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Thursday, December 12, 2013

The Dreams Of Avarice

Avarice over-rates the difference between poverty and riches.

 - Adam Smith, The Theory of Moral Sentiments


Disaffected
:

"I'm a Wealth of Nations guy," Republican Congressman So and So stated on MSNBC during the Republican Government Shutdown.

I seriously doubt that Republican So and So has actually read The Wealth of Nations. It's one of those books people place on their mantle to look smart and a phrase that right-wingers trot out as way of an argument instead of actually defending their positions. 

Indeed, we see way too many people worship at the feet of a mythical Adam Smith without knowing what he really said beyond "invisible hand", and the results are dismal.  Those folks also tend to not be aware that economics has evolved since Smith, but whatever.  Let's shine a light on some dark, quiet corners of his economic world that these WoNGs generally ignore, as though they were whistling past the graveyard.

So, let's start with Book I, Ch 8 (Of the Wages of Labour):

Is...improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole.

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.

Something for the NYPost to consider, perhaps.  Now a quickie from Book I, Ch 9 (Of the Profits of Stock):

Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little.

What's the quickest way to make $2M?  Start with $1M.  Or be born rich, which affords you a lot of advantages whilst the poor have little chance to get out of their circumstances, as President Obama has noted.  It might suprise people that Smith ("A power to dispose of estates for ever is manifestly absurd.") and a variety of Founders (Ben Franklin: "[T]he Public has the Right of Regulating...Property, and even of limiting the Quantity and the Uses of it.") thought concentration of wealth was bad for society.

Moving on.  After noting in Book I that the division labor leads to "universal opulence which extends itself to the lowest ranks of the people," he warns in Book IV, Ch 1 (Of the Expences of the Sovereign or Commonwealth):

In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations, frequently to one or two...

His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.

Could be why Thomas Jefferson advocated education for its own sake--and the sake of our Republic--as opposed to mere training poor folk to perform jobs in a rich person's company.  Now, did Smith think government had no role in our lives?  Nay, he laid out three general duties of government in Book V, Ch 1, Part iii (Of the Expence of public Works and public Institutions), including:

The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expence to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain...[The] works and institutions of this kind are chiefly those for facilitating the commerce of the society, and those for promoting the instruction of the people.

Stepping out of WoN for a moment, we can take a brief look at Smith's Theory of Moral Sentiments for an example of good government involvement:

The same principle, the same love of system, the same regard to the beauty of order, of art and contrivance, frequently serves to recommend those institutions which tend to promote the public welfare.

When a patriot exerts himself for the improvement of any part of the public police, his conduct does not always arise from pure sympathy with the happiness of those who are to reap the benefit of it. It is not commonly from a fellow-feeling with carriers and waggoners that a public-spirited man encourages the mending of high roads. When the legislature establishes premiums and other encouragements to advance the linen or woollen manufactures, its conduct seldom proceeds from pure sympathy with the wearer of cheap or fine cloth, and much less from that with the manufacturer or merchant.

The perfection of police, the extension of trade and manufactures, are noble and magnificent objects. The contemplation of them pleases us, and we are interested in whatever can tend to advance them. They make part of the great system of government, and the wheels of the political machine seem to move with more harmony and ease by means of them.

Thus, while Smith might be skeptical of some government intervention, especially particular subsidies (which actually might've been proven to have a positive impact), he did see them as legitimate areas of activity.  It certainly is something that the United States has practiced quite a bit since the First Congress, so there might be some merit in it.

That said, subsidies have to carry some public benefit to meet Smith's approval.  So what Disaffected details of corporate welfare in the post I linked at the very beginning isn't necessarily a good thing because it merely transfers money to the already wealthy, leaving society in a lurch.  

Indeed, tax giveaways are dreadful ways to encourage the public good.  Returning to WoN, Book V, Ch 2, Part ii (Of Taxes):

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.

Etc. Etc. Etc.  With all that as backdrop, perhaps Jacob Viner, Canadian economist and a "mentor" of the Chicago School, summed it up best in 1927:

Adam Smith was not a doctrinaire advocate of laissez faire. He saw a wide and elastic range of activity for government, and he was prepared to extend it even farther if government, by improving its standards of competence, honesty, and public spirit, showed itself entitled to wider responsibilities...

Smith was endowed with more than the ordinary allotment of common sense, but he was not a prophet. But even in his own day, when it was not so easy to see, Smith saw that self-interest and competition were sometimes treacherous to the public interest they were supposed to serve, and he was prepared to have government exercise some measure of control over them where the need could be shown and the competence of government for the task demonstrated.

His sympathy with the humble and the lowly, with the farmer and the laborer, was made plain for all to see. He had not succeeded in completely freeing himself from mercantilistic delusions, and he had his own peculiar doctrinal and class prejudices. But his prejudices, such as they were, were against the powerful and the grasping, and it was the interests of the general masses that he wished above all to promote, in an age when even philosophers rarely condescended to deal sympathetically with their needs.

He had little trust in the competence or good faith of government...He saw, nevertheless, that it was necessary, in the absence of a better instrument, to rely upon government for the performance of many tasks which individuals as such would not do, or could not do, or could do only badly.

So the next time you hear somebody claim to be a WoNG, give them a pop quiz and watch them squirm.  Or maybe not.  I enjoy it, but I might have a perverse sense of fun.

Anyway, it's most likely the case that those WoNGs are really just greedy bastards trying to cover up their lack of humanity with a veneer of philosophical legitimacy.  There's no amount of money in the world that will meet the demands of their avarice, but living in crappy, dangerous shelters is way too opulent for the Poors.

ntodd

December 12, 2013 | Permalink

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Comments

This sentiment always makes me think of Omelas (what a fine object lesson it is, and yet how few of my students ever understand it):

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.

And this:

The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expence to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain...[The] works and institutions of this kind are chiefly those for facilitating the commerce of the society, and those for promoting the instruction of the people.

Reminds me of the day when Texas actually subsidized public education up through the university level, rather than trying to make it pay its own way.

In my cynical moments, I think that change was to ensure a Republican voting base in the state.....

Posted by: Rmj | Dec 12, 2013 3:31:05 PM

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