Adam Smith vs. Barack Obama

At The New Yorker, Adam Gopnik argues that the famous Scottish economist Adam Smith would support President Barack Obama’s controversial “you didn’t build that” comments because Smith, Gopnik argues, was “a firm believer in public goods.” Writing at National Review’s The Corner, Yuval Levin pokes a few holes in Gopnik’s theory:

Gopnik is certainly right to say that Smith believed that markets were created and sustained by public policy, and that building infrastructure is an important public purpose which government should pursue. Everyone else believes that too. Obama’s assertion that his opponents disagree with that is preposterous. But as Gopnik also notes, Smith was an ardent critic of what we today would call crony capitalism. His case for the approach he lays out in The Wealth of Nations begins from a critique of the then-reigning economic approach known as mercantilism, under which each of the European powers set market rules that served the interests of a few large domestic manufacturers and trading companies that worked closely with the government—putting economic policy in the service of what they took to be the national interest, in order to advance the nation’s trading position. Smith argued that legislators should instead govern the market in the interest of the common consumer, and that the interest of that consumer would be best served by intense, open competition among producers that did not privilege large and well-connected businesses over smaller and newer rivals.

Crony capitalism—and a preference for a few large companies in each part of the economy that will function as agents of the government and be rewarded and protected accordingly—is the core of the Obama administration’s approach to the economy. It’s the essence of Obamacare and Dodd-Frank, for instance. And it is decidedly not about open competition in the service of the common consumer’s interest. You can name your new agencies consumer protection bureaus all you like, what they’re doing is making the economy more consolidated and easily manageable from the center, rejecting competitive enterprises in favor of public utilities. That’s basically the opposite of Smith’s vision.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • o3||

    perhaps obama went a bridge too far...

    bada boom!11!

  • Mainer2||

    T shirt girls...I'm getting two new ones today. The busty girl in Daisy Dukes, reclining on a deck, and the sultry brunette with her finger to her fire engine red lips. Is everyone else getting those ? 'cause they relieve the pain of Pelosi and Warren.

  • R C Dean||

    I've been seeing those for awhile. Mucho props to the auto-ad bot.

  • Mainer2||

    Must be some kind of rotation, I haven't seen unzipped redhead for awhile.

  • Brett L||

    "ColumbianCupid.com" -- apparently adbot thinks I'm a Secret Service guy. But yes, its nice to see t-shirt models when someone who actually likes women dresses them and takes their picture.

  • Mr. FIFY||

    Why do you hate gay men, Brett?

    /Tony-style anti-breeder rant

  • DEG||

    Sometimes I wish I hadn't installed adblock.

  • ||

    markets were created and sustained by public policy, and that building infrastructure is an important public purpose which government should pursue. Everyone else believes that too.

    I guess I'm not part of the everyone he's talking about.

  • ||

    I was just thinkin the same thing.

  • sarcasmic||

    "Everyone" means "the cool kids", which libertarians are not.

  • R C Dean||

    markets were created and sustained by public policy,

    No, markets arise whenever people consensually exchange goods and services. People don't sit around, looking longingly at each other wishing they could trade, until a government comes along.

    building infrastructure is an important public purpose which government should pursue.

    OK, sure, I don't think government has no business building roads 'n' bridges.

    Of course, vast swathes of our infrastrucure were not built by our government.

  • Pro Libertate||

    You could just as easily have a nongovernmental process to handle such things. We just leave that to the government out of tradition, more than anything else. Government is a tool, even when it's a tool being shoved into a collective uncomfortable place.

  • Brett L||

    We have lots of examples of private entities building improvements or forming companies to capture criminals/prevent crime (Dog the bounty hunter!, more seriously the Pinkerton detective agency). The downside is that they are just as likely to abuse people as government agents. The upside is that they don't have taxation power to support their abuses.

  • Aresen||

    "...a tool being shoved into a collective uncomfortable place."

    Some of our trolls might enjoy that.

  • ||

    Of course, vast swathes of our infrastrucure were not built by our government.

    As a land developer I can can attest when I try to build infrastructure it is government blocks that slows me down the most.

  • Scruffy Nerfherder||

    RC you've got it all wrong. Mittens thinks the government allows an economy to happen.

  • Aresen||

    Creating a consistent legal framework for protecting property rights and settling disputes is both a legitimate function of government and a form of "soft infrastructure".

