Bonus Quotation of the Day…

by Don Boudreaux on June 7, 2023

in Monetary Policy, The Crisis

… is from page 118 of Edward Chancellor’s excellent 2022 book, The Price of Time: The Real Story of Interest (footnote deleted):

Why were the credit systems of so many different countries, from Australia to Iceland, so vulnerable at the time [of the 2007-09 recession]? The unifying factor appears to be the low-interest rate policy of the Federal Reserve at the turn of the century, which, owing to the special position of the dollar as the global reserve currency, created conditions for a credit boom that engulfed much of the world’s economy. Prior to the crisis, global interest rates were negative in real terms and far below the growth rate of the world’s economy…. There is no need to appeal to ad hoc explanations: easy money produced the boom and the boom was followed by the inevitable bust.

DBx: This account is one that Hayek would find compelling. And so it’s appropriate that this evening in New York City Edward Chancellor will receive, for his book The Price of Timethe Manhattan Institute’s 2023 Hayek Book Prize. I look forward to hearing his acceptance lecture.

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Tom Palmer and John Stossel understand the ugly reality of socialism.

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GMU Econ alum Adam Martin writes insightfully about the essence of socialism. A slice:

Entrepreneurship, for Mises and Kirzner, is not the province of an elite class of businessmen. It is a part of human action. “In any real and living economy every actor is always an entrepreneur and speculator” (Mises 2007, p. 252). The more expansive freedom of entry is, the more likely is it that errors will be detected and corrected. We do not know ex ante whose knowledge will prove relevant to producing what we want at least cost. Freedom of entry means that anyone can have a go, tapping maximally into the dispersed knowledge of a modern society.

Following Kirzner, then, an essential component of a free economy is freedom of entry. By contrast, as Murray Rothbard notes, “a centrally planned economy is a centrally prohibited economy (p. 831). In order for there to be a central plan at all, private entrepreneurs must be prohibited from driving production decisions. A Central Planning Board may still act entrepreneurially in changing The Plan. But they will act without prices shaped by other entrepreneurs’ knowledge, alertness, and judgment. It is precisely the prohibition on exercising the entrepreneurial function that makes calculation in a socialist economy arbitrary.

George Will accurately describes Californians’ concern these days with slavery reparations as part of “a plague of solemn silliness.” Two slices:

A relatively parsimonious California task force, whose final report is due this month, last year initially suggested $223,200 (the $200 was a whimsical touch) as recompense just for housing discrimination. A more recent figure is $360,000 for all the state’s Black residents who had enslaved ancestors. Although the total cost might be about three times the state’s budget, a task force member who mints novel verbs is disappointed that the news media has focused on dollars and is “not able to nuance better.”


Reparations are another example of a metastasizing phenomenon: solemn silliness. All calculations of costs are fanciful, depending as they do on capricious inclusions and exclusions of categories of people from access to the trough. The multibillion-dollar race industry (“diversity, equity, inclusion” consultants, governments’ spoils systems of racial set-asides, etc.) involves some awkwardness. A piquant New York Times headline announces on page one: “Reparations Put Democrats in a Quandary.” Do tell.

Progressives bandying the idea that the nation was born racist and remains so cannot tiptoe away from reparations without seeming insincere. Advocacy of reparations involves, however, the culminating denial of Blacks people’s agency: Crippled by history, they necessarily have the status of permanent wards of government. The progressive vocabulary of “equity” says disparate social outcomes are definitionally the results of racism that is “systemic,” therefore it is incurable until a new social system arrives. Meaning: never.

My intrepid Mercatus Center colleague, Veronique de Rugy, applauds the REINS Act.

Iain Murray decries Britain’s regulatory state.

Jane Shaw Stroup reviews economic growth theories. (DBx: Sometime in the Spring of 1981 Fritz Machlup offered, to students in his international-trade-theory course, this assessment of the sub-discipline of economic development: “It’s a shame that most ‘development’ economists are among the least developed economists.”)

