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"The America's Cup is like driving your Lamborghini to the Grand Prix track to watch the charter buses race." —from Holidays in Hell |
P.J. on why Wealth is so damn long: “The simplest reason for Adam Smith’s lack of economy with words was, aptly, economic. When Wealth was published it sold for one pound sixteen shillings. By Smith’s own estimate the ‘ordinary wages of labour’ at the time were ten shillings a week. Consumers, even well-off consumers of intellectual luxury goods, demand good weight. Hoist Bill Clinton’s apologia pro vita sua, which could have been summed up in a few choice words.” P.J. on trade: The little fellow with the big ideas chips the spear points. The courageous oaf spears the mammoth. And the artistic type does a lovely cave painting of it all. One person makes a thing, and another person makes another thing, and everyone wants everything. Trade may be theoretically good, or self-sufficiency may be theoretically better, but to even think about such theories is a waste of that intermittently useful specialization, thought. Trade is a fact. Adam Smith saw that all trades, when freely conducted, are mutually beneficial by definition. A person with this got that, which he wanted more, from a person who wanted this more than that. It may have been a stupid trade. Viewing a cave painting cannot be worth 300 pounds of mammoth ham. The mutuality may be lopsided. A starving artist gorges himself for months while a courageous oaf of a new art patron stands bemused in the Grotte de Lascaux. And what about that wily spear point-chipper? He doubtless took his mammoth slice. But they didn’t ask us. It is, precisely, none of our business. P.J. on specialization: Smith was aware that freedom has its discontents. He was particularly worried about the results of excess in the division of labor: “The man whose whole life is spent in performing a few simple operations generally becomes as stupid and ignorant as it is possible for a human creature to become.” (W/L 782) We’ve seen this in countless politicians as they hand-shake and rote-speak their way through campaigns. But even that is worth it. Productivity of every kind can be increased by specialization. And the specialization of politics at least keeps politicians out of business where their stupidity and ignorance could do even greater harm to economic growth. P.J. on wealth: Smith’s logical demonstration of how productivity is increased disproved the lamentable idea (still dearly held by leftists and everyone’s little brother) that bettering the condition of one person necessarily worsens the condition of another. Wealth is not a pizza. If I have too many slices, you don’t have to eat the Domino’s box. P.J. on econometrics: Where the labor of reading Wealth is not always repaid is in wading through the work Smith had to do to shape his field of thought. It’s particularly difficult when Smith the lonely pioneer is sod-busting the vast untilled prairies of econometrics. There was hardly such a thing as a reliable statistic in the 18th century and certainly no set of them that went back for decades. By dint of prodigious reading and protracted correspondence, Smith could find numbers to confirm his theories. But each number had to be examined for quality and weighed for usefulness in comparisons. And we have to stay there with Smith as he sorts through these apples and oranges like the world’s pickiest Jewish mother and the world’s worst corner grocery.Smith then subjected numerical data to graphical analysis without the one thing you pretty much have to have to do this – graphs. Quesnay’s Tableau Economique was the first attempt to make a graph to explain economics. It was a minutely labeled, densely zig-zagging chart – part cat’s cradle, part crossword puzzle, part backgammon board. Quesnay may have put Smith off the whole idea of graphic representation. The first good economic graphs were drawn by Adam Smith’s fellow Scottish economist William Playfair, in 1786, in time for Smith’s last revision of Wealth. And Smith knew Playfair, who was the young brother of a close friend. Alas, one genius didn’t recognize another. Actually, two geniuses didn’t. Of William Playfair’s economics Jeremy Bentham said, “Nine-tenths of it is bad writation.” As a thinker, rather than a draftsman, Playfair was a tyro, but one wishes that Smith had paid attention to the callow lad anyway. Hundreds of pages of The Wealth of Nations that readers skim might have been condensed into several pages that readers skip entirely.Another thing Smith didn’t have, besides graphs, was jargon. Economics was too new to have developed its thieves’ cant. When Adam Smith was being incomprehensible he didn’t have the luxury of brief, snappy