Friday, June 10, 2005

Almost right, but then he blew it 2

Dick Armey is former US House majority leader and co-chairman of FreedomWorks, a grass-roots organization that promotes principles of limited government. He gave the remarks quoted below at a luncheon in Lansing hosted by the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan, USA,. on 24 May, 2005, published by the Mackinac Centre on 9 June 2005 (courtesy of google).

First Dick Armey’s good bit:

Adam Smith, by the way, best defined the public interest (as he did most everything best) in 1776. And don’t you think it is a marvelous accident of history that "The Wealth of Nations," the treatise that created the discipline of economics, was a treatise on free enterprise written in the year of the work of the greatest historical experience of free enterprise in the history of the world? In 1776, in "The Wealth of Nations," Adam Smith said the ultimate economic activity is consumption. To the extent that the government intervenes in the affairs of commerce, it should do so on behalf of the consumer. … That is still, for me, the best definition of the public interest.”

[With which I completely agree!]

Then Dick Armey spoiled his chances for June’s ‘Lost Legacy’ Adam Smith Monthly prize:

‘After "The Wealth of Nations" came out, I’m not sure that any other book ever needed to be written. So words like "laissez faire" still have meaning to me.’

As regular visitors to “Lost Legacy” will know, Adam Smith never mentioned the words laissez-faire and his book was not about complete freedom for businesses. In his day “merchants and manufacturers” were most likely to conspire against the consumer by forming monopolies and raising prices. He wrote against the interventions of the 18th century governments he knew about because they imposed “Mercantile” policies that undermined or slowed down economic growth, from which he expected that rising prosperity would spread opulence to all consumers, whatever their stations in life. He did not address prospects for their behaviour in future, except he cautioned that economic freedom must always be within the law and under justice.

“Wealth of Nations” is a polemic against 18th century economic policies and the inevitable tendencies of “merchants and manufacturers” to rig their markets.

Dick Armey’s advice in the first paragraph quoted that “To the extent that the government intervenes in the affairs of commerce, it should do so on behalf of the consumer” is the authentic Adam Smith. His second paragraph unfortunately repeats a major misinterpretation of Adam Smith’s legacy.


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