Thrown Under the Omnibus, page 85
We were greeted by the village elder who’d said the water main was broken. Without the formidable woman, he was more talkative. He said the American attack on the airport came through the middle of the French Quarter. The area had been defended by Iraqi secret police, but not very well, to judge by the slight shell and bullet damage. The village elder said he’d been a fire chief for thirty years. The French Quarter was not a cap to his career. After a secret-police vehicle was hit by an American rocket, a house caught fire, and the entire block burned down. Ten families were left homeless, but fortunately they were homeless already, having fled from the war.
Tarik al-Wasty, a carpenter and pipe fitter at the airport, had spent the five days of the bombing and assault lying on the floor of his house with his wife and ten children. He showed me a hole where a tank round had come into his garden, and offered me tea. His two-year-old son was still terrified, would sleep only if curled beneath his father, and was coughing continually. A medical corpsman brought some drugs from the Iraqi cache. The corpsmen tried to explain to Tarik, whose English was not good, that steam could be used to help clear the child’s chest. Getting a blank stare, the corpsman attempted charades and was prevented from persuading Tarik to boil his toddler in a pot by the family’s nine-year-old son, whose English was excellent.
The electrical-engineer lieutenant colonel had discovered fellow electrical engineers among the French Quarter residents. They were probing the innards of a transformer. The mechanical-engineer major had found additional engineers. They were inspecting the water main, which had been crushed by a tank. “I think I know where there’s a big piece of pipe I can scrounge,” the mechanical engineer said.
Major Bob and I looked at the school. It was the one public building I saw in Iraq that hadn’t been looted. There were only a few bullet holes in the walls. The school was decorated with murals of Smurfs and Mickey Mouse drawn, it looked like, by the painter of the Chagalls at the Museum of Modern Art.
The fire chief and some of his friends gave us a tour of the village. The houses were prefab, semidetached, and looked like modest European vacation cottages but with bomb shelters in their yards. Recreation facilities had been provided for the previous construction-worker tenants—a picnic area, a swimming pool, tennis and volleyball courts. The nets were gone. The poles were bent double. The swimming pool was half-filled with chunks of concrete. The picnic area was layered in trash. The fire chief said something about “repairs forbidden” and that the French Quarter had fallen out of favor with Saddam Hussein. If appearances were any indication, so had the rest of Iraq.
“Having looked at the Mideast,” Major Bob said, “I realize how the Arabs came up with the concept of zero.”
Will a strong Iraq emerge from the chaos? Let’s hope not. But will the Iraqi people become part of the modern, free, and prosperous world? That’s possible, though I have only one piece of anecdotal evidence to go by. I was riding through Baghdad in the last truck of an army convoy, with a unit that will go unidentified because drinking was a punishable offense for U.S. troops in Iraq. We spotted a man selling beer on the street. “I’d better stop,” said the sergeant who was driving, “and check my windshield-wiper fluid level or something.”
I jumped out of the truck. “Let me do this,” I said. “I’ve been coming to the Middle East for twenty years. I know how to haggle.”
“How much for the whole case?” I asked the vendor in pidgin and gesture.
“Twenty bucks,” he said in English.
Twenty dollars was a fortune in Baghdad at that moment. Also, I didn’t have twenty dollars. I had a ten and a bunch of Kuwaiti dinars. The vendor looked askance at the dinars. The soldiers weren’t carrying much money, either. They came up with another six dollars among them.
I dickered with the beer merchant. He bargained. I chiseled. We bandied. A crowd gathered to watch. Some teenage Iraqi boys, seeing an Asian-American soldier in the truck, hollered, “Thigh Cone Do!” and exhibited awkward kicks.
The seller of beer and I concluded a deal of considerable financial complexity involving U.S. dollars and Kuwaiti dinars, with change in Iraqi dinars at an exchange rate determined by consensus among the purchase’s spectators.
Back in the truck, as we tried to catch up with our convoy, I did the math. I had bargained my way from $20 to a final price of $24.50. And the beer turned out to be nonalcoholic.
ON THE WEALTH OF NATIONS
(2007)
“He took only what his superficial mind had the power of taking, and the pith of Smith’s thinking must have been left behind. To borrow even a hat to any purpose, the two heads must be something of a size.”
—Adam Smith’s biographer, John Rae, on a previous author who attempted to appropriate Smith’s work
An Inquiry into An Inquiry into the Nature and Causes of the Wealth of Nations
The Wealth of Nations is, without doubt, a book that changed the world. But it has been taking its time. Two hundred thirty-one years after publication, Adam Smith’s practical truths are only beginning to be absorbed in full. And where practical truths are most important—amid counsels of the European Union, World Trade Organization, International Monetary Fund, British Parliament, and American Congress—the lessons of Adam Smith end up as often sunk as sinking in.
Adam Smith’s Simple Principles
Smith illuminated the mystery of economics in one flash: “Consumption is the sole end and purpose of all production.” There is no mystery. Smith took the meta out of the physics. Economics is our livelihood and just that.
