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P.J. on Trade

And Hart on Ayn Rand, Adam Smith, and Beowulf.



Neither my children nor I were ever introduced in school to the writings of Ayn Rand and Adam Smith. Given that the singular objective of most educators is to indoctrinate the malleable minds of kids into their own semi-socialist thinking, they don't expose kids to libertarian or capitalistic writers. So, as with most life lessons of value, I sought out these writers on my own. They have served me well, certainly better than Beowulf. (What was that all about? Requiring students to read it is like academic hazing.)

The practical thinking of those who believe in the individual has always appealed to me. Individuals fuel this country and always will. Today, there is no better proponent of this than the libertarian writer P.J. O'Rourke. I was fortunate to be able to spend two hours with him at a Cato Institute event in Florida recently. He can boil complicated subjects down to easily understood prose, and he does so with humor.

His latest endeavor is a reworking of Adam Smith's 1776 classic, The Wealth of Nations. Smith's groundbreaking book provided one of the best-known intellectual rationales for capitalism and free trade as a path to the betterment of all. He profoundly influenced the writings of later economists, and his observations of 231 years ago are as true today as they were then. O'Rourke's achievement is to have taken Smith's 900-page "doorstopper" and reworked it into modern terms and a manageable 227 pages.

Smith viewed the freedom of consumers to choose and merchants to provide goods and services as essential to the wealth of all -- thus the title. Unfettered capitalism, unobstructed by tariffs, taxes, government regulation, plutocracy, and the like, benefits us all, Smith says. Smith even had the thought-provoking idea that government should not even license doctors, as it did more to validate quacks than protect the informed public. Since cutting-edge leech medicine was practiced then, it was probably a good idea.

Trade, when conducted freely, will in the aggregate serve mankind well. And to paraphrase the much-maligned line from the film Wall Street uttered by Gordon Gekko, "greed is good." Or better put, enlightened self-interest, in a free society, is good. Whether we admit it or not, self-interest drives us all. Not as blatant selfishness or greed but as a natural human need to provide for one's family and to be a productive member of society.

Smith wrote: "It isn't from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." If a car dealer or televangelist who is taking our check tells you that he is doing so "for the greater good," watch your wallet.

Put another way, government thinks it has to regulate everything for us because we are stupid. Politicians pat themselves on the back for doing nothing that free markets would not otherwise accomplish for us.

It is not the USDA that keeps your local supermarket from trying to make a little more money by selling tainted meat. It is their knowledge that their reputation and their future profits will be adversely affected by such. I tell the people who work for me "to be long-term greedy." Think of your reputation as your stock and trade, and do nothing to clients that is not in their best interest -- and therefore, ultimately, your own. The old saying that you can shear a sheep every month but you can only slaughter it once applies here. Businesses that do not do that, in a world with a vigilant free press, will not survive.

The framers of our constitution were clearly for less government. Modern politicians of both parties have forgotten that. As O'Rourke said, "The U.S. Constitution is less than a quarter the length of a Toyota Camry owner's manual, and it has managed to keep 300 million of the world's most unruly, passionate, and energetic people safe, prosperous, and free."

In the world today, where the right wants to tell you what you can do in the bedroom and the left wants to tell you what car you can drive and how to spend your money, it is important that the words of Adam Smith are heard again.

Ron Hart is a columnist and investor in Atlanta. He worked for Goldman Sachs and was appointed to the Tennessee Board of Regents by Lamar Alexander. His e-mail:

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