Bert Kelly], “A licence to print a quota of money,” The Australian Financial Review, May 6, 1977, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 72-74, as “Import Quotas (2).”

Eccles is always nagging me about the danger of using import quotas as a method of protecting Australian industry.

Sometimes he calls them import quotas, sometimes quota restrictions (QRs for short), sometimes tariff quotas, sometimes even import licences. So it is not surprising that your Modest Member gets confused.

There was a time B.E. (Before Eccles) when it seemed to me that if an Australian industry was protected by quotas and not by tariffs, then whatever imports came in would not have to come in over the tariff wall and so would not be made dearer, so the consumer would not have to pay extra as he does if tariffs are used. I asked:

So why do you get in such an awful lather about QRs, Eccles?

They always seem so definite in their operation. If imports are limited by quotas to, say, 30 per cent of the market then the Australian industry knows that it has the remaining 70 per cent so can plan more definitely. And QRs don’t seem to make things dearer as tariffs do. Why do you hate them so?

Eccles took a long deep breath and started in on me.

He first ridiculed the idea that if a product was imported under a quota its selling price in Australia would not be increased as it would if it had come in over a tariff wall. Eccles growled:

Surely even you can see that because an importer is only allowed to import a limited amount he would have no incentive to compete strongly with the Australian manufacturer? What would be the sense of so doing if he can’t import any more goods because he is only allowed a limited import quota.

One reason why import quotas are so popular with Australian industry and with importers who have been given quotas is that everyone knows their place; there is no incentive to rock the boat, to compete.

No wonder quotas are popular with the people who either have been allotted import quotas or are protected by them.

Then Eccles explained that if imports came in over the tariff wall the Customs duty went into consolidated revenue so the taxpayer benefited even though the consumer paid an increased price.

But with import quotas the price to the consumers still rises to the Australian price for reasons given. But with quotas the difference between the Australian price and the duty-free price is a windfall gain to the importer with a quota.

Eccles says that getting a quota is like getting a licence to print a quota of money.

“If that is so, quotas must be greatly sought after. How then are they allocated?” I asked.

Eccles says that there are two grave dangers in doing this. It may be nice and comfortable for the importer with a quota but it keeps out any up and coming new importer. In other words, it offends Eccles’ bucket of worms conception of the economy.

“Anything that keeps things as they are, anything that inhibits change is bad for the economy in the end,” Eccles warned me yet again. “Nothing is quite so offensive as a bucket of worms that stops turning.”

But there was a great worry gnawing at Eccles and I too am concerned. Even since Eccles made me read Professor Hayek’s The Constitution of Liberty I have been on my guard against particular advantage being given to particular people by administrative discretion. I quote from page 168: “Englishmen then understood better than they do today that the control of production always means the creation of privilege: that Peter is given permission to do what Paul is not allowed to do.”

Even more telling is this pregnant quotation from Sir Edward Coke’s examination of Magna Carta in 1624: “if a grant be made to any man, to have the sole making of cards, or the sole dealing with any other trade, that before did, or lawfully might have used that trade and consequently is against this great charter.”

By giving particular people a licence to import, the government is giving a particular advantage to those people. If tariffs are used all citizens are free to engage in the trade if they pay the tariff duty, but with QRs it is only those with a quota that can trade, a quota given to them by administrative discretion and not by law.

As Coke said in 1624, it would be far better “to leave all causes to be measured by the golden and straight meter-wand of the law and not to the uncertain and crooked cord of discretion.”

