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Quotation of the Day…
Posted By Don Boudreaux On October 16, 2013 @ 8:02 am In Adam Smith,Complexity & Emergence,Inequality,Seen and Unseen | Comments Disabled
Adam Smith understood that consumption by the rich has an insignificant [negative, today] effect on the welfare of the poor, because most of the income of the rich is invested in the tools and knowledge of production (or “improvements”) that provides external benefits for every consumer.
Of course, both Smiths – Adam and Vernon – here are speaking of market economies sufficiently free of government interference, special privileges, and predations that entrepreneurial activities and investments remain attractive options. Kill the attractiveness of those options with interventions and taxes intended to “help” the poor and you kill, ironically, one of the chief means by which today’s rich generate benefits to society at large, including especially to the poor.
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URLs in this post:
 Vernon Smith: http://www.econlib.org/library/Enc/bios/SmithV.html
 Rationality in Economics: http://www.amazon.com/Rationality-Economics-Constructivist-Ecological-Forms/dp/0521133386/ref=sr_1_1?s=books&ie=UTF8&qid=1381924902&sr=1-1&keywords=vernon+l.+smith
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