Adam Smith’s The Wealth of Nations is the foundation for most modern economic theory. Indeed, one can scarcely find an economic work, both popular and academic, that does not mention this chef d’oeuvre which was first published in the same year America declared its independence from Great Britain (Interestingly, some suggest that Thomas Jefferson pilfered the “Life, Liberty and the pursuit of Happiness” line from Adam Smith’s earlier declaration of the rights to “Life, Liberty, and the pursuit of Property.”) As someone who is constantly trying to learn more about economics, I thus felt I should give the book a read.
I’m currently about a 1/3rd of the way through (my pace is quickening as of late) and have already gleaned many insights, although admittedly some sections of the book, such as the one entitled “Digression concerning the Variations in the Value of Silver during the Course of the Four last Centuries,” are not so edifying. The other day, however, I came across a passage that I wish every legislator would pay heed to:
The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
At superficial glance this appears to be a condemnation of business, but it is rather a condemnation of lawmakers who facilitate the businessman’s natural desire to increase market share. Large corporations quietly celebrate many safety regulations and even the minimum wage because they recognize that one deleterious effect of these laws is to restrain competition by putting many smaller firms out of business who do not have the resources to comply.
Do legislators or John Q. Public (Sidebar: What might the German counterpart for this term be? Fritz D. Volk?) examine such laws with the scrupulous and suspicious attention that Smith advocates? I suspect not, mainly for the reason that I believe many laws are not pursued for efficacious but rather for gratuitous reasons, such as to salve the conscience of moral busybodies.