technical terms as a shorthand for incoherence. He had to go on talking through his hat until the subject was (and the reader would be) exhausted. P.J. on the super ego: Smith also described the operation of the super ego long before, and more astutely, than Freud did. Smith gave it a moniker that didn’t sound like a comic book hero’s. And Smith connected our conscience to human attributes more noble and reasonable than what drives a miniature schnauzer to hump our leg. P.J. on morality: It’s a mistake to read The Wealth of Nations as a justification of amoral greed. Wealth was Adam Smith’s further attempt to make life better. In The Theory of Moral Sentiments he wrote, “to love our neighbor as we love ourselves is the great law of Christianity.” (TMS 25) But note the simile that Christ used and Smith cited. The Theory of Moral Sentiments was about the neighbor. The Wealth of Nations was about the other half of the equation, ourselves. It is assumed, apparently at the highest level of moral arbitration, that we should care about ourselves. And logically we need to. In Moral Sentiments Smith insisted, paraphrasing Zeno, that each of us “is first and principally recommended to his own care,” (TMS 219) and “endowed with the principle of self-love.” (TMS 272) A broke, naked, hungry and self-loathing me is of no use to anyone in the neighborhood. In Wealth Smith insisted that in order to take care of ourselves we must be free to do so. The Theory of Moral Sentiments showed us how the imagination can make us care about other people. The Wealth of Nations showed us how the imagination can make us dinner and a pair of pants. Nothing but imagination could justify Genesis 1:26, “And God said, Let us make man in our own image,” certainly not our looks. Imagination may be our only distinctively human attribute. Animals detect with their senses everything that humans do and more. Probably animals think many of the same thoughts we do, at least from nine to five. When’s lunch? Animals can love. For all we know a romantic pang goes through an amoeba’s heart – or whatever single cell organisms have – just before it splits. But animals, whose complete insensitivity to vice and virtue is evident when the miniature schnauzer humps your leg, cannot sympathize, let alone do so morally. Nor can animals cooperate enough to build a civilization. Unless an ant heap is your idea of the Acropolis. “Nobody,” Adam Smith wrote in Wealth, “ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.” (W/ML 13) Adam Smith did not think we are innately good any more than he thought we are innately rich. But he thought we are endowed with the imaginative capacity to be both, if we’re free to make the necessary efforts. The Theory of Moral Sentiments and The Wealth of Nations, read together, do provide a blueprint – though it’s for the soul rather than society. Smith never made any religious claims about his philosophical project. In a footnote to Part I of Moral Sentiments he wrote, “…the present inquiry is not concerning a matter of right, if I may say so, but concerning a matter of fact.” (TMS 77) Smith only meant to show, as well as his “mere inventions of the imagination” could, what he called “the plan and system which Nature has sketched out.” (TMS 292) Yet the design that Adam Smith drew was for nothing less than the mechanical engineering of the Holy Ghost. P.J. on marginal utility: Smith came very close to stumbling on marginal utility when he noted that “Nothing is more useful than water; but it will purchase scarce anything.” (W/ML 12) With an additional eight ounces of water all we get is a trip to the bathroom in the middle of the night. With an additional eight ounces of gold we get the upfront payment to lease a Lexus. Marginal utility explains why gold, vital to the life of no one except hip-hip performers and fiancés, is so high-priced. However, the high-price we pay for premium bottled water sends the law of marginal utility up the spout. P.J. on price theory Witness Adam Smith wrestling with his: “If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer.” (WI, 47) Wait. Can killing a beaver, even in supposition, really be twice as hard as killing a deer? Deer can run like hell. We know where the beaver lives. It built the beaver dam. We’ve got the beaver’s home address. Even if it does take twice as long to kill a beaver – wading around in the beaver pond smacking at Bucky’s head with the flat side of a canoe paddle – who wants a beaver? It’s not like the nation of hunters is wearing a lot of top hats. And after a long day of hunting, take your pick – a juicy tenderloin of venison or beaver soup? P.J. on banking: A bank is an institution that doesn’t deal in money. If we accept Smith’s definition of value as “toil and