(in order of appearance on
  1. Bert Kelly on his journalism
  2. Move for a body of Modest Members
  3. Modest Members Association
  4. Bert Kelly's Maiden Parliamentary Speech
  5. Government Intervention
  6. 1976 Monday Conference transcript featuring Bert Kelly
  7. Bert Kelly, Hayek and Mencken on the virtues of farmers
  8. Sound economics calls for quiet from government
  9. Petrol for Farmers
  10. Some Sacred Cows
  11. Experiences in Parliament
  12. Spending your Money
  13. Is Taxmania a politician fetish?
  14. How Bert Kelly repays a free feed
  15. Modest column #898
  16. Chicken-hearted feathered friends strange bedfellows on a feather bed?
  17. Who needs literary licence?
  18. A touch of Fred's anarchy
  19. Helping the farmers help themselves
  20. Standing on the shoulders of the downtrodden
  21. Supply and Demand
  22. Bert Kelly responds to claims he is arrogant and uncredentialed
  23. Politics: it's a very confusing business
  24. The best featherbeds run on rails
  25. Bert Kelly on Disaster Relief
  26. Bert Kelly Wants to Secede
  27. Blinded by their tears
  28. Anti-freedom pro-tobacco industry lobby harmed Australia
  29. Under Labor, is working hard foolish?
  30. An Idiot's Guide to Interventionism
  31. Is free healthcare worthless?
  32. Can government kiss it better?
  33. Bert Kelly Destroys the Side Benefits Argument for Government
  34. Bert Kelly gets his head around big-headed bird-brained politics
  35. First Modest Member (Bert Kelly) AFR Column
  36. Second Modest Member (Bert Kelly) AFR Column
  37. Third Modest Member (Bert Kelly) AFR Column
  38. Fourth Modest Member (Bert Kelly) AFR Column
  39. Fifth Modest Member (Bert Kelly) AFR Column
  40. Sixth Modest Member (Bert Kelly) AFR Column
  41. Bert Kelly on the 2011 Budget and Australia's Pathetic Journalists and Politicians
  42. Bert Kelly, Bastard or Simple Sod?
  43. Liberal Backbencher Hits Govt. Over Import Restrictions
  44. Bert Kelly feels a dam coming on at each election
  45. Bert Kelly Enters Parliament
  46. Why take in one another's washing?
  47. Bert Kelly breaks the law, disrespects government and enjoys it
  48. Gillard's galley-powered waterskiing
  49. State Premiers are always asking for more taxing powers
  50. Can price control really work?
  51. Should we put up with socialism?
  52. We're quick to get sick of socialism
  53. Time the protection racket ended
  54. Can't pull the wool over Farmer Fred
  55. People not Politics
  56. Bert Kelly admits he should have had less faith in politicians
  57. The inspirational incentivising Dear Leader Gough Whitlam
  58. Labor: a girl who couldn't say no
  59. Why leading businessmen carry black briefcases
  60. Ludwig von Mises on page 3 of AFR
  61. Bert Kelly's empowering feminism
  62. Mavis wants the Modest Member to dedicate his book to her
  63. What if the whole country is swindled?
  64. Moss Cass: "Flood plains are for floods"
  65. A worm's eye view
  66. Eccles returns to haunt us
  67. How to grip a politician's ear
  68. It's hard to digest this economic cake
  69. Time to Butcher "Aussie Beef"
  70. Cold water on government-instigated irrigation schemes
  71. Hooray for Ord River Dam!
  72. Tariffs paid by exporters
  73. The problem of principles v popularity
  74. If you support State Quotas, where will your logic take you?
  75. Against guidance by government
  76. A socialist in Liberal clothing
  77. Never ask the government to help
  78. Don't listen to economists!
  79. Bert Kelly's revolutionary strategy
  80. Whitlam's July 1973 25% tariff cut
  81. Bert Kelly on Import Quotas
  82. Good directions when government backseat driving, like reversing down wrong side of road
  83. Barriers to imports are barriers to exports
  84. Bert Kelly reviews The War Diaries of Weary Dunlop
  85. Bert Kelly reviews We Were There
  86. Tariffs get the fork-tongue treatment
  87. Bert Kelly reduces government to its absurdities
  88. Politician sacrifices his ... honesty
  89. It's all a matter of principle
  90. Bert Kelly Destroys the Infant Industry Argument
  91. Bert Kelly Untangles Tariff Torment
  92. Bert Kelly resorts to prayer
