Donald Boudreaux: An interview with Adam Smith
My first trip to Europe, in 1987, was to visit the Edinburgh grave of the father of economics, Adam Smith. Born in 1723, Smith died in 1790. During his lifetime he was rightly regarded as one of the world’s greatest thinkers.
My admiration for Smith stems largely from the wisdom packed into his 1776 book, “An Inquiry Into the Nature and Causes of the Wealth of Nations.” But what relevance can a book by a long-dead economist have today? Plenty.
Many of Smith’s chapters read as if he were responding to the tweets of Donald Trump, the fantasies of Alexandria Ocasio-Cortez and the bellowing of Bernie Sanders.
So I here construct from Smith’s own 1776 words an imaginary interview.
Interviewer: Professor Smith, many politicians and pundits endorse subsidies and tariffs as means to support the industries of the future. What say you?
Smith: The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.
Interviewer: Whoa! Tell us what you really think! Moving on, don’t you agree with President Trump that American firms need protection from the competition of cheap imports?
Smith: To give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.
Interviewer: But aren’t we hurt by cheap imports?
Smith: It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbors, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for.
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage.
Interviewer: You clearly think that much of what President Trump says about trade is absurd. But about the U.S. trade deficit, isn’t he right to worry?
Smith: Nothing, however, can be more absurd than this whole doctrine of the balance of trade.
Interviewer: Thanks very much, Professor Smith. I sense that your insights and eloquence will ensure that you’ll remain relevant long after the last memory of Trump, Ocasio-Cortez and Sanders dies out.
Donald Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.