Tuesday, August 19, 2008

Is this a Correct Use of a Quotation?

Steven Malanga in City Journal writes (19 July) about “New Jersey’s Ruin - The state’s leaders seem determined to drive it off a cliff”.

Adam Smith once wrote that there’s a “great deal of ruin in a nation,” by which he meant that it takes an awful lot of bungling by political leaders to bring down a powerful and prosperous state. Today, New Jersey pols are giving Smith’s thesis quite a test drive. They are steering the Garden State toward ruin at an astonishing pace, and no amount of bad economic news seems capable of deterring them.”

I am not sure of the situation in New Jersey, which Steven Malanga details in his piece (HERE), but the exchange between Smith and Sir John Sinclair, following the British surrender at Saratoga, involved the following words:

Sir John: ‘If we go on at this rate, the nation must be ruined.’

To which Smith replied: ‘Be assured young friend, that there is a great deal of ruin in a nation

From Ian Simpson Ross (Smith's definitive biographer), 1995. The Life of Adam Smith, p 32, Oxford University Press; in Correspondence of Sir John Sinclair of Ulbster, i.390-1, and in Correspondence of Adam Smith, Letter no. 221, footnote 3, Liberty Fund, 19.

It may be that Smith was less concerned at the prospect of the government’s defeat by the British colonists in America than Sir John (see Wealth of Nations, IV.vii.c: 64-79: pp 614-26), than the enormous cost of maintaining colonial monopolies that diverted scarce capital away from productive investment, and thereby contributed to slower economic growth, and also distorted capital flows from more rapid growth in the UK in favour of a longer turn around of capital, from once every four years instead off two or three times a year if invested locally.

In this context I am not convinced that Steven Malanga has deployed the quotation from Smith with greater affect.

As for the good folks of New Jersey, whatever happens in the near future, there may be pain, but the losers from corrective changes are not going to give up policies that benefit them as things stand; however, capital flight is feasible for those hurt by the current policies. The current gainers may end up the future losers.

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Blogger stevem said...

Similar interpretations of this quote abound...

From "Making Modern Economics" by Mark Skousen:

"Smith's dictum is frequently cited by Milton Friedman, Gary Becker and other economists in response to economic doomsayers." It suggests that when a nation has built up tremendous wealth, institutions and goodwill over the centuries, it would take more than a major war or disaster to destroy a country."

5:02 pm  
Blogger Gavin Kennedy said...

Thank you for your comment with which I have no disagreement in principle - that countries - rich or poor, incidentally - take a great deal of 'ruin' before they are ruined was wise advice from Smith to 'young' Sinclair.

However, that is no reason to apply the 'ruin' message to New Jersey in the context of poor government.

Friedman and Becker were of the Chicago School, a wholly unreliable source for anything about Adam Smith.

See Lost legacy, passim, and my 'Adam Smith: a moral philosopher and his political economy', July 2008, Palgrave Macmillan.

7:10 pm  

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