Government Handouts and Market Manipulation — The Wealth of Nations

Smith attacks export bounties: government payments meant to help British goods undersell foreigners abroad. If the state cannot force foreigners to buy, it tries paying them to buy. A bounty should be unnecessary in any trade that already earns ordinary profit on export.

Bounties tax the public twice: once to fund the payment and again through higher home prices when goods are diverted abroad. Drawbacks only return duties already paid; bounties add new expense on top. They steer capital toward politically favored exports instead of letting investors follow real demand. Every pound paid to exporters is raised by taxing or borrowing from the public that already faces dearer goods at home. A bounty is a hidden tax with a merchant's name on the receipt.