The herring subsidy scam

Happy birthday, Adela! (Also, my blog is 13 years old today, 3 July!) As I mentioned at the end of my previous Adam Smith post (see here), Smith devotes Addition #11 (pp. 13-22) of his 1784 pamphlet to the herring bounty. Here, he begins by making the best possible case for such bounties (my emphasis): “Something like a bounty upon production … has been granted upon some particular occasions. The tonnage bounties given to the white-herring and whale fisheries may, perhaps, be considered as somewhat of this nature. They tend directly, it may be supposed, to render the goods cheaper in the home market than they otherwise would be.” (Smith 1784, p. 13) Smith, however, lays his cards on the table. He concludes that such fishery bounties are a waste of money: “In other respects their effects, it must be acknowledged, are the same as those of bounties upon exportation. By means of them a part of the capital of the country is employed in bringing goods to market, of which the price does not…