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Quotation of the Day…

… is from page 237 of Russ Roberts’s superb 2014 book, How Adam Smith Can Change Your Life:

Love locally, trade globally.

DBx: The counsel packed into this quotation is not only wise, it’s also a fine summary of Adam Smith’s two books.

Smith’s 1759 The Theory of Moral Sentiments is very much, although not exclusively, about how to act among people who we know on a face-to-face or small-group – a ‘local’ – basis. Many motivations in such settings regularly prompt us to sacrifice our self-interest in order to promote the interests of others.

Smith’s 1776 An Inquiry Into the Nature and Causes of the Wealth of Nations was largely, although not exclusively, focused on the interactions among large numbers of strangers. The same moral sentiments that prompt us to nurse a sick child, to make substantial sacrifices to help a friend in distress, or to give generous gifts to neighbors and colleagues operate with far less intensity and regularity in our dealings with strangers. Because the enormous wealth of modern society requires the cooperation of millions, and in some cases today billions, of individuals, coordination of the production actions of these multitudes cannot possibly be guided by the kinds of moral sentiments that govern our behavior among people who we know. Such coordination must instead rely upon abstract rules of justice along with market-determined prices.


Pictured above is Milton Friedman holding and admiring a product the production and distribution-to-consumers of which requires the knowledge and cooperation of hundreds of millions of strangers.