So, having managed to reach the year 1776 in spite of hundreds of thousands of years primarily devoted to killing each other while avoiding being killed by the somewhat bloodthirsty Mother Nature, two really cool things happened. The American experiment was launched (see parts three and four) and Mr. Smith published a book.
Adam Smith was, and is, a well-regarded absent minded professor type with a first rate mind. He gave up his day job, as a popular professor at Glasgow university in 1764, to tutor and travel with a young Scottish nobleman (road trip!). They spent a couple of years touring continental Europe and met several leading thinkers of the day (such as Benjamin Franklin) and Mr. Smith was given a life pension by the grateful nobleman that enabled him to spend the next ten years or so working on his magnum opus, “An Inquiry Into the Nature and Causes of the Wealth of Nations.”
Adam Smith was, and is, a well-regarded absent minded professor type with a first rate mind. He gave up his day job, as a popular professor at Glasgow university in 1764, to tutor and travel with a young Scottish nobleman (road trip!). They spent a couple of years touring continental Europe and met several leading thinkers of the day (such as Benjamin Franklin) and Mr. Smith was given a life pension by the grateful nobleman that enabled him to spend the next ten years or so working on his magnum opus, “An Inquiry Into the Nature and Causes of the Wealth of Nations.”
In other words, he set out to discover the best policies a given nation should pursue so that everyone could make a buck. The answer, as summed up by P.J. O’Rourke is, “Economic progress depends upon a trinity of individual prerogatives: pursuit of self-interest, division of labor, and freedom of trade.”
Warning: do not try and read The Wealth of Nations unless you enjoy the writing style of 18th-century century academics (I’m thinking this is a relatively small group of folks), and, you’re much smarter and more patient than I am (I’m thinking this is a relatively large group of folks). The commas and semicolons seemingly reproduce themselves as you try and decipher the text. Find a commentator or two that you trust to render Mr. Smith’s ideas into modern English.
In Mr. Smith’s defense, it ain’t easy to invent a field of study, particularly a field like modern economics. Also, I must warn any kneejerk anti-capitalists (a group that included me when I was a callowyute) that beating up on Mr. Smith because you think he was just another greed head will make you look goofy as he’s well known for his belief that accumulating wealth and material goods won’t make you happy.
Before inventing modern economics, his thing was exploring morality and ethics, figuring out how we should treat each other, how we could all get along. He wrote a book entitled The Theory of Moral Sentiments that is still highly regarded. Incidentally, both it and The Wealth of Nations were best sellers in their day and almost immediately literally changed the world.
In Mr. Smith’s defense, it ain’t easy to invent a field of study, particularly a field like modern economics. Also, I must warn any kneejerk anti-capitalists (a group that included me when I was a callowyute) that beating up on Mr. Smith because you think he was just another greed head will make you look goofy as he’s well known for his belief that accumulating wealth and material goods won’t make you happy.
Before inventing modern economics, his thing was exploring morality and ethics, figuring out how we should treat each other, how we could all get along. He wrote a book entitled The Theory of Moral Sentiments that is still highly regarded. Incidentally, both it and The Wealth of Nations were best sellers in their day and almost immediately literally changed the world.
He just wanted to figure out what the optimal system was for a free people to attain whatever level of economic security they thought was necessary and appropriate to keep the wolf from the door. He warned the world about crony capitalism. Although he was financially quite successful, he quietly and discreetly gave away most of his money and lived simply. I highly recommend P.J. O’Rourke’s, “On The Wealth of Nations.” Mr. O’Rourke is not an economist, which is not necessarily a bad thing, but that’s a whole different essay. He is, however, very smart, very funny, and lives in the real world.
“Economic progress depends upon a trinity of individual prerogatives: pursuit of self-interest, division of labor, and freedom of trade,” says O’Rourke, stating the fundamentals of Smith’s thought. That’s it? That’s all it takes for a country to be prosperous? Everdamnbody? Yup. Well, more or less. The rule of law is also essential component if you think that it’s important that everdamnbody should have to play by the same rules and bullies should be spanked.
Disclaimer: I’m an unrepentant wild-eyed free marketeer, a UWFM, here, have a bumper sticker. I don’t care for the word capitalist because of the tendency of well-meaning, progressives, socialists and communists to frequently use it as an epithet. Also, I describe myself as a sorta/kinda or bleeding heart libertarian, primarily because I’m all for a rationally designed safety net and many libertarians think that’s wrong-headed or impossible.
Aside: Communism, in spite of its adherents claim that it would work if ever done properly, is an obvious dead end, often literally. Socialism is a great idea, all we have to do is change human nature first and lock up all the screwballs like me that are obsessed with personal freedom. Progressivism and/or democratic socialism, or how to have your cake and eat it tooism, is the current flavor of the month for the utopianists of the world. Many people want the benefits of a free market combined with a big, juicy welfare state with millions of rules and millions of unionized bureaucrats, but someone else, preferably the evil rich, should pay the high taxes needed to fund the necessities of life, such as Obamaphones for example. More on the resulting mess later.
Back to Adam Smith. Smith’s work contradicted a widely held belief of his time, mercantilism. This is the belief that a nation’s wealth is determined by how much gold, silver, cash, ginormous televisions etc. it can accumulate, after all, there’s only so much wealth to go around. Therefore, you should export for the cash and block, or at least penalize, imports. This view of the world, that currently is enjoying a comeback, leads otherwise clear thinking people to believe in the Boarding House Pie Fallacy.
Say you're living in a boarding house. It’s dinner time and Mrs. McGillicuddy is serving up her famous apple pie for dessert. Since there’s only so much pie to go around, and fat Frank is at the table, it behooves everyone to employ a strategery that will ensure an equitable portion of pie. Mr. Smith’s insight (not to be confused with Mrs. Smith's pies), and he’s not alone, was that boarding house wisdom has limited applicability. There’s an easier and more effective way to get what you want that has the added benefit of not having to impose high tariffs (which begat high prices) and over-regulate anyone -- the pursuit of self-interest, division of labor, and freedom of trade. Skilfully employed these three ensure that everyone can have their own pie. To be continued...
Have an OK Day.
©2016 Mark Mehlmauer
Gentlereaders, my Tuesday and Thursday mini-posts are about to disappear, at least for the time being. It looks like I'm going to need to have a new knee installed and before I do I'm going to be meeting all sorts of medical specialists. Turns out that if you're a man who is technically over 50 you're supposed to have various medical shtuff done on a regular basis. Who knew?
Having not seen a doctor since the late 80s (for a CDL physical... it's complicated) I'm running a bit behind and have all sorts of i dotting and t crossing to do (tests and appointments) before I can get myself a shiny new knee.
So -- to make things easier, not miss any mini-post postings, and most importantly, to make sure I don't miss publishing my beloved (by me anyway) weekly column (dude, it's what I do!) -- mini-posts are outta here.
Have an OK Day.
©2016 Mark Mehlmauer
Gentlereaders, my Tuesday and Thursday mini-posts are about to disappear, at least for the time being. It looks like I'm going to need to have a new knee installed and before I do I'm going to be meeting all sorts of medical specialists. Turns out that if you're a man who is technically over 50 you're supposed to have various medical shtuff done on a regular basis. Who knew?
Having not seen a doctor since the late 80s (for a CDL physical... it's complicated) I'm running a bit behind and have all sorts of i dotting and t crossing to do (tests and appointments) before I can get myself a shiny new knee.
So -- to make things easier, not miss any mini-post postings, and most importantly, to make sure I don't miss publishing my beloved (by me anyway) weekly column (dude, it's what I do!) -- mini-posts are outta here.