  93. Eccles keeps our nose hard down on the tariff grindstone
  94. "Don't you believe in protecting us against imports from cheap labour countries?"
  95. Even if lucky, we needn't be stupid
  96. Great "freedom of choice" mystery
  97. Small government's growth problem
  98. I like my kind acts to get a mention in the press
  99. A Modest Member rakes the embers
  100. Tariffs Introduced
  101. More About Tariffs
  102. Sacred cow kicker into print
  103. Bert Kelly's 1984 two-article quote-collection on Aboriginal policies
  104. Modest Member must not give up
  105. Traditional Wheat Farming is Our Birthright and Heritage and Must be Protected!
  106. Tariff-cut nonsense lives on
  107. Bert Kelly brilliantly defends "theoretical academics"
  108. The high cost of protection
  109. Generosity creates problems
  110. The Society of Modest Members
  111. John Hyde's illogical, soft, complicated, unfocussed and unsuccessful attempt to communicate why he defends markets
  112. Modesty ablaze
  113. Case for ministers staying home
  114. The unusual self-evident simplicity of the Modest Members Society
  115. Animal lib the new scourge of the bush
  116. The Association for the Prevention of Cruelty to Krill
  117. modest members society
  118. Repeal economic laws, force people to buy new cars and enforce tariffs against overseas tennis players
  119. Thoughts on how to kill dinosaurs
  120. Let's try the chill winds
  121. Taking the Right's road
  122. Bert Kelly: "I did not try often or hard enough"
  123. Bert Kelly "lacked ... guts and wisdom"
  124. A look at life without tariffs
  125. The Gospel according to Bert
  126. Tiny note on Bert Kelly's column in The Bulletin in 1985
  127. Why costs can't be guaranteed
  128. Hitting out with a halo
  129. Paying farmers not to grow crops will save on subsidies, revenge tariffs, etc
  130. "The Modest Farmer joins us" | "How The Modest Farmer came to be"
  131. Bert Kelly Destroys the Freeloading Justifies Government Argument
  132. Industrial Relations Club shovellers
  133. From Shann to Stone
  134. Government Intervention
    Government Interference
  135. A sojourn in the real world
  136. The tariff wind swings
  137. Bigger Cake = Bigger Slices
  138. Bert Kelly on the Political Process
  139. A charabanc called protection
  140. Taken for a ride - to nowhere
  141. Down hill, in circles, all the way
  142. Relationships with the Liberal Party
  143. Tariffs = High Prices + World War
  144. Bert Kelly's Family History
  145. Bert Kelly's Pre-Parliament Life
  146. What the MP could say to the Bishop
  147. Why Bert Kelly was not even more publicly outspoken
  149. How to stand aside when it's time to be counted
  150. How the Modest Member went back to being a Modest Farmer
  151. My pearls of wisdom were dull beyond belief
  152. Bert Kelly on Political Football
  153. Undigested morsels in Fraser spew
  154. Bert Kelly on LSD
  155. Bert Kelly reflects on the Australian car industry in 1992
  156. Bert Kelly wants reprinted Shann's Economic History of Australia
  157. If tariffs are opposed here then why not there?
  158. The emperor has no textiles, clothing and footwear sense
  159. Ross Gittins Wins Bert Kelly Award
  160. Interesting 1964 Bert Kelly speech: he says he is not a free trader and that he supports protection!
  161. This is the wall the Right built
  162. Tariff Protection in Australia (1970)
  163. Has Santa socked it to car makers?
  164. Is the Budget a cargo cult?
  165. Will we end up subsidising one another?
  166. Keeping the bucket of worms alive
  167. Can we get off the stomach-churning head-spinning tariff merry-go-round?
  168. Do we want our money to fly?
  169. Can a bear be sure of a feed?
  170. How to impress your MP -
    ambush him
  171. The time for being nice to our MPs has gone ...
  172. Don't feel sorry for him -
    hang on to his ear
  173. Trade wars can easily end up on a battlefield
  174. Tariffs Create Unemployment
  175. Bert Kelly recommends Ayn Rand
  176. Bert Kelly on Alf Rattigan's Industry Assistance: The Inside Story
  177. Bert Kelly's Satirical Prophecy: Minister for Meteorology (tick) and High Protectionist Policies to Result in War Yet Again (?)
