Tuesday, 24 February 2009
A gem to contradict conservative (read anti-gov't) economists who quote Smith all the time.
"The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain. The performance of this duty requires, too, very different degrees of expense in the different periods of society."
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4 comments:
Not quite sure what you're getting at?
I read this as Smith refering to what we now call public goods that probably have free ryder or some other coordination problem (e.g. an army -or- financial watchdogs?) preventing private provision of these services.
The cost of provision of these services will indeed change over time, but I don't see the link to anti-government?
Like the quotes though btw, it's reminded me of this rather fun paper I'm going to dig out right now..
I meant it not as support for the stimulus package but as a general thorn in the side of harsh supply-siders and libertarians. They seem to revere Smith but forget that he has some sense about him. His statement does open the door to governments solving credit crises with fiscal expansion at times when monetary policy has run out...
I guess if you see it as upholding some institution.. not sure this is quite what he had in mind when he wrote it though!
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