My GMU Econ colleague Bryan Caplan – inspired by research by our colleague Vincent Geloso – writes insightfully about bets that Julian Simon did not take against Paul Ehrlich.

David Henderson shares some of his favorite quotations from Adam Smith.

Jim Bacchus reports the dismaying (but unsurprising) news that the Biden administration is doubling down on “costly ‘Buying American’ mandates.”

Michael P Senger tweets: (HT Jay Bhattacharya)

Lockdowns and the ensuing “response” to COVID were, quite simply, the most dystopian thing thats’s happened to the western world since the end of World War II. If you still don’t see it, then you’re missing the only political story your kids will ever care to ask you about.

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Quotation of the Day…

by Don Boudreaux on June 7, 2023

in Philosophy of Freedom

… is from pages 534-535 of Bruce Caldwell’s and Hansjoerg Klausinger’s excellent 2022 Hayek: A Life, 1899-1950 (original emphasis):

It is the great advantage of a liberal market system that it allows coordination of individual activity without requiring agreement on a common set of values. To be successful, socialist planning that purports to be democratic requires such agreement; without it, some set of values inevitably has to be imposed. The “inevitability” is, it should be noted, a logical condition: if there is to be a plan but there is no agreement on values, the plan must be imposed.

DBx: And so it goes also for “common good capitalism.”

If “common good capitalism” means anything other than capitalism as championed by liberals such as Adam Smith, Frédéric Bastiat, Ludwig von Mises, F.A. Hayek, Milton Friedman, Armen Alchian, James Buchanan, Thomas Sowell, Julian Simon, Deirdre McCloskey, and Robert Higgs, it must mean capitalism that is poked, prodded, and otherwise consciously arranged to satisfy particular concrete ends that “common good capitalists” fear would not be fully enough satisfied under capitalism unprefixed. Therefore, no less than for overtly socialist schemes, “common good capitalist” schemes require that some individuals impose their concrete ends on other individuals. As is true for individuals living under socialism, individuals living under “common good capitalism” would not all be equally free to choose and to pursue their own peaceful ends. Under “common good capitalism,” we’d all have to sacrifice at least some of our concrete ends in order to enable the “common good capitalists” – individuals such as Marco Rubio – who happen to be in power to enjoy greater satisfaction of their preferred concreted ends.

There is, it’s worth repeating, nothing “common good” about “common good capitalism.” The name is a beautiful mask hiding the ugly reality of a scheme that promotes the specific good as desired by power-holders, such as Rubio, by suppressing the freedom of choice of everyone who doesn’t share the particular set of concrete preferences possessed by the in-power “common good capitalists.”

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Bonus Quotation of the Day…

by Don Boudreaux on June 6, 2023

in Philosophy of Freedom

… is from page 44 of Nathan Oman’s 2016 book, The Dignity of Commerce (footnotes deleted):

Exchange has two key features. First, it is unanimous. Each party to a market exchange has at least the nominal power to veto the transaction. In contrast, political systems allow action in the face of dissent. In a political debate my goal might be to persuade, but politics provides a mechanism to triumph in the face of my interlocutor’s opposition. Democratic outcomes are always premised on the absence of unanimity, although differing decision procedures require greater of lesser levels of consensus. The wishes of at least some members of the polity can be ignored. Not so with exchange. Without the cooperation of my partner, no exchange is possible.

Second, exchange requires that each party pursue the other party’s interests to achieve his or her own interests.

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Shanker Singham and my Mercatus Center colleague Alden Abbott decry the worrying revival of price controls. A slice:

In short, price controls have never actually succeeded in combatting inflation. Instead, they have sown the seeds of dangerously anti-competitive markets and structural impediments to economic growth in the medium and long term. As economist Pierre Lemieux explains, price caps cause shortages, increasing the quantity demanded of a good while reducing its supply. As a result, sellers invest less in the production of the good, leading to an inefficient undersupply of the product in the future, to the detriment of consumers.