    The "roads" of Adam Smith's time were essentially commons created by the users over time (with the exception of some Roman roads that were still in use in Smith's time and some military roads such as Wade's Road in Scotland).

  • Wilt Chamberlain||

    I think from a libertarian perspective you could state that markets may not be created, but they are partially sustained by the state. To guarantee contracts and property rights you would need some form of force, and the government plays a part in that.

  • Ken Shultz||

    To guarantee contracts and property rights you would need some form of force, and the government plays a part in that.

    That's correct to a certain extent. I might add that enforcing contracts isn't exactly "force".

    Making people fulfill the obligations of the contracts they willingly signed--isn't exactly the government imposing itself on individuals.

    To the contrary, signing a contract is something individuals willingly do to protect themselves should someone breach the contract.

    In other words, enforcing contracts isn't something the government imposes on unwilling individuals--it's something the government does in its proper function, which is protecting the individual's rights.

  • Ken Shultz||

    To guarantee contracts and property rights you would need some form of force, and the government plays a part in that.

    That's correct to a certain extent. I might add that enforcing contracts isn't exactly "force".

    Making people fulfill the obligations of the contracts they willingly signed--isn't exactly the government imposing itself on individuals.

    To the contrary, signing a contract is something individuals willingly do to protect themselves should someone breach the contract.

    In other words, enforcing contracts isn't something the government imposes on unwilling individuals--it's something the government does in its proper function, which is protecting the individual's rights.

  • Ken Shultz||

    Twice as good.

  • Killazontherun||

    There was a slight difference in your intent, and I dare say, I picked of a bit of tong in cheek there in the second iteration that the original lacked.

  • Ken Shultz||

    I hit refresh like three times, and it didn't show up.

    And then I hit post again, and they both showed up.

    Damn squirrels!

  • ||

    This makes Smith, as I wrote, a firm believer in public goods: his state has an obligation to build roads and schools, establish an army, build bridges and highways

    And since the only example Gopnik gives that is even marginally a public good is national defense, there is no reason to take this man seriously.

  • Joe R.||

    That's a common error. "Public goods" has a definition that most leftists ignore.

    One out of five public goods are actually public goods.

  • KPres||

    Yep. And public choice problems mean that the 20% that actually are public goods might still be better served by the market anyway.

  • Fist of Etiquette||

    If journalists with an agenda can't drag an economist's corpse out and make it dance to their tune, then what good is having those barrels of ink?

  • Killazontherun||

    One reason Rothbard is better than Smith. Progressive journalist can read The Wealth of Nations, and find things to twist; however, when they sit down with a Rothbard treatise, you know that within a few pages in, they are going to go running and screaming as far away from it as they can.

  • mybarber||

    The market was created when one person traded something to another,most likely wandering tribes.Government has helped drive the building of roads,dams,bridges,ect by taking money for one group (taxpayers ) and giving it to another(private builders)It is a middle man and yes it takes it's cut.It does not create wealth.It does not built a single road,bridge,building or dam.

  • sarcasmic||

    Government does have a valid role in the economy by enforcing contracts and property rights.
    That is not to say that those things don't exist without government, but having them enforced makes markets run much better than not.

  • tarran||

    Adam Smith also was a proponent of the Labor Theory of Value. Those writings don't not make Marxism free-markety. They merely mean Adam Smith, being human, could and did make some pretty spectacular errors.

  • o3||

    who u gonna believe? a furiner fm scotland or kenya?

  • Scruffy Nerfherder||

    You're leading the polls in non sequiturs today.

  • Mr. FIFY||

    Unfortunately, stOOOpid, Obama was born in America.

  • Killazontherun||

    Got to give it to o3, he keeps them short and snappy.

  • Mr. FIFY||

    His life should be short and snappy, as well.

  • CampingInYourPark||

    OT:
    "Panhandler arrested, claims to have made $60,000 last year"
    http://www.koco.com/news/oklah.....index.html

  • sarcasmic||

    The officer told Speegle without a permit and an insurance policy he could not panhandle

    Is there any economic activity that one may engage in without first getting permission from Nanny Government?

  • Aresen||

    Dog grooming
    Interior Decorating
    Garbage Collecting
    Broadcasting
    Sex

    All negative so far.

  • o3||

    selling weed?

  • Aresen||

    No, you need a permit.

    They'll still bust you.

    But you need a permit.

  • DingHooo||

    Gotta just love dem bought and paid for politicians.

    www.Full-Anon.tk

  • ant1sthenes||

    Why is a Democratic Congressman attacking his own party's president?

