More Good Sense on Adam Smith

In a thoughtful piece, Ken Mosser, (of the Adam Smith of California Society) comments on changes brought about in US student loans that advantage the lender at the expense of student borrowers, as was predicted by Adam Smith if legislation is passed to limit competition in the lending (or any other) business.

Here are some extracts from Providence Journal, Rhode island ( projo.com) by
Ken Mosser: “Sallie Mae vs students” (8 March):

“SAN DIEGO -- Economist Adam Smith was not a proponent of free markets, any more than Isaac Newton was a proponent of gravity. Both of these groundbreaking scientists simply told us about these seminal forces, and left us to figure out that we would be pretty stupid to ignore them.

If Adam Smith were here today and looked around the world, he would be happy to know about the power of this theory: Free markets create free people; free people create prosperity. Pretty simple.

Adam Smith did not have a problem with profits. Just the opposite: They are a signal for more competition and lower prices. But Smith warned that when government creates barriers to competition, monopolistic profits result and consumers lose.

What a shame that [Congressman Boehner] sold out college students so cheaply. Using government to quash competition was a trick Adam Smith was very familiar with. So he would not be surprised that Sallie Mae has unleashed an army of lobbyists to put its competition out of business. He would be surprised, however, that we let them get away with it.”

Comment:
Briefly, not wishing to detract from the good sense exhibited by Ken Mosser, it is also the case – and probably more important - that ‘free people create free markets, and free markets create prosperity’. The three events are inextricably bound together. Smith always insisted on the existence of Natural Liberty.

Read Ken Mosser's article at:

http://www.projo.com/opinion/contributors/content/projo_20060308_08moser.3890d7d.html