Look Ma!

For your enjoyment, the first of many original satirical cartoons to be posted only on this site. I'm slowly digitizing a lot of my previous work... so expect regular updates.

Greenspan admits that page 287 is relevant

Greenspan Concedes Error on Regulation
By EDMUND L. ANDREWS
Published: October 24, 2008
Alan Greenspan, the former Federal Reserve chairman, said he “made a mistake” in trusting that free markets could regulate themselves.



Amazing. You would have thought he would be up on his Wealth of Nations.... "...Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending."



Adam Smith understood why that was a dumb idea 237 years ago.

The "Lost Page" of the Weath Of Nations

Here are pages 287-8 of my copy of the Wealth of Nations, first my paraphrase, and then the literal text. This page, clearly stating Smith's understanding of how business interests  can be contrary to the public interest, has been completely ignored by the reigning "Pro-Business" political establishment. All Americans should understand why Smith said this:

My Paraphrase:

Any business that can profit by reducing market competition and raising prices (Airlines, Auto Industry, Gas Companies, Private Utilities, Microsoft, Enron... think of your own examples) will naturally tend to work against the public interest by keeping prices higher than they should be, and by those means creating a virtual tax on consumers (the extra price of the good) that serves to drain the public and enrich the business-people. The pro-profit orientation of the business leaders is bad for the public and should be kept strictly out of government. Instead, government should treat business fairly while maintaining the focus on the public interest at all times.

Actual Text From The Wealth of Nations  (In my version, pp 287-8, Text Borrowed from the Project Guttenberg Version, my notes in brackets, [], my corrections in forward slashes, //, my emphasis):

"His employers [the employers of labor]constitute the third order, that of those who live by profit. It is the stock that is employed for the sake of profit, which puts into motion the greater part of the useful labour of every society. The plans and projects of the employers of stock regulate and direct all the most important operation of labour, and profit is the end proposed by all those plans and projects. But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin. The interest of this third order, therefore, has not the same connexion with the general interest of the society, as that of the other two. Merchants and master manufacturers are [companies that re-sell goods and those that control both manufacture and sale], in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business /./ than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion), is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his [the public consumer] own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market, and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." -Adam Smith

I just don't know any basic issue that is more important in the USA. The difference between Smith's carefully thought-out analysis, and the slow and virus-like creep of "pro-business" agendas into the government is both frightening and revealing. It is a basic cause of the current mixed up governmental priorities that seem to place high profits over public interest.