2009-02-02

The Wealth of Nations Volume 1

Dave Andrews said to me one day, 'we should really read The Wealth Of Nations you know'. That was some time ago, and I've now just finished Volume 1.

The theory is pretty much as I thought it would be, but all of Smith's arguments are filled with historical detail that was entirely new to me.

As I listen today to the news of workers striking in protest at the free labour market of the EU, it's clear that Smith's ideas haven't convinced everybody. They have convinced me however, and I'm sure that an EU with a free labour market would be much richer than one with monopolies on labour.

I heard Lord Mandelson trying to make the case for free markets to John Humphreys, and he failed to answer John's straightforward questions.

The problem is that although with free markets society as a whole gets richer, the wealth isn't distributed evenly. Adam Smith describes what happens when the supply of labourers exceeds demand; they starve to death.

That's why I'm in favour of not taxing the poor. And indeed I'm in favour of a universal 'citizen's allowance', so that nobody goes hungry.

With free markets making society richer, and a citizen's allowance making sure nobody gets left behind, I think we can muddle through.

Now on to Volume 2...

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