Clark Packard explains that the White House’s extension of Ukraine’s steel-tariff exemption is a “sad reminder of steel protectionism.” A slice:

On the heels of Russia’s aggressive war against Ukraine in early 2022, the Biden administration temporarily exempted Ukrainian steel from the Trump administration’s bogus “national security” tariffs imposed under Section 232 of the Trade Expansion Act of 1962 (at the behest of the domestic steel industry). The exemption was set to expire on June 1, 2023, with tariffs snapping back to 25 percent. Last week, the White House announced it would maintain Ukraine’s exemption from tariffs and expanded it to cover Ukrainian steel processed within the European Union (EU). For free traders battered by ill‐​advised protectionism over the last two administrations, this announcement is what constitutes good news these days. As my Cato colleague Scott Lincicome rightly noted on Twitter, “… this exemption is a tacit admission that opening our markets to goods/​services from allies & other friendly nations is IN THEIR AND OUR OWN SECURITY INTERESTS, but admitting that wouldn’t be very ‘worker‐​centric’,” the latter of which has been a central talking point in the Biden administration’s protectionist trade policy. This (very) minor tariff relief is a positive relative to the status quo, but it also serves as a sad reminder of the domestic steel industry’s stranglehold on U.S. trade policy.

GMU Econ alum Gabriella Beaumont‐​Smith and Alfredo Carrillo Obregon identify “five rotten reasons to oppose infant formula trade liberalization.”

Here’s the abstract of a new paper by Adrián Rodríguez del Valle and Esteban Fernández-Vázquez:

The study of market power has gained a lot of attention by scholars and policy-makers since De Loecker and Eeckhout (Global market power. Working paper 24768, National Bureau of Economic Research, 2018). In their work, they show the temporal evolution of market power worldwide using detailed data from the financial statements of thousands of firms. In this paper, we propose an alternative way of estimating market power using sectoral-based data. By utilizing the aggregates observable in a series of input–output tables and by applying an estimation procedure based on entropy; indicators of market power can be derived without requiring the use of micro-data. We document a heterogeneous evolution of market power across 28 European countries and 14 manufacturing sectors between 2000 and 2014. Market power is found to be rising for several central- and East-European countries, while decreasing in multiple South- and West-European nations. Globalisation and value chain positioning are both seen to have a significantly decreasing impact on markups.

On Amy Jacobson’s and Dan Proft’s radio show yesterday I discussed the dangerous movement for “de-growth.”

Richard McKenzie offers a reality check on the case for taxing wealth. A slice:

Presidential advisors assert that the wealthy’s capital gains are conceptually the same as worker earnings, except they escape taxation. But that’s not the case. The most prominent difference? The extent to which the two forms of “income” are realized. Workers’ annual earnings are realized in their paychecks—and are spendable and savable, and not subject to future losses! By contrast, the market value of wealth holdings—say, corporate stocks—is best approximated by the present value of market estimates of companies’ ever-changing future and yet unrealized profit streams, appropriately discounted for time and risks that expected future profits will not be realized. And those unrealized gains can’t be realized until… well, the future arrives.

With the future always unrealizable today, shareholders will unavoidably carry risks of their unrealized capital gains evaporating or morphing into losses. And unrealized future profit streams can vary with errant government (say, tax and regulatory) policies and a multitude of ever-changing economic, social, geopolitical, and environmental forces (among others) over which wealth holders have no control.

Risk costs may only be expected and seem ephemeral, but they can become real as products and firms fail. Remember Sears? When Sears was the world’s top retailer in 1969, many shareholders likely had unrealized capital gains, subject to unrealized (and unrecognized) risks. Then, many Sears executives had probably not heard of Walmart expanding in small Southern markets. Walmart was, surely, a force in the emergence of Sears’ losses in the 21st century, with its last store closing in 2021.

