The video of my second OLLI talk on Adam Smith, in which I focus on The Wealth of Nations, is here.
A fair number of highlights.
2:45: First sentence of WN is a zinger on the division of labor.
3:24: Pin factory.
4:58: Why division of labor works.
6:58: Propensity to truck, barter, and exchange.
7:58: Dogs don’t trade bones with other dogs.
8:34: We need the cooperation and assistant of great multitudes.
9:34: The most famous quote from WN.
10:20: Smith on mercantilism.
11:58: Wealth does not consist of money.
12:15: Gold and silver are like kitchen utensils.
12:50: Balance of trade.
15:00: Invisible hand.
17:00: George Stigler’s clever remark.
17:50: Smith on industrial policy.
21:00: Smith on protectionism.
23:04: Smith on free trade.
23:44: Producing wine in Scotland.
26:00: Corn laws and Irish famine.
27:49: Retaliatory tariffs and the “chicken tax.”
30:00: Transition costs in move to free trade.
32:05: Smith discovers the Laffer Curve.
35:40: Smith on collusion: what gets left out of quote.
37:00: Electrical equipment conspiracy.
38:27: Inequality. First, in free economy; second and more important, due to government regulation.
42:08: Trickle down on the consumer side.
45:40: Smith on British imperialism.
47:20: Colonies are an economic loser.
48:20: Should Britain give up the colonies voluntarily?
48:50: Who will win the American Revolution? (Someone yelled out “spoiler alert,” but this didn’t make it on to the recording.
49:50: Smith on slavery.
52:05: Smith’s 3 functions of government.
53:28: Smith’s first maxim of taxation.
54:25: Smith on universities.
57:40: Smith on lotteries.
58:40: Smith on deregulation.
Then to Q&A.
59:40: East India Company.
1:01:15: Biden on Ukraine spending on U.S. arms. What would Smith say about Biden’s argument?
1:03:25: Would Smith have favored intervention to establish “orderly markets?”
1:04:15: How did Smith reconcile his Christianity with self-interest?
1:05:00: Smith and national security.
1:05:50: PPE during pandemic.
1:06:20: Should we get rid of tenure?
READER COMMENTS
Warren Platts
Dec 28 2023 at 4:56pm
David, that is very unfair. Trump was actually — like Adam Smith — what I would call a mild protectionist. Mercantilism and Protectionism are two different animals entirely. The former requires low wages in order to be “competitive”; the latter seeks high wages in order that mass production can be accommodated by mass consumption — and that requires money in workers’ pockets
Also, you completely ignore the fact that Adam Smith became the Scottish Commissioner for Managing and Causing to be Levied and Collected His Majesty’s Customs, and Subsidies and other Duties in that part of Great Britain called Scotland, and also the Duties of Excise upon all Salt and Rock Salt Imported or to be Imported into that part of Great Britain called Scotland AFTER he wrote Wealth of Nations. By all accounts I have seen, he performed his duties assiduously. Any free market analysis of Adam Smith must make some sort of apology for this travesty. Right? That you brought up the wages of hangmen is interesting because it would be a great research project to figure out the number of smugglers (aka free traders) who were hanged without benefit of clergy on Commissioner Smith’s watch..
Jon Murphy
Dec 29 2023 at 8:18am
Trump is a mercantilist and protectionist, if you wish to make a distinction.
Smith was neither. He explicitly condemns protectionism and calls mercantilism “absurd” multiple times in WN, as well as in his classroom lectures, personal correspondence, and official documents as commissioner.
Warren Platts
Dec 30 2023 at 1:57pm
Jon, they are two different animals. Any economist who cannot explain the difference should not comment on either.
David Henderson
Dec 29 2023 at 5:01pm
You write:
Yes. Consider it done, at least by me.
Richard W Fulmer
Dec 29 2023 at 10:59am
Thanks for posting your talk.
I’m going to put in a plug for Adam Smith’s understanding of comparative advantage. His recommendation that Brits buy Portuguese wine rather than trying to make it in Scotland and the following quote are a pretty good explanation of the concept:
David Henderson
Dec 29 2023 at 1:15pm
Good point. I made that point at the 23:20 point in my talk.
Richard W Fulmer
Dec 29 2023 at 6:28pm
You’re right. Missed it. Sorry.
David Henderson
Dec 29 2023 at 7:09pm
Thanks. I love giving talks where I change my mind right in the middle of the talk.
Ahmed Fares
Dec 29 2023 at 11:07pm
Adam Smith did not understand comparative advantage because he was talking about gains from trade due to absolute advantage. In Ricardo’s example of comparative advantage, Portugal would trade with England despite the fact that it was more expensive to produce cloth in England. Comparative advantage is about opportunity cost.
Both cloth and wine were more expensive to produce in England yet both England and Portugal would gain from trade.
Richard W Fulmer
Dec 29 2023 at 11:58am
Smith argued that we advance through application of the division of labor. But that can’t be the whole story because the division of labor only allows us to do what we’re already doing more efficiently and on a larger scale. If all we had was the division of labor, today we’d be amazingly good at making lots of excellent and inexpensive obsidian knives and stone hammers, but we would have never made it to the Bronze Age much less to the Iron and Industrial Ages.
Advancement comes from innovation – that is, from arranging old knowledge in new ways or acquiring new knowledge and applying it to the world around us. But innovation is a luxury good. Probably 99% of all new ideas are bad, and trial-and-error experimentation to test out new ideas was inadvisable in the Stone Age when error often meant injury or death.
Thomas Edison famously failed over 1,000 times before finding a filament that would work in his lightbulb. But a Stone Age Edison would have starved long before failing that many times. Just to survive, Caveman Edison would have had to spend much of his time gathering nuts and berries and hunting woolly mammoths. He wouldn’t have had the luxury of so many trials and errors.
People had to reach a certain level of prosperity before innovation became possible and, perhaps, socially acceptable. And it was likely the division of labor that allowed them to reach that level.
Richard W Fulmer
Dec 29 2023 at 6:22pm
Here are a couple of ant-slavery quotes from The Wealth of Nations:
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