I left this comment over at this particularly bad article at American Conservative, a sort of ultra-paleocon publication, as it was flagged up in the Arts & Letters Daily aggregator site. The AC article made various, and in my view foolishly wronghead, comments about Adam Smith, while neglecting to mention other aspects of his ideas, or mistakes, such as his mistaken attachment to a form of the labour theory of value (admittedly a mistake made by other classical economists and not really sorted out until the marginalist revolution of the late 19th Century). I note that Philip Salter, of the Adam Smith Institute, left a comment. Here is mine, which I thought I would republish here.
“Philip Salter has nicely rebutted many of the points of this remarkably bad article. But I would add this point to the argument, made here, that somehow there is a case for protectionism in giving “infant” industries a chance to get off the ground. It is sometimes argued that in the case of some of the “Asian Tigers” – Japan, Taiwan, South Korea, etc – that this is what happened. That is far too glib. Sure, some of these countries practised protection, but then again, as Philip Salter said, Hong Kong did not. Also, many African nations, which on a per capita basis were richer than Asia in 1945, often used subsidies, tariffs, quotas and many other restrictions, and those countries have been largely overtaken by Asia.”
For a good debunking of the whole “infant protectionist” argument, I recommend this article by R. E. Baldwin: “The Case Against Infant Industry Tariff Protection”; Journal of Political Economy 77 (May/June) 295-305, as cited on page 41 of “Reviving the Invisible Hand: The Case for Classical Liberalism in the 21st Century, by Deepak Lal. I suggest readers of this website study that book, if only to guard against the kind of nonsense that this publication has chosen to publish. In the meantime, I commend PJ O’Rourke’s recent excellent, and typically witty, study of Adam Smith.
“Bad and discredited ideas, it seems, never die. Neither do they fade away. Instead, they keep turning up, like bad pennies or Godzilla in the old Japanese movies.” — Murray N. Rothbard
Economics in One Lesson: The Lesson
By Henry Hazlitt (1946)
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[edited excerpt] Economics is haunted by more fallacies than any subject known to man. This is no accident. The difficulties of the subject are great enough, and they are multiplied a thousandfold by the special pleadings of selfish interests.
Every group has interests antagonistic to all other groups. Some public policies benefit everybody in the long run. Other policies benefit only one group at the expense of all other groups.
The group that benefits by such policies has such a direct interest in them that they argue for them plausibly and persistently. The group hires the best buyable minds to present its case. It will either convince the public that its case is sound, or so befuddle the argument that clear thinking becomes next to impossible.
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Serve you right for going to American Conservative’s website. Ugh. Pat Buchanan and Taki? Toxic swill.
Taki was marginally amusing when spilling the beans about the private lifestyles of the rich and sometimes-famous. But his politics are pathetic.
No one should be surprised that they screwed up Adam Smith — it would just be the latest in a long line of screwups.
Pat “I am NOT pro Hitler – I just do not think that Britain, let alone America, should have opposed Hitler in World War II” Buchanan (remind you of anyone?) starts from a genuine concern for manufacturing.
This is a concern I share – there has been a terrible decline in basic manufacturing (sorry Cafe Hayek and your endless stats – but there has been such a decline as anyone who has seen the once great industrial cities knows), but his “solution” is no solution at all.
Salter, Buchanan (and so on) demand taxes (or other restrictions) on imports – but imports are not the real reason that American manufacturing industries went in decline (they are a sign of the sickness – not the sickness itself).
It was (for example) the “anti trust” laws that undermined such American industries and boot and shoe making equipment, and aluminium (both famous anti trust cases – that should be infamous anti trust cases).
A real free market does not come from government regulations – that is the central insight that Murry Rothbard, Ayn Rand (and so many others) have tried to teach.
Also the vast growth of the American WELFARE STATE – with its benefits, taxes and regulations.
And the terrible burden of union attacks. It is just not true (as some people are now claiming) that union are only bad in government employment – read W.H. Hutt’s “The Strike Threat System” or visit such cities as Detroit, or Gary Indiana.