Wealth-tax proponents need a reality check: Most firms’ anticipated future profits are never realized, partially because most new firms fail (half in their first five years). Remember Kmart, Radio Shack, and Blockbuster? Their stockholders once had unrealized capital gains. Bed, Bath & and Beyond’s stock price doubled to $35 in 2021, which left some stockholders flush with capital gains—but also with considerable risk that the company’s future was in jeopardy. Its future would have been further jeopardized had the IRS then drawn off some of the shareholders’ capital gains, taking a portion of the failing company’s desperately needed capital. As it was, BBB’s stock plunged after 2021, dipping below a dime at this writing (April 2023).

Also writing about taxing wealth is Mike Munger.

Kyle Pomerleau is no fan of the corporate alternative minimum tax.

Brad Birzer reviews Matt Zwolinski’s and John Tomasi’s new book, The Individualists.

What did people owing on their student loans do with the ‘relief’ government granted of their debt payments?

GMU Econ alum Erik Matson and Jordan Ballor write about Adam Smith, liberalism, and Christianity.

The Federal Housing Administration seems to believe that we’re still in the midst of a covid emergency.

Michael Shellenberger tweets: (HT Jay Bhattacharya)

Government-funded “anti-disinformation” groups say they want transparency, but they are refusing to comply with a Congressional subpoena for their data, and they are refusing en masse to answer questions from journalists. Why is that?

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Quotation of the Day…

by Don Boudreaux on June 6, 2023

in Adam Smith

… is from page 116 of Ludwig von Mises’s Introduction to the 1953 Henry Regnery Co. edition of Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations, as Mises’s Introduction is reprinted as chapter 24 of the original 1990 edition of Mises, Economic Freedom and Interventionism, Bettina Bien Greaves, ed.:

The British historian Henry Thomas Buckle (1821-1862), declared [about Adam Smith and The Wealth of Nations] “that this solitary Scotchman has, by the publication of one single work, contributed more toward the happiness of man than has been effected by the united abilities of all the statesmen and legislators of whom history has presented an authentic record.” The English economist Walter Bagehot (1826-1877) said about the Wealth of Nations: “The life of almost everyone in England – perhaps of everyone – is different and better in consequence of it.”

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… is from page 340 of the 1982 Liberty Fund issue of the 1978 Oxford University Press edition of Adam Smith’s Lectures on Jurisprudence:

The unassisted industry of a savage can not any way procure him those things which are now become necessary to the meanest artist. We may see this odds in comparing the way of life of an ordinary day-labourer in England or Holland to that of a savage prince, who has the lives and liberties of a thousand or 10000 naked savages at his disposall. It appears evident that this man, whom we falsely account to live in a simple and plain manner, is far better supplied than the monarch himself. Every part of his cloathing, utensils, and food has been produced by the joint labour of an infinite number of hands, and these again required a vast number to provide them in tools for their respective employments. So that this labourer could not be provided in this simple manner (as we call it) without the concurrence of some 1000 hands. His life indeed is simple when compared to the luxury and profusion of an European grandee. But perhaps the affluence and luxury of the richest does not so far exceed the plenty and abundance of an industrious farmer as this latter does the unprovided and unnesisted manner of life of the most respected savage.

DBx: Again wishing the Great Scot a Happy 300th Birthday!

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Phil Kerpen’s letter in today’s Wall Street Journal is worth reading:

Your editorial “The Trump-Cuomo Covid Bromance” (June 1) gives former President Donald Trump too much credit for accuracy. You write, “Florida had more total deaths than New York, but Florida’s population is older and thus more vulnerable to Covid.” In fact, even using the absurd metric of state pandemic performance favored by Mr. Trump and former New York Gov. Andrew Cuomo—total Covid-associated deaths, which are 95% correlated with total state population—Florida outperformed New York. According to the most recent Centers for Disease Control and Prevention data, Florida had 78,642 total deaths, while New York had 80,568.