  178. Bert Kelly in 1972 on Foreign Ownership of Australian Farmland and Warren Truss, Barnaby Joyce and Bill Heffernan in 2012
  179. Bert Kelly baits Welfare State Tiger
  180. Why does Govt wear two faces?
  181. Parliament a place for pragmatists
  182. Of Sugar Wells and Think-Tanks
  183. Bert Kelly: "I must take some of the blame"
  184. Bert Kelly on dumping duties
  185. The Govt's helping hand often hurts
  186. Unbuckling the hobbles on the motor industry
  187. A Modest Farmer looks at the Problems of Structural Change
  188. Government Fails Spectacularly
  189. Know your proper place if you want the quiet life
  190. Bert Kelly on political speech writers
  191. Having your cake and eating it
  192. Perish the thawed!
  193. Hooray for Northern Development!
  194. The silly image of our MPs
  195. Bert Kelly Question Time highlights
  196. Modest Farmer sees his ideas take hold
  197. Should facts stand in the way of a good story?
  198. Fondling one another's glass haloes
  199. What is the sense in making the effort to look after yourself?
  200. Fred's Feeling: Counterpatriotic country contrarian
  201. Handouts for big boys only
  202. Mavis trying to buy a hand loom
  203. Bad news for bearers of bad news
  204. Is it time to get aboard the tariff band-waggon?
  205. Why farmers resent tariff protection for motor makers
  206. A sordid use of scare tactics
  207. Goods vs services
  208. Tariffs are hilariously counterproductive
  209. Bert Kelly on decentralisation
  210. Inflation breeds moral decay
  211. Who envies equality?
  212. Growth – malignant or benign?
  213. Government wiser than Magna Carta
  214. Bert Kelly on looking to politicians for moral leadership
  215. Max Newton: Maverick in Exile
  216. Whitlam & co on the Dismissal
  217. 25% Tariff Cut
  218. Bert Kelly on pensions
  219. Mr Clunies-Ross of the Cocos Islands should rule Australia
  220. They get the wind up when it changes
  221. Why the Big Green Lie survives
  222. Ross McLean in 1982: "Malcolm! Why don't we try good government? It might be popular."
  223. Bert Kelly on the importance of exchange rate movements
  224. Bert Kelly shows how to attack
  225. Bert Kelly vs Bert Kelly vs Bert Kelly
  226. Industrial relations dinosaur, Bruce, chews his cud
  227. Hooray for "firmly entrenched"!
  228. Respect your dinosaurs
  229. What if something is "deeply ingrained" yet harmful?
  230. A case for ministerial inertia
  231. Why politicians don't like the truth
  232. Our great open spaces
  233. Ominous dark clouds are gathering
  234. Better to be popular than right
  235. Crying in the wilderness
  236. Ivory tower needs thumping
  237. Bert Kelly asks, "How can you believe in free enterprise and government intervention at the same time?"
  238. Politicians get undeserved praise, why not undeserved blame too?
  239. Feet in a bucket of champagne
  240. Rural Problems
  241. Health cover needs a $30 excess clause
  242. Unholy state of taxation
  243. Boring economics worth a smile
  244. The Libido for the Miserable
  245. Agricultural Development and Tariffs
  246. Fred's too poor to have principles
  247. Eccles Law of the constant wage share
  248. "He whom the gods would destroy ..."
  249. Tariffs: when to wean infant BHP?
  250. Keep any government as far as possible from farming
  251. The Playford charade is out of date
  252. Bert Kelly: the odd man out who's now in
  253. Dries must resist giving up struggle as going gets tough
  254. How a well meaning Government can be so stupid
  255. The icing on the economic cake
  256. Sir Roderick Carnegie's foreword to Bert Kelly's Economics Made Easy
  257. The Vale of Popularity and the Protection Procession
  258. Politics 101: Pay Lip Service to Capitalism and Shoot the Messenger
  259. Bert Kelly makes politicians eat their own words on tariffs, then says, "We cannot be blamed for treating the statements of our statesmen with cynical contempt"
  260. Bert Kelly on Free Enterprise
  261. Cartoons of protected industry, the welfare teat and the nanny state
  262. Bert Kelly on the theory of constant shares and the Fabian Society
