Hyperbole From Ayn Rand Institute
Grace Hollis, Associate Editor, reports (18 April) a speech to students, in Cavalier Daily Here , by Don Watkins, a Fellow of the Ayn Rand Institute. He has written economic policy issue pieces for the Ayn Rand Institute for the past six years. He currently blogs on Forbes.com
“Ayn Rand Institute fellow Don Watkins.
spoke to the University community yesterday evening about his qualms with the nation’s entitlement programs, which include Social Security and Medicare.
Watkins sought to answer the question, “What’s really wrong with entitlements?” and first explained how he believed the nation progressed from “limited government” to an “entitlement nation.”
“It turns out Americans didn’t starve in the streets [before entitlement programs,]” Watkins said. “Even I was surprised by how much people thrived in the world without entitlements … It’s not an accident Adam Smith published ‘Wealth of Nations’ in 1776 and that it was that unleashing of free human minds in markets that led to an explosion of innovation and creativity.”
Follow the link for the rest of the speech. My interest was drawn to the above extract.
Entitlements, paid for by taxation and borrowing, have a tendency to grow, once embarked upon, as do regulations, tax laws, laws themselves, constitutions, and amendments thereto.
Contrary to Don Watkins’ assertion, it was not an accident that “Adam Smith published ‘Wealth of Nations’ in 1776”. It was just a coincidence, in my view. It is even less likely that his book unleashed “free human minds in markets that led to an explosion of innovation and creativity.” Such assertions are retrospective judgements, and hyperbole.
First, the ‘facts’: Smith completed his manuscript in 1773 and he left his mother’s house in Kirkcaldy with his hand-written pages for London to see his book through the press. In those days it could take 3 weeks to travel by coach on what passed for roads from Kirkcaldy (via a small boa)t to Edinburgh and then by more 'roads' to London. By taking the trouble of travelling to London and living close to his publisher, Smith saved what would have been many months spent receiving and sending back corrected proofs of the manuscript’s typeset pages, with many pages going back and forth by coach in multiple exchanges between his publisher and himself. Normally, this would take a year or more to have it ready for publication. In the case of Wealth Of Nations it took over three years.
We know this because in later editions of his two books, Moral Sentiments (1759) and Wealth Of Nations (1776) his surviving correspondence includes many letters regarding his proofs, some taking months to be sent and returned throughout the five editions of each work he prepared up to just before he died in 1790. His correspondence in 1773 with his close friend, David Hume, reveals his anxieties about losing his manuscript on the journey, or worse: “should I die very suddenly I shall take care that the Papers I carry shall be carefully sent to you.” (Letter to David Hume, 16 April 1773). It was common practice for travellers from Scotland to London to write their wills before setting out.
What else did he do to prolong his expected shorter stay in London? According to David Hume, Smith became “very zealous in America affairs” (Letter from David Hume to Adam Smith, 8 February 1776). Smith was consulted by Government Ministers and MPs about taxation policy and what should be done to avert the slide into violent confrontation with the Colonists. The net affect was that Wealth Of Nations was held back from publication, though it was completed and ready to be printed. Therefore, it was an accident that Smith’s most famous book was delayed from sometime in 1774 until March 1776, three months before the Colonists’ Declaration of Independence on 4 July 1776.
It was not the American Declaration of Independence and the final triumph of the Colonists over the British, let alone the coincidental publication that year of Wealth Of Nations that unleashed “free human minds in markets” that “led to an explosion of innovation and creativity”. The long process to freeing “human minds in markets” and the “explosion of innovation and creativity” necessarily associated with free markets had begun centuries earlier in Northern Italy, what is now the Netherlands, and England (and in Scotland too). Claiming this for the USA and a single, if remarkable book, selling a few thousand copies across three editions, is retrospective hyperbole. Deep, lasting, changes to socio-economic systems do not spring from a single event, nor a single book.
Don Watkins’ “qualms with the nation’s entitlement programs, which include Social Security and Medicare” are 21st-century, politically-motivated “qualms” that have nothing to do with Smith’s undoubted contributions to political economy. “Entitlements” had nothing, in modern jargon, to do with anybody’s political agenda in the 18th century. For Smith, his agenda for pragmatic reform focussed, almost to the exclusion of all else, on the removal of the “mercantile political economy” of his day, which political economy continued “jealousy of trade”, “tariffs and prohibitions”, long and expensive wars against potential trading partners, choking monopolies that “narrowed competition” and raised prices to consumers, and of course, the pursuit of Empire. These were the unstated targets of Smith’s ire, it not being safe to openly criticize the Monarch directly.
Wealth Of Nations, said Smith, contained a “very violent attack” on the entire “commercial system of Great Britain”. How much changed for his books over the following 240 years? In these respects, I suggest, not very much.
Meanwhile, the necessary and truly revolutionary “explosion of innovation and creativity” conducted by mainly anonymous individuals over several centuries, and more recently, at an astonishing rate that is dispersed across the globe, continues relentlessly in dispersed markets, not by design and not by top-down command, nor by a single book, more quoted than read. These deep social market processes continue to liberate billions from dire poverty, shortened lives, disease and ignorance at an unprecedented rate.
[This post was written in April and appears no to have been published in Lost Legacy.]