Thursday, April 23, 2009

Adam Smith on Liberty

Today’s Tomas Estrada-Palma Message (‘I am the great grandson of Don Tomás Estrada-Palma, the first elected president of Cuba, 1902-06). HERE:

Preface to the Post:

Tomás Estrada-Palma: LocaAnnapolis, MD, United States’

‘Let entrepreneurs into Cuba, keep the tax low and watch the economic explosion happen. Whenever there are more jobs than workers the wages and benefits are driven upward. That's because entrepreneurs compete for a limited supply of workers. Those who lose the competition will not be as successful because they can't grow without more laborers. Finally, the first modern society on the planet will be populated by people who are neither slaves to the pharaohs of industry nor government. Cuban workers will have the best job security in the world!

The Post:

Stock Manipulation (23 April)

‘What's going to happen? Adam Smith wrote that the invisible hand of the marketplace always corrects the price of everything eventually. What the Treasury Department is futilely attempting to do is to re-inflate the stock market bubble. They will fail dramatically and very soon. The bubble is going to pop and the drop will be much more significant than if the government would have just left things alone

I posted the Preface because for its contents, because Tomas Estrada-Palma, deserves to be saluted and respected by all who believe in Liberty.

His later post is less clear. Adam Smith did NOT write that ‘the invisible hand of the marketplace always corrects the price of everything eventually’. Smith wrote that markets determine the ‘the price of everything eventually’.

There were no invisible hands involved in Adam Smith’s writings about markets, as can be seen in Books I and II of Wealth Of Nations.

That is a myth invented in the middle of the 20th century by modern economists (download my paper, ‘Adam Smith and the invisible hand: from metaphor to myth’, from ASLL Home Page: click where invited to do so).

Tomas is correct: ‘the Treasury Department is futilely attempting … to re-inflate the stock market bubble.’ And burdening current and future generations with immense debts that will have to be repaid from taxation.

On Cuba’s future, I am sure it would be in safe hands if its people elect a (small) government to be ‘at peace, introduce easy taxes, and a tolerable administration of justice’ (Adam Smith, 1755).

The best response to Castroism is not bloody revenge nor mass persecution of his acolytes: let the people create prosperity based on justice and competitive markets. Keep an eye out for monopolistic tendencies and special pleading for privilege; stamp out corruption, fraud and favours.

And above all secure the people with Liberty.

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Blogger Tomás Estrada-Palma said...

Thanks for your insight and correcting my misquotes. I'm operating from memory with less and less time available as an older man.

Normally, I'm absolutely correct about what I assert. However when I am incorrect I feel it has been a kind service to me to point out my errors.

Thanks again amigo.

4:22 pm  

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