Competitive Enterprise Institute Forgets The Message Of Adam Smith

Earlier today, President Obama's Council of Economy Advisers released its first annual report.  The report highlighted both the strengths and weaknesses of the economy and offered an outlook for the future. The conclusion was grim: the economy would continue to face high unemployment in the years ahead.

The Competitive Enterprise Institute's Fran Smith responded with a quick analysis of the report's section on international trade.  On the one hand, she praises the chapter because it "provides a strong defense of open trade, following the theories of both Adam Smith and David Ricardo regarding specialization and comparative advantage" yet on the other hand, assails it for correctly mentioning the unfair tendencies of international trade and for offering suggestions for how to ensure that the benefits of trade are "shared sufficiently." 

To Fran Smith, former head of the now defunct Consumer Alert, an industry-funded advocacy group received hundreds of thousands of dollars from ExxonMobil to in order to question the science behind climate change, "shared sufficiently" is of course as Marxist as "dictatorship of the proletariat." 

But her usage of Adam Smith is very selective.  Adam Smith believed that an economy operates best when individuals work in their own self-interest. But his conception of self-interest was radically different from the unscrupulous rugged individualism that modern-day free-market enthusiasts espouse.  In fact, Smith's Wealth of Nations, the handbook of capitalism, is chock-full of language that would these days put his face on one of Glenn Beck's chalkboards.  Here are but a few relevant passages from Wealth of Nations:

"No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.  It is but equity, besides, that they who feed, clothe and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed and lodged."
-- An Inquiry into the Nature and Causes of the Wealth of Nations

"Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all."
-- An Inquiry into the Nature and Causes of the Wealth of Nations

"It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
-- An Inquiry into the Nature and Causes of the Wealth of Nations

And that's just from the more market-friendly book.  The Theory of Moral Sentiments, Smith's treaties on ethics, is even more blasphemous.

"This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.  That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often more unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages."
-- The Theory of Moral Sentiments