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Quotation of the Day…

… is from page 15 of Thomas Sowell’s 1979 essay “Adam Smith in Theory and Practice,” which is Chapter 1 in Adam Smith and Modern Political Economy, Gerald P. O’Driscoll, Jr., ed. (1979; footnotes as well as page references to Smith’s Wealth of Nations eliminated; ellipses original to Sowell):

To [Adam] Smith it seemed unlikely that the “artificial direction” given to the economic efforts of society would be better than the direction it would have taken “of its own accord.”  But here as elsewhere in The Wealth of Nations, the question was ultimately not one of theory but of fact.

History showed that governments habitually mismanaged economic affairs, that such mismanagement was difficult to correct (in contrast to the market’s swift correction by bankruptcy), and the the whole bias of government projects was toward things that were big and showy rather than useful.  A government will often create works “of splendour and magnificence” to be seen by those whose applause will flatter its vanity and promote its political interests but will neglect “a great number of little works” which may have “extreme utility” but present no “great appearance” to “excite … the admiration” of passers-by.  Down through the centuries governments have been prone to operate at a deficit, often using tricky fiscal devices to conceal just how much they were in debt.

Plus ça change….