  263. Bert Kelly vs Doug Anthony
  264. You're lucky if you escape being helped by government
  265. Bert Kelly on Small Farmers
  266. Bert Kelly on Apathy
  267. Bert Kelly in 1967 on "problems of government and things like that"
  268. The last "Dave's Diary"
  269. Bert Kelly vs The Australian on tariffs in 1977
  270. Bounties or Tariffs, Someone Pays
  271. Geriatric companies without a minder
  272. A free marketeer wary of free trade
  273. Nixon's puzzling profession of faith
  274. "Ford ... seems to spend more time bending its knees than its back"
  275. Clyde Cameron's weak ways with wise words
  276. Why flaunt what others flout?
  277. Bert Kelly yearns for Tim Flannery's powers of prediction
  278. Looking after yourself is silly
  279. Bert Kelly masterpiece on drought, fire, flood and other natural disaster relief schemes
  280. Government can take credit for our car industry mess
  281. Car makers want the 4wd driven deeper into tariff bog
  282. Why our MP is no longer prone to a good sob story
  283. Auto industry is in a straitjacket
  284. Bert Kelly on market predictions
  285. Why should dryland farmers subsidise irrigation farmers?
  286. How much should government decrease incentive for independence from government?
  287. Clarkson crowned Deputy Government Whip
  288. Bert Kelly to blame for soaring government healthcare costs
  289. 1959 return of Dave's Diary
  290. Bert Kelly in 1966 on developing northern Australia
  291. Successful government intervention can [sic] occur
  292. Vernon Report upholds Clarkson
  293. Quiet Man Makes An Impact
  294. Should it be compulsory to buy footwear and clothing?
  295. To save Australian clothing industry women must all wear same uniform
  296. Don't confuse plucking heart strings with plucking harp strings
  297. Speech only for public
  298. Catchy Tariff Circus Extravaganza
  299. Bert Kelly in 1985 on cars yet again
  300. Hurrah for the Gang of Five
  301. Thoughts on a verse about Balfour
  302. Bert Kelly pep talk to politicians
  303. Government intervention = Agony postponed but death brought nearer
  304. Recipe for disaster: Freeze!
  305. Recipe for government intervention: Gather winners and scatter losers
  306. Recipe for industry destruction: Blanket market signals
  307. Mavis writes!
  308. Bert Kelly's empiricism is not kneejerk reaction kind
  309. The $2,000 song of the shirt worker
  310. Subsiding only small farmers means subsiding the big banks
  311. Difficult to be fast on your feet when you've got your ear to the ground
  312. It would surprise people to see how sensible MPs behave if they think they are not being watched
  313. Bert Kelly on "this land of limitless resources" and "great open spaces"
  314. Growing bananas at the South Pole
  315. Car components tariff protection under fire
  316. Why carry a $300m car subsidy?
  317. Tariff feather beds for the foreign giants
  318. Bert Kelly says end compulsory voting to stop donkey vote
  319. Perhaps being smart and insured isn't all luck
  320. You gets your tariff, you pays a price
  321. More funds to train Olympians?
  322. Fire in their guts and wind in ours
  323. Should free universal healthcare include pets?
  324. Sound advice from a modest farmer
  325. A tottering monument to intervention
  326. Cunning meets wisdom
  327. Competition, Aussie-style: Who's the bigger parasite?
  328. Australians are proud patriotic parasites, says Bert Kelly
  329. Taxpayer-funded sport is cheating
  330. Being loved by all is not always a good thing
  331. Welfare State Destroys Society
  332. 1980 Bert Kelly feather bed series
  333. The White Mice Marketing Board
  334. Government intervention and advice can be harmful, even when right, even for those it tries to help
  335. One small step on the compulsory voting landmine
  336. The free & compulsory education sacred cows have no clothes
  337. Holding a loaded wallet to an economist's head
  338. Political No Man's Land
  339. Only blind greed demands both equality and prosperity
  340. A cow that sucks itself — that's us!
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