These numbers are from the CDC’s count of digitized death certificates, which was always the more accurate CDC death count and is now the CDC’s only death count. The agency also used to publish a separate “data tracker” count that reflected whatever was submitted by states. In that count, New York had fewer total deaths than Florida, but that was only because of Mr. Cuomo’s refusal to include probable deaths, contrary to the reporting instructions.

On the more relevant, age-adjusted metric published by the CDC, New York has the 17th highest cumulative Covid-associated death rate, while Florida is down at 36th. But even using Mr. Trump’s dubious standard, Florida outperformed New York.

Phil Kerpen

The Institute of Economic Affairs published today Jonas Herby’s, Lars Jonung’s, and Steve Hanke’s new book, Did lockdowns work? The verdict on Covid restrictions. Here’s the abstract:

The purpose of this systematic review and meta-analysis is to determine the effect of lockdowns, also referred to as ‘Covid restrictions’, ‘social distancing measures’ etc., on COVID-19 mortality based on available empirical evidence. We define lockdowns as the imposition of at least one compulsory, non-pharmaceutical intervention (NPI). We employ a systematic search and screening procedure in which 19,646 studies are identified that could potentially address the purpose of our study. After three levels of screening, 32 studies qualified. Of those, estimates from 22 studies could be converted to standardised measures for inclusion in the metaanalysis.

They are separated into three groups: lockdown stringency index studies, shelter-in-place-order (SIPO) studies, and specific NPI studies. Stringency index studies find that the average lockdown in Europe and the United States in the spring of 2020 only reduced COVID-19 mortality by 3.2 per cent. This translates into approximately 6,000 avoided deaths in Europe and 4,000 in the United States. SIPOs were also relatively ineffective in the spring of 2020, only reducing COVID-19 mortality by 2.0 per cent. This translates into approximately 4,000 avoided deaths in Europe and 3,000 in the United States. Based on specific NPIs, we estimate that the average lockdown in Europe and the United States in the spring of 2020 reduced COVID-19 mortality by 10.7 per cent. This translates into approximately 23,000 avoided deaths in Europe and 16,000 in the United States. In comparison, there are approximately 72,000 flu deaths in Europe and 38,000 flu deaths in the United States each year. When checked for potential biases, our results are robust. Our results are also supported by the natural experiments we have been able to identify. The results of our meta-analysis support the conclusion that lockdowns in the spring of 2020 had a negligible effect on COVID-19 mortality. This result is consistent with the view that voluntary changes in behaviour, such as social distancing, did play an important role in mitigating the pandemic.

And here, in the Telegraph, is an op-ed by Jonas Herby and Lars Jonung titled “Painful lockdowns a global policy failure that must never be repeated.” A slice:

Lockdowns taught us many painful lessons. That economies cannot be shuttered for many months without consequence. That needless money printing will fuel inflation. That school closures will have a catastrophic effect on pupils’ education. But perhaps the most painful lesson is that lockdowns were far less effective than many people had been led to believe.

Today we, along with Prof Steve H. Hanke of Johns Hopkins University, are releasing new research which concludes lockdowns were a colossal global policy failure that should never be imposed again. Our systematic meta-analysis of Covid restrictions has found lockdowns saved what translates to an estimated 1,700 to 6,000 lives in England and Wales. By way of context, influenza inflections account for an annual burden of around 20,000 deaths in the two nations.

We used two different approaches to evaluate the effectiveness of lockdowns in Europe and the United States in the spring of 2020. Our results indicate that lockdowns prevented approximately 3.2 to 10.7 per cent (6,000 to 23,000 Covid-19 deaths in Europe and 4,000 to 16,000 deaths in the US). These results are based on all relevant research studies and are robust when accounting for potential biases. They are further supported by results from natural experiments and several existing reviews on the subject, strengthening their validity.

Our findings sit in sharp contrast to two widely cited claims from Imperial College London.

The first projection, made in March 2020, suggested intervention could save over 400,000 lives in the UK. This heavily relied on the assumptions made in the authors’ modelling exercise. The second claim, based on a before/after comparison in June 2020, suggested that lockdowns averted 3.1 million deaths across 11 countries. This conclusion, however, rested on the unrealistic assumption that lockdowns were the sole determinant of the observed reduction in transmission. The authors failed to account for the voluntary behavioural changes adopted by individuals, such as working remotely or cancelling private gatherings, which undoubtedly contributed to reducing transmission rates.

This last point is important. The choice was never between lockdown and “business as usual”. Had people been presented with the information and the risks, they would have adjusted their behaviour accordingly – yet in many countries they were never trusted to do so. Nonetheless, our meta-study unveils a series of substantial burdens that lockdowns imposed on society, from the economic to the political.

Telegraph columnist Janet Daley understandably worries that lockdowns infantilized people. A slice:

Embracing economic and social freedom requires confidence, resilience and adaptability, and the measures taken during the pandemic were much more psychologically damaging and intrusive than the wartime restrictions. No one was told during the Blitz that they could not see their friends, hug their elderly parents, or have a sexual relationship with someone outside their household. They were not reported to the police if they met with more than six people. In fact, the wartime experience was a time of intense communality when strangers shared bomb shelters and neighbours became extended family. The risk to life was made endurable by those bonds of affection and trust that were manifest in every community.

The interventions of the state during Covid were quite different. They were unprecedentedly inhuman, reaching into the most personal areas of life. Along with the sinister propaganda that reinforced them, and as we now learn, the systematic suppression of dissent – they seemed deliberately designed to be psychologically destabilising: isolate people and then, as the minister said, “scare the wits out of them”. Where the wartime experience had given people more responsibility, the pandemic made them feel helpless.

Tom Slater is correct: “The British state’s monitoring of lockdown sceptics is a democratic outrage.” A slice:

Just take a look at the latest revelations about the British state’s monitoring of lockdown sceptics during the pandemic. A new blockbuster investigation by the Telegraph and civil-liberties group Big Brother Watch details the shady activities of the Counter-Disinformation Unit (CDU), which is still operating and was set up by the Department for Culture, Media and Sport (DCMS), and the now-closed Rapid Response Unit (RRU), which was run out of the Cabinet Office. They compiled reports about prominent lockdown sceptics including Carl Heneghan, director of the University of Oxford’s Centre for Evidence-Based Medicine, and Molly Kingsley, co-founder of UsForThem, which valiantly campaigned against Covid school closures. The government also employed an artificial-intelligence firm to ‘scour social-media sites’ for wrongthink.

So what did Heneghan, Kingsley et al say that so alarmed these disinfo units? For Heneghan, it was criticising the ‘rule of six’ – one of those nonsensical, back-of-a-fag-packet Covid rules which we’ve all done our best to forget. He also had the gall, as a professor of evidence-based medicine, to write an article questioning the evidence base used to justify the second national lockdown. Among Kingsley’s heresies was to tweet that it was ‘unforgivable to close schools’. This is a sincerely held ethical and moral position – one that I dare say will be vindicated in time. It is not ‘disinformation’. And yet still it was flagged. We saw something similar in a Big Brother Watch report published earlier this year, which found that tabs were kept on David Davis MP because he opposed vaccine passports on civil-liberties grounds. The disinformation cops were not simply monitoring malicious bullshit merchants during the pandemic, they were monitoring opponents of government policy.

David McGrogan decries “the return of lockdown kitsch.”

Michael P Senger tweets: (HT Jay Bhattacharya)

Walensky managed to tell Congress the CDC had conducted no RCTs on masks because it was so obvious they worked, and that CDC’s guidance to mask two-year-olds would never change regardless of a gold-standard Cochrane review showing they don’t prevent COVID.

el gato malo:

it’s becoming inescapably obvious what a complete goat rodeo of a pseudoscientific sham of suppression and shaping of facts the last 3 years have been and it’s important that we document this so that, if nothing else, people will know better than to blindly “trust the experts” next time.

Economist Casey Mulligan talks with Russ Roberts about vaccines, the pandemic, and the FDA.

Reason‘s Eric Boehm reflects on the final season of The Marvelous Mrs. Maisel.

Wall Street Journal columnist Andy Kessler reports on the planet’s self-healing properties. A slice:

But nothing is simple. What about negative feedback loops? Examples: human sweat and its cooling condensation or our irises dilating or constricting based on the amount of light coming in. Clouds, which can block the sun or trap its radiation, are rarely mentioned in climate talk.

Why? Because clouds are notoriously difficult to model in climate simulations. Steven Koonin, a New York University professor and author of “Unsettled,” tells me that today’s computing power can typically model the Earth’s atmosphere in grids 60 miles on a side. Pretty coarse. So, Mr. Koonin says, “the properties of clouds in climate models are often adjusted or ‘tuned’ to match observations.” Tuned!

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Some Adam Smith Links

by Don Boudreaux on June 5, 2023

in Adam Smith, Complexity & Emergence, Cooperation

David Friedman, writing in Reason, defends Adam Smith from the many attempts by today’s progressives to claim him as one of their own; Friedman also exposes Murray Rothbard’s carelessness (to put it mildly) in assessing Smith’s work. Two slices from Friedman:

Not only did Smith not endorse a progressive income tax, he did not endorse any sort of income tax. “Capitation taxes,” he warned, “if it is attempted to proportion them to the fortune or revenue of each contributor, become altogether arbitrary. The state of a man’s fortune varies from day to day, and without an inquisition more intolerable than any tax, and renewed at least once every year, can only be guessed at. His assessment, therefore, must in most cases depend upon the good or bad humour of his assessors, and must, therefore, be altogether arbitrary and uncertain.”


Noah Smith, of the Noahpinion newsletter, has offered this quote to claim that Adam Smith favored income redistribution: “Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.” He neglects the sentences that follow: “The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security.…Where there is no property, or at least none that exceeds the value of two or three days’ labour, civil government is not so necessary.” Smith is not arguing against inequality. He is saying that inequality is what makes government necessary.

Russ Roberts, Eamonn Butler, Tom Palmer, Charles Koch, and my intrepid Mercatus Center colleague, Veronique de Rugy, are among those who offer their favorite Adam Smith quotations.

My emeritus Nobel-laureate colleague, Vernon Smith, describes Adam Smith’s “emergent rules of justice.” A slice:

The violation of justice is the violation of fair play rules. The resentment felt is proportioned to the evil inflicted, and the justified punishment response is proportioned to the resentment felt. Consequently, the greatest evil is for one person to cause the death of another. Hence, humankind, and the relatives and friends of the person slain, harbor the greatest resentment for murder and seek its maximal punishment. To be deprived involuntarily of things in our rightful possession “is a greater evil than to be disappointed of what we have only the expectation. Breach of property, therefore, theft and robbery, which take from us what we are possessed of, are greater crimes than breach of contract, which only disappoints us of what we expected.” (TMS, p 121)

Gary Galles celebrates Adam Smith’s “cooperative capitalism.” A slice:

People, however, who are protected by private property rights and the derivative right to contract, are united by the vast mutual benefits production and exchange with one another can make from our dramatic differences in interests and abilities. Instead of a zero-sum game, market competition produces an incredibly positive-sum “game” in which each benefits him- or herself by finding more and better ways to benefit others, which George Reisman recognized as producing a situation where “one man’s gain is positively other men’s gain.” And it comes through the ability to create and exchange with others, which Smith noted, is “common to all men, and to be found in no other race of animals,” which is why for man, “the greater part of his occasional wants are supplied by…treaty, by barter, and by purchase,” which, in turn, “gives occasion to the division of labor,” and the massive expansion of output that makes massive expansions of consumption possible.

Writing in National Review, Mark Skousen asks “how much of Adam Smith’s hand is still visible.”

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