The Wealth of Nations argues three basic principles and, by plain thinking and plentiful examples, proves them. Even intellectuals should have no trouble understanding Smith’s ideas. Economic progress depends upon a trinity of individual prerogatives: pursuit of self-interest, division of labor, and freedom of trade.
There is nothing inherently wrong with the pursuit of self-interest. That was Smith’s best insight. To a twenty-first-century reader this hardly sounds like news. Or, rather, it sounds like everything that’s in the news. These days, altruism itself is proclaimed at the top of the altruist’s lungs. Certainly it’s of interest to the self to be a celebrity. Bob Geldof has found a way to remain one. But, for most of history, wisdom, beliefs, and mores demanded subjugation of ego, bridling of aspiration, and sacrifice of self (and, per Abraham with Isaac, of family members, if you could catch them).
This meekness, like Adam Smith’s production, had an end and purpose. Most people enjoyed no control over their material circumstances or even—if they were slaves or serfs—their material persons. In the doghouse of ancient and medieval existence, asceticism made us feel less like dogs.
But Adam Smith lived in a place and time when ordinary individuals were beginning to have some power to pursue their self-interest. In the chapter “Of the Wages of Labour,” in book 1 of The Wealth of Nations, Smith remarked in a tone approaching modern irony, “Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society?”
If, in the eighteenth century, prosperity was not yet considered a self-evidently good thing for the lower ranks of people, it was because nobody had bothered to ask them. In many places nobody has bothered to ask them yet. But it is never a question of folly, sacrilege, or vulgarity to better our circumstances. The question is how to do it.
The answer is division of labor. It was an obvious answer—except to most of the scholars who had theorized about economics prior to Adam Smith. Division of labor has existed since mankind has. When the original Adam delved and his Eve span, the division of labor may be said to have been painfully obvious. Women endured the agonies of childbirth while men fiddled around in the garden.
The Adam under present consideration was not the first philosopher to notice specialization or to see that divisions are as innate as labors. But Smith was arguably the first to understand the manifold implications of the division of labor. In fact he seems to have invented the term.
The little fellow with the big ideas chips the spear points. The courageous oaf spears the mammoth. And the artistic type does a lovely cave painting of it all. One person makes a thing, and another person makes another thing, and everyone wants everything.
Hence trade. Trade may be theoretically good, or self-sufficiency may be theoretically better, but to even think about such theories is a waste of that intermittently useful specialization, thought. Trade is a fact.
Adam Smith saw that all trades, when freely conducted, are mutually beneficial by definition. A person with this got that, which he wanted more, from a person who wanted this more than that. It may have been a stupid trade. Viewing a cave painting cannot be worth three hundred pounds of mammoth ham. The mutuality may be lopsided. A starving artist gorges himself for months while a courageous oaf of a new art patron stands bemused in the Grotte de Lascaux. And what about that wily spear point chipper? He doubtless took his mammoth cut. But they didn’t ask us. It’s none of our business.
Why an Inquiry into Adam Smith’s Simple Principles Is Not an Inquiry, First, into Adam Smith
Most things that people spend most of their time doing are none of our business. This is a very modern idea. It makes private life—into which we have no business poking our noses—more fascinating than private life was to premoderns. Adam Smith was a premodern, therefore this book is organized in an old-fashioned way. The man’s ideas come first. The man comes afterward. Adam Smith helped produce a world of individuality, autonomy, and personal fulfillment, but that world did not produce him. He belonged to an older, more abstracted tradition of thought.
When a contemporary person’s ideas change the world, we want to know about that person. Did Julia Child come from a background of culinary sophistication, or did her mother make those thick, gooey omelets with chunks of Velveeta cheese and Canadian bacon like my mother? I fed them to the dog. What elements of nature and nurture, of psychology and experience developed Julia Child’s thinking? But there was a time when thinking mostly developed from other thinking. The thinkers weren’t thinking about themselves, and their audience wasn’t thinking of the thinkers as selves, either. Everyone was lost in thought. Dugald Stewart, who in 1858 published the first biography of Adam Smith, excused its scantiness of anecdote with the comment, “The history of a philosopher’s life can contain little more than the history of his speculations.”
Another reason to put the history of Adam Smith’s speculations ahead of the history of Adam Smith is that Smith led the opposite of a modern life—uneventful but interesting. He was an academic but an uncontentious one. He held conventional, mildly reformist political views and would have been called a Whig if he’d bothered to be involved in partisan politics. He became a government bureaucrat. Yet the essence of his thinking—“It’s none of our business”—will eventually (I hope) upend everything that political and religious authorities have been doing for ten thousand years. In a few nations the thinking already works. There are parts of the earth where life is different than it was when the original physical brute or mystical charlatan wielded his initial club or pronounced his initial mumbo jumbo and asserted his authority in the first place.
The whole business of authority is to interfere in other people’s business. Princes and priests can never resist imposing restrictions on the pursuit of self-interest, division of labor, and freedom of trade. Any successful pursuit of these means a challenge to authority. Let people take the jobs they want, and they’ll seek other liberties. As for trade, nab it.
