Tuesday, March 09, 2010

Adam Smith's On The Wealth Of Nations

On this date in 1776, Adam Smith's On The Wealth Of Nations was published. Back during the days of the free market in our nation, it was a very influential book. If it's too forbidding a tome for you, you may enjoy P.J. O'Rourke's introduction to it, from a few years ago. Here are some fair-use quotes:

Leftist critics of free markets assume that there is a fraudulent aspect to capitalism. They're right. We tricked the feudal powers into setting us free, and we remained free by continuing to bamboozle them. We used chicanery and sharp dealing to found our cities, become rich bourgeoisie, and supply ourselves with creature comforts. We left the barbarian aristocrats in their drafty castles throwing chicken bones on the floor.

Later economists, such as, in the early nineteenth century, J. B. Say, felt that Smith undervalued the economic contributions of service. And he did. The eighteenth century had servants, not a service economy. It was hard for a man of that era to believe that the semi-inebriated footman and the blowsy scullery maid would evolve into, well, the stoned pizza delivery boy and the girl behind the checkout counter with an earring in her tongue.
Smith emphasized the "private frugality and good conduct of individuals" and "their universal, continual, and uninterrupted effort to better their own condition." He argued that it was "this effort, protected by law and allowed by liberty...which has maintained the progress of England towards opulence and improvement." But since England "has never been blessed with a very parsimonious government...[it] is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people."
Before totalitarianism had ever been tried, Adam Smith was prescient in his scorn for it:
"The man of system [...] is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.[...] He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board."

Barbed wire always seems to be needed to keep the chessmen on their squares.

Adam Smith did a lot of thinking about taxes, eighty-odd pages worth. He began with four sensible maxims of taxation: taxes ought to be inexpensive to collect, be levied when taxpayers are best able to pay them, be proportionate to the revenue that taxpayers "enjoy under the protection of the state," and be "certain, and not arbitrary."
The last maxim is the most sensible and therefore the least observed. The boggling complexity of tax law and the ceaseless fiddling with taxes, even by legislators who would lower them, violate Smith's principle that "a very considerable degree of inequality...is not near so great an evil as a very small degree of uncertainty."
It's a principle that applies to practically everything, as anyone who is in love or waiting for a check in the mail knows.

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