Quotation of the Day…

by Don Boudreaux on January 22, 2019

in Adam Smith, Crony Capitalism, Trade, Virginia Political Economy

… is from pages 471-472 of Book IV, chapter ii, of the 1981 Liberty Fund edition of Adam Smith’s timeless 1776 masterwork, An Inquiry Into the Nature and Causes of the Wealth of Nations; (The “new monopolies” to which Smith here refers are the monopoly protections created by protectionist policies; Smith here warns that dislodging workers and firms from the monopoly positions they acquire through protectionism is politically difficult – and possibly socially disruptive – and, therefore, these consequences of freeing trade are yet another reason to avoid protectionist policies from the start.):

The legislature, were it possible that its deliberations could be always directed, not by the clamorous importunity of partial interests, but by an extensive view of the general good, ought upon this very account, perhaps, to be particularly careful neither to establish any new monopolies of this kind, nor to extend further those which are already established. Every such regulation introduces some degree of real disorder into the constitution of the state, which it will be difficult afterwards to cure without occasioning another disorder.

DBx: Adding brilliant analysis, Gordon Tullock later labeled the general phenomenon warned of here by Smith, “the transitional-gains trap.”

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