And, if unions are so wonderful, how come that the United States had the highest real wages and conditions of any major nation on Earth – when unions were of little importance?
Unions promise higher wages and better conditions than the market would produce – they do this via the (government regulation backed) “strike threat system” with its “picketing” and other paramilitary (or organized crime) tactics. But guild monopolistic practices (which is what the modern American union movement really is a throwback to) in the longer term hurt EVERYONE – including the members of the unions themselves.
But Pat B. Philip Slater and the rest will not attack the anti trust laws (indeed the pretend that these are “anti cartel” laws – when in fact they have normally been used to ENFORCE de facto cartels), they will not attack the American Welfare State (because that would not be “compassionate” – as if an ever growing underclass was “compassionate”) and they certainly will not attack industrial unions…..
Oh no – Pat B. wants to appeal to the “white working class” (and thinks that attacking unions would undermine his appeal).
Actually if they wanted to appeal to ordinary people (of any hue of skin) against “the elite” they would attack CENTRAL BANKING (the whole credit bubble Ponzi Scheme).
But either they do not know enough (again, for some reason I am reminded or some people in Britain) or they think “the masses” would not understand.
Actually ordinary people are perfectly capable of understanding.
For example, the millions of people who have watched (and will watch) Glenn Beck’s show on the Federal Reserve last night will have had no trouble understanding the basic facts presented.
“The people would not understand” is normally (in my opinion) really “I am too lazy to explain this matter”.
That anyone takes John Maynard Keynes theories seriously is a testament to human credulousness.
There must be some identifiable dynamic that causes bad ideas to persist.
Or is it just human nature’s love affair with its own destruction?
No, not for the most part.
For millenia, mankind trudged along behind the ox that was the only way known to plow the field.
Everything was done as it always had been done. Traditional knowledge was the only knowledge.
All was held of the king. If you wished to trade, to manufacture, to import or export, you had to find the right politically connected palms to grease in order to get the licenses and permits needed to function.
And don’t try anything too new, don’t cut prices too much, don’t threaten any of the guilds or vested interests—that way lies revocation, banishment, even prison.
For millenia, mankind lived on the edge of starvation and disaster, while all was prohibited except that which the lord permitted.
Why do bad ideas persist? Because that’s all there was for most of the history of human civilization.
When there was a burst of freedom, men went from a hovel shared with a few other half-starved relations to taking a stroll on the moon.
When you follow the teachings of lunatics, maniacs, and delusional prophets for century after century, you suffer.
Superstition ain’t the way…
The fact that productivity can destroy work is to be commemorated. It is that reason that we work 5 days instead of 7.
But Socialists views allied to anti-deflationist theories block any prospect of we getting 4 work days week.
which would be the natural path of a free economy.
We continue work 5 days weeks to pay the salaries of other 5 days work week workers that have fake state bureaucratic jobs plus the unemployed.
Does it make sense?
So only when we can enjoy the gains of productivity and quality by working less instead of getting more money-this more money to be wasted in taxes for the above fake jobs- we will fix this crisis.
The current crisis is a crisis of success.
They haven’t been involved with The American Conservative for about 4 years.
Paul Marks, I think you got this wrong:
I think you will find, if you read the comment thread at AC, that Philip Salter is attacking these ideas, not defending them. He made some excellent comments, in fact.
I did not raise the Buchanan issue because I did not want the thread to be derailed by debate about this man’s white supremacist views and questionable revisionist views on history, such as WW2, the US Civil War, or whatnot.
My apologies to Mr Salter.
I misinterpreted your post J.P.
You know me – sadly I tend (not always, but often) to look at a “link” as just a bit of coloured text, so if the post itself is not clear to me, it stays unclear.
Having looked again at your post – it is perfectly clear.
I have no explication for my radical misreading.
Paul, it is not a “link”, it actually is a link;-P
“[Buchanan and Taki] haven’t been involved with The American Conservative for about 4 years.”
Right. They just contribute articles.