Question

1. Ricardo was opposed to the tariff on grain & Malthus was not. Malthus admitted it raised the price of bread but claimed the poor were better off when the price was high than when it was low. Discuss. Explain.

Answer 1

Malthus believed in his population theory. According to it, the population will increase if the wages are beyond the subsistence level of the person i.e. the people will reproduce more when they have higher wages. This will increase the population and the supply of labor bringing the wages down to the subsistence level. So no matter what the real value of the wages remains the same.

COming back to the question, if the tariffs are put on grain the food will become costlier and the poor will spend more on food and as the money they have is not above the subsistence level the population will be in check. this will increase the wages because with the low population the supply of labor will be less and wages will increase to the level where they can fill up for the increased tariff.

According to this, any tariff will not have any effect on the real value of wages and poor will be better in the long run.

Ricardo, on the other hand, was more worried about the decreased demand and consumer welfare form increased tariffs so he opposed them.