Showing posts with the label Adam Smith

Adam Smith on the Current Financial Crisis

While there is much wrong with Mr. Smith's work, he did, in The Wealth of Nations, note the following:
"To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country, and of all men in all other countries."
The result of policies favoring "one little order of men (Wall Street, in the current crisis)" gives rise to what Smith calls "a high rate of profit."
"But besides all the bad effects to the country in general, which have already been mentioned as necessarily resulting from a high rate of profit; there is one more fatal, perhaps, than all of these put together, but which, if we may judge from experience, is inseparably connected with it. The high rate of profit seems everywhere to destroy that parsimony which in other circumstances is natural to the character of the merchant. When profits are high, that sober virtue seems superfluous, and expensive luxury to suit better…