Sunday, April 02, 2006

Smith Got it Right

An appropriate use of a quotation from Smith's Wealth of Nations:

Politicians do not stay embarrassed for long. The prime minister, having been caught out dodging his own rules on party funding through loans from rich benefactors, no doubt expects the police investigation into cash-for-honours to run into the sand. Mr Cameron believes that as a new leader he is absolved from his party’s past sins. So when they meet they are likely to agree in principle to push forward on state funding. The great Adam Smith had it right more than two centuries ago: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.” In this case the conspiracy would be comical were it not so serious. The party leaders will be saying, in effect, that because they cannot be trusted to raise funds in an open way free from corruption, you, dear long-suffering taxpayer, will pick up the bill.”

Sunday Times (London), 2 April, Editorial Comment.

Well said.

See Wealth of Nations (WN I.x.c.27: p 145) the sentence concludes with: ‘or some contrivance to raise prices.’. And in this will happen in this case too.

Whatever amount MPs agree to subsidise political parties initially, it will gradually get more expensive after each election, as MPs vote to spend taxpayers' money on getting themselves and friends elected, to among other things become eligible for substantial and generous pensions, all paid with taxpayers' money again, few of whom will ever have such pensions themselves.

Smith was writing about local merchants and manufacturers consipiring over beer, bread and games to gain extra pennies from their customers; he never envisaged that the amounts at stake would be measured in millions of pounds.


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