  • T||

    A New Yorker writer doesn't understand Adam Smith. I am shocked, truly I am. Next you'll tell me water is wet.

  • Aresen||

    A New Yorker writer doesn't understand Adam Smith.

    ... or Jack Shit, for that matter.

  • T o n y||

    What was dispersed and unconsolidated about the financial market before the consumer protection agency?

    Just face it, libertarianism and the rhetoric of the Republican party has become quasi-anarchic--allowing only for a few concessions to obvious practicality, and in the case of the GOP, for unlimited payments to Halliburton, er defense spending. Medicare didn't exist in Adam Smith's day but neither did today's life expectancies. Some things it's smart to do collectively, and that's that. We can argue about what those should be, but there is no firm moral line to be drawn as libertarians would have us believe. "We only support the most violent forms of government coercion and won't pay a dime for more!" doesn't make a whole lot of sense.

  • sarcasmic||

    Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

    We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.
    http://bastiat.org/en/the_law.html
  • wef||

    We object to a state religion. Then the socialists say that we want no religion at all.

    Exactly.

    Types like servile tony are at bottom smug daddy-worshipers - and you're welcome to contemplate all the psycho-sexual messiness that implies. Those who disturb the myths supporting their power worship must be declared false and witches. Such are the power-suck-ups and their state religion of today. Luckily, with the demise of the old intellectual socialism as a coherent thesis, the religious daddy-yearning serviles of the left are just left with a muddled fascist tribalism and have to spend their time merely rooting for those who play the power game.

  • Mr. FIFY||

    Hey, Tony, if you think Republicans are actually anti-government... tell us how they plan to run the War on Drugs and the war against gays without government.

  • Scruffy Nerfherder||

    You can stop conflating the Republicans with libertarianism now.

  • ||

    Tony has never been able to make that distinction and I doubt he ever will.

  • sarcasmic||

    There are many distinctions that Tony has problems with.

    Action and inaction. Voluntary and coerced. Entrance and exit.

    If there's a distinction out there, chances are Tony doesn't get it.

  • R C Dean||

    And, of course, the big one:

    Mine, and yours.

  • T o n y||

    You should be mad at them for stealing all your stupid antigovernment rhetoric.

  • ant1sthenes||

    Don't start another IP debate.

  • ||

    Shouldn't you be mad at them for stealing all your stupid progovernment rhetoric?

  • Joe R.||

    Why stop now?

  • Scruffy Nerfherder||

    It's old and tiresome. If you're going to be a troll, at least keep it fresh.

  • Joe R.||

    Never go full retard. But if you do go full retard, you're committed to it.

  • Ken Shultz||

    Even leaving the particulars aside and just focusing on the gist of what Obama was saying...

    Does Gopnik imagine that Adam Smith would agree with Obama--that business owners don't deserve the credit for what they do?!

  • Keith3D||

    reductio ad public-gooderum

  • Brandybuck||

    Obama's speech in a nutshell: "Public goods, therefore give me more of your money"

  • Mr. FIFY||

    You forgot "and Fuck You, That's Why."

  • Loki||

    the "Fuck You, That's Why" part is implied everytime he opens his fucking mouth.

  • Ken Shultz||

    Incidentally, anyone know how much of the federal budget is infrastructure?

    http://www.usfederalbudget.us/federal_budget

    It's a gotta be a sliver of that 20%, right?

    I mean, if business owners owe Barack Obama anything, it's probably less than a couple hundred bucks each, right? ...and they are paying for it, right? I know I pay my taxes--I can be the only one!

    And what about all the other stupid programs Obama's charging business owners for--that have nothing to do with small business?

    Does Obama think businesses are getting more from the government than we pay for?!

    Where does he think all the government's money comes from?

    Let me be clear, President Obama--if you've got a government program? You didn't build that. Some business owner makes that happen.

  • ||

    Where does he think all the government's money comes from?

    He thinks it comes from the FED throwing money out of helicopters.

    Is there confusion on how Keynesian economics work? Or are you just dumbfounded that Obama believes in it?

    You do not go from a national debt of 60% of GDP to a national debt of 100% GDP in 3 and half years and believe wealth comes from people working to better themselves.

  • ||

    Following from that link to here, we find that all outlays for transportation amount to 3% of the federal budget.

    I'm pretty sure that anyone complaining about the size of the federal government is concerned about the ones that are taking the real money.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement