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Quotation of the Day…

… is from my emeritus GMU Econ colleague Vernon Smith’s profound speech “Human Betterment Through Globalization,” delivered in September 2005 at the Irvington-on-Hudson then-headquarters of the Foundation for Economic Education:

Markets require consensual enforcement of the rules of social interaction and economic exchange. No one has said it better than David Hume over 250 years ago – there are just three laws of nature: the right of possession, transference by consent, and the performance of promises. These are the ultimate foundations of order that make possible markets and prosperity.

Hume’s laws of nature derive from the ancient commandments: thou shalt not steal, thou shalt not covet thy neighbor’s possessions, and thou shalt not bear false witness. The “stealing” game consumes wealth and discourages its reproduction. Coveting the property of others invites a coercive state to redistribute wealth, thus endangering incentives to produce tomorrow’s harvest. Bearing false witness undermines community, management credibility, investor trust, long-term profitability, and the personal exchanges that are most humanizing.

DBx: Protectionism is one of the ways that the state, by erecting a veneer of legitimacy over them, hides particular individuals’ violations of Hume’s laws – their violations of the ancient commandments. Unable peacefully to persuade fellow citizens to buy more of their outputs, producers who resort to protectionism persuade armed agents of the state to coercively penalize fellow citizens who buy imports. Dissatisfied with the earnings that they can earn peacefully, producers who resort to protectionism covet more of their neighbors’ incomes than those neighbors peacefully choose to spend on these producers’ outputs. Aware that describing their activities honestly would alert everyone to the reality that protectionism is nothing but gussied-up extortion, producers who resort to protectionism portray their actions falsely. Unlike more conventional burglars and armed robbers, protectionists insult their victims’ intelligence by insisting that the thieves’s thievery will enrich not only the thieves but the thieves’ victims as well.

Protectionism violates the most foundational rules of human decency and civilization. It is tolerated only because of widespread failure to understand basic economics mixed with the intellectual and ethical blinders that commonly accompany nationalism.


Vernon Smith today celebrates his 92nd birthday. He’s still going as strong and with as much creativity and relevance as he was when I first met him more than 30 years ago. He’s remarkable. I wish Vernon and his equally remarkable wife, Candace, a Happy New Year and a wonderful 2019.