The Roots of American Prosperity

Trevor Grant Thomas.com ^ | 11/20/15 | Trevor Grant Thomas

[DWW1990]

Ask most Americans what was the most important document produced in 1776 and almost no one would answer with Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (more commonly known as The Wealth of Nations). However, some would argue that Smith’s work had more of a global impact than even the Declaration of Independence.
The first edition of The Wealth of Nations sold out in six months. It would have an almost immediate impact on government financial policy, and is considered by many to be the most important treatise on economics ever written. Adam Smith is often called the “Founding Father” of capitalism.

[x_plus_one]

The U.S. was the first nation on earth of any size or consequence to undertake the structuring of a whole national economy on the basis of natural law and the free-market concept described by Adam Smith.

And now it is the last.

[DWW1990]

HA! Sadly, you may be right, although, one would think that after decades of the broken and tragic results of socialism, people would begin to wake up.

[Rurudyne]

For a long while after the founding of this Republic we were blessed with a central government that because it could do so little, could screw up so little ... though not for want of trying ... and as such our federal government was often among the least competent at being incompetent.

By default.

But with the men who cast the Constitution aside to embrace Arbitrary government the varied objects for federal attention have grown without limit and so it’s ability to be incompetent has similarly increased: so now ours is among the most competent at being incompetent.

Truly, “Progress!”

[Fiddlstix]

I read The Wealth of Nations many years ago. I highly recommend it.
I wish more people would read it.
Heck, I wish it was taught in schools

[econjack]

As an econ grad student, I have to read TWoN and remember it laying the ground work for a capitalistic system. Another equally important work is Charles Beard's An Economic Interpretation of the Constitution, which lays down what the economic responsibilities of gov't are based on the tenets stated in the Constitution. Essentially, the role of the gov't is twofold: 1) the policing of property rights (e.g., a legal system), and 2) provision of social overhead capital (e.g., those things society needs, but aren't provided in private markets, like national defense, public roads, etc.)

After reading his work, look at the idiotic programs that have been created by politicians to buy votes. Free cell phones for deadbeats? WTF.

[PeterPrinciple]

It is a hard read but a good read. The are some very good audios:

https://archive.org/details/wealth_nations01_se

https://www.youtube.com/watch?v=sp-59DOIi88

Surprisingly there is a comment at the youtube site that Adam Smith would support Bernie Sanders. I do not think the kid has reading and comprehensive skills.

“because economic growth is inhibited by government spending for unproductive labor, it is better to have less government and, consequently, lower taxes on the capitalists so that they may accumulate more capital.”

[PeterPrinciple]

The Wealth of Nations is more of a philosophy, than a prescription. That is why it is not liked today. It requires thinking.

The thought of an uncontrollable “Invisible Hand” is an anathema to modern thinking. Heck, we can control the climate now.

[DWW1990]

“Progress” from the “Progressives!”

[DWW1990]

Thanks for that about Beard’s book. I’ll check it out.

[gattaca]

bump

[Rurudyne]

By contrast, what I would describe as the single greatest failure and defect of Keynes work is inherently a philosophical failure. In essence he failed to realize that in time all anyone in politics, and many in “economics”, would hear of his prescriptions is “spend”. They would heed his words about priming pumps in bad times but be deaf to cutting spending in good.

IOW: all those in government know of Keynes is that bad times demand more spending yet good times are an opportunity for more spending. The one constant is simply “more spending”. I’ve called such people “Keystone Keynesians”, and they are the ideological ancestors of the current MMC crowd.

Economics should not be divorced from philosophy, or the study of what it is to be Man, simply because economies here on Earth are human endeavors. To fail to understand human nature and how people will eagerly abuse the ideas presented them to arrive at even lunatic beliefs should damn any theory of economics as spurious, or even dangerous.

By contrast to recognize and try to account for human nature, especially when people are not put under compulsion as a consequence (unlike, say, communism which is hostile to human nature), is a sign of actual brilliance and value. For such things the failures are not in first principals as these will be actually applied (such as I’ve describe for Keynes) but in simply not imagining every possible case/instance of human mendacity or Nitwittery.

[mjp]

American Founders soon recognized the importance of The Wealth of Nations when it came to economics and sound fiscal policy.

In this book Smith defined the link between commerce and cultural progress, which the rest of the Scottish Enlightenment had written about and celebrated, but not really proved. In a modern commercial society, as it produces more, in greater quantities, it becomes so productive that it can supply the wants and needs not only of those who work, but of those who don't. But in order to be able to do this, there must be economic inequality.

[PeterPrinciple]

Nitwittery leads to the Invisible Hand? (eventually)

[Rurudyne]

(Warning: Standup Philosophy ...)

There is and upside and a downside to everything.

Betting on some few people to be competent in traditional economic liberalism is certainly the basis for the idea of the invisible hand.

That doesn’t mean there aren’t plenty of nitwits who effectively foul their own and their neighbors’ nest as a consequence for the lives they lead.

It is a matter of optimism that the cumulative effects of the nitwits won’t ever overwhelm the efforts and unintended consequences of the builders: a matter of realism to expect that there are times that they will.

I sometimes think people who mock the idea of the invisible hand think Smith and others were dewey eyed optimists.

Perchance all such philosophies should plainly spell out that sometimes that **** happens ... and that’s okay. Also that sometimes life will just suck for folks ... and that’s okay too.

But the need to do so is only in proportion to believing that people won’t understand that such things should be assumed to be the case as a matter of course.

Ironically, it seems like it was only as the fruits of economic liberalism and having a central government too weak to ****-up much came to create a more prosperous society that what may not have been necessary to say in Smith’s day really became needful to clearly state later on. But by then OTHER philosophies had made inroads.

Of these, betting on human competence in matters of governance as a matter of course (often to deny the reality of human nitwittery or just bad luck) has produced everything from early progressivism to outright communism.

When Peter confronted Ananias he told him several times that his wealth had been under his control. The sin was in lying, not holding back part of the price. That being true (Peter not lying about it being under his control) had the old boy just said something to the effect of “Here’s some of the proceeds from the sale.” he would not just have lived, but probably been received warmly, even commended.

To a modern hyperventilating over chasing after social justice this makes no sense just as it makes no sense to be unconcerned about economic inequality.

There is of course this huge difference between merely opposing social injustice and chasing after social justice that is likewise lost on many: you can effectively fight social injustice by removing or preventing police powers in the hands of government (whereby the government harms citizens) but to chase after social justice in public affairs demands empowering government, even to the point of transforming society from one where most things are lawful (without being point for point enumerated as such) save those things actually forbidden to one where what is lawful will be endlessly enumerated, for everything is regulated “for our own good”.

So those who are pessimistic about men in commerce are ironically among the most dewey eyed optimist when it comes to government ... mocking an invisible hand they embrace an iron one.