trouble,” banks deal in toil and trouble. Banking is a clever device for storing your toil and trouble. And instead of being charged storage fees, you’re compensated for engaging in excess toil and going to extra trouble. For example say that, per Book I of Wealth, you are killing a lot of deer. You’re only getting one beaver for every two deer you kill but, nonetheless, you’re getting more beavers than you know what to do with. Absent some system of banking, you have to pile the beavers under your bed where they’re no use to anyone. And they stink. Banking allows you to rent the beavers to me with “some tolerable security” of receiving the agreed upon beaver lease revenue and getting your beavers back when I’m finished with my high profit, beaver-intensive business deal. Money doesn’t come into it except insofar as the transaction is more convenient and pleasant if it’s conducted in money instead of used beavers. P.J. on currency fluctuation: Many currencies issued by many central banks are no better nowadays. Would you like your change in Argentinian pesos? All modern money is paper money but with nothing ensuring its relative value except the promises of a government or, in the case of the euro, the even more nebulous promises of a bunch of governments. We have our paper, or “fiat” money because it’s easier for our governments to print more of it in the name of “greater monetary policy flexibility.” The quality of money, like the quality of the human body after the age of eighteen, is not often improved by increases in quantity. Smith wrote that “paper money does not necessarily increase the quantity of the whole currency.” (W/ML 308-9) Italics added, alas. In February, 2006, P.J. on servants: Later economists, such as, in the early 19th century, J.B. Say, felt that Smith undervalued the economic contributions of services. And he did. The 18th century had servants, not a service economy. It was hard for a man of that era to believe that the semi-inebriated footman and the blowzy scullery maid would evolve into, well, the stoned pizza delivery boy and the girl behind the checkout counter with an earring in her tongue. P.J. on retail: Adam Smith was one of the few deep thinkers – wives excepted – to ever come to the defense of retailing. “If,” he wrote, “there was no such trade as butcher, for example, every man would be obliged to purchase a whole ox or a whole sheep at a time. This would generally be inconvenient to the rich, and much more so to the poor.” (W/ML 342) And even a two-lawyer family with a Sub-Zero freezer might have quite a time getting an ox in there. P.J. on human capital: “[I]n the language of modern economic planning, ‘promoting human capital’ tends to mean large-scale government intrusions upon the education and training of everyone the government can get a hold of. President Bush calls his intrusion “No Child Left Behind.” What if a kid deserves to be left behind? What if he deserves a smack on the behind?” P.J. on the division of labor: “Productivity of every kind can be increased by specialization. And the specialization of politics at least keeps politicians from running businesses where their stupidity and ignorance could do even greater harm to economic growth.” P.J. on central banks: “If a nation has less circulating money than it has labor and goods, you get a credit collapse and a Great Depression. If a nation has more money than it has labor and goods, you get the 1970s. Which is worse depends on whether you are more annoyed by double knit, disco, and Henry Kissinger or by claptrap about the Greatest Generation, enormous Medicare expenditures, and your parents. The purpose of central banking is to prevent the return of disco and get your parents to shut up.” P.J. on the pursuit of self-interest: “Take care of the pennies, and the speculative philosophers, the utopians, the politicians, the economists, and God will take care of themselves.” P.J. on outsourcing: “Some jobs require protection, to ensure they are performed locally in their own communities. My job is to make quips, jests, and waggish comments. Somewhere in Mumbai there is a younger, funnier person who is willing to work for less. My job could be outsourced to him. But he could make any joke he wanted. Who would my wife scold? Who would my in-laws be offended by? Who would my friends shun?” P.J. on blogs: “Freedom of speech is wonderful, if you have anything to say. A search of the ‘blogosphere’ reveals that hardly anyone does.” P.J. lobbyists: “The recent scandals in the U.S. Congress concerning Jack Abramoff and his ilk would have appalled Adam Smith as much as they appall any good Washington Post editorial writer. But Smith, we can assume, would have had enough respect for his readers’ intelligence not to feign shock.” |