A restriction is hardly a restriction unless coercion is involved. To go back to our exemplary Cro-Magnons, a coercive trade is when I get the spear points, the mammoth meat, the cave painting, and the cave. What you get is killed.
Coercion destroys the mutually beneficial nature of trade, which destroys the trading, which destroys the division of labor, which destroys our self-interest. Restrain trade, however modestly, and you’ve made a hop and a skip toward a Maoist Great Leap Forward. Restrain either of the other economic prerogatives and the result is the same. Restrain all three and you’re Mao himself.
Adam Smith’s Less Simple Principles
It is clear from Adam Smith’s earlier (and more celebrated in its time) book, The Theory of Moral Sentiments, that Smith was a moral advocate of freedom. But the arguments for freedom in The Wealth of Nations are almost uncomfortably pragmatic. Smith opposed most economic constraints: tariffs, bounties, quotas, price controls, workers in league to raise wages, employers conniving to fix pay, monopolies, cartels, royal charters, guilds, apprenticeships, indentures, and of course slavery. Smith even opposed licensing doctors, believing that licenses were more likely to legitimize quacks than the marketplace was. But Smith favored many restraints on persons, lest brute force become the coin of a lawless realm.
In words more sad and honest than we’re used to hearing from an economist, Smith declared, “The peace and order of society is more important than even the relief of the miserable.” Without economic freedom the number of the miserable increases, requiring further constraints to keep the peace among them, with a consequent greater loss of freedom.
Smith was also aware that economic freedom has its discontents. He was particularly worried about the results of excess in the division of labor: “The man whose whole life is spent in performing a few simple operations … generally becomes as stupid and ignorant as it is possible for a human creature to become.” We’ve seen this in countless politicians as they hand-shake and rote-speak their way through campaigns. But it’s worth it. Productivity of every kind can be increased by specialization. And the specialization of politics at least keeps politicians from running businesses where their stupidity and ignorance could do even greater harm to economic growth.
Adam Smith’s More Complicated Principles
Smith’s logical demonstration of how productivity is increased through self-interest, division of labor, and trade disproved the thesis (still dearly held by leftists and everyone’s little brother) that bettering the condition of one person necessarily worsens the condition of another. Wealth is not a pizza. If I have too many slices, you don’t have to eat the Domino’s box.
By proving that there was no fixed amount of wealth in a nation, Smith also proved that a nation cannot be said to have a certain horde of treasure. Wealth must be measured by the volume of trades in goods and services—what goes on in the castle’s kitchens and stables, not what’s locked in strongboxes in the castle’s tower. Smith specifies this measurement in the first sentence of his introduction to The Wealth of Nations: “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes.” Smith thereby, in a stroke, created the concept of gross domestic product. Without GDP modern economists would be left with nothing much to say, standing around mute in ugly neckties, waiting for MSNBC to ask them to be silent on the air.
If wealth is all ebb and flow, then so is its measure, money. Money has no intrinsic value. Any baby who’s eaten a nickel could tell you so. And those of us old enough to have heard about the Weimar Republic and to have lived through the Carter administration are not pained by the information. But eighteenth-century money was still mostly made of precious metals. Smith’s observations on money must have been slightly disheartening to his readers, although they had the example of bling-deluged but impoverished Spain to confirm what he said. Gold is, well, worth its weight in gold, certainly, but not so certainly worth anything else. It was almost as though Smith, having proved that we can all have more money, then proved that money doesn’t buy happiness. And it doesn’t. It rents it.
Adam Smith’s Principles: Their Principal Effect
The Wealth of Nations was published, with neat coincidence, in the very year that history’s greatest capitalist nation declared its independence. And to the educated people of Great Britain the notion of the United States of America was more unreasonable, counterintuitive, and, as it were, outlandish than any of Adam Smith’s ideas. Wealth was not light reading, even by the weightier standards of eighteenth-century readers. But it was a succès d’estime and something of an actual success. The first edition sold out in six months, shocking its publisher. Other than this, there is no evidence of Smith’s work shocking his contemporaries.
For instance, Smith’s suggestion of the economic primacy of self-interest didn’t appall anyone. That self-interest makes the world go round has been tacitly acknowledged since the world began going round—a little secret everyone knows. And the worrisome thought that money is imaginary had been worried through by Smith’s good friend David Hume a quarter of a century earlier. Indeed the fictitious quality of money had been well understood since classical times. In the two hundred years between the reigns of the emperors Nero and Gallienus, imperial fictions reduced the silver content of Roman coinage from 100 percent to none.
But, though its contents didn’t make people gasp, something about The Wealth of Nations was grit in the gears of Enlightenment thinking. And that something is still there, grinding on our minds. I could feel it myself when the subject of self-interest came up.
Gosh, I’m not selfish. I think about the environment and those less fortunate than me. Especially those unfortunates who don’t give a hoot about pollution, global warming, and species extinction. I think about them a lot, and I hope they lose the next election. Then maybe we can get some caring and compassionate people in public office, people who aren’t selfish. If we elect an environmentalist mayor, the subdivision full of McMansions that’s going to block my view of the ocean won’t get built.
