“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” –Adam Smith
Adam Smith, an influential philosopher and profound political economist was born 292 years ago today. Before President Calvin Coolidge adopted “laissez-faire” economic policies and long before the American economy had a chance to flourish under the supply-side policies of President Ronald Reagan, the foundation of a sound and fruitful economic policy plan was laid down by a young Adam Smith.
Nicknamed the “father of economics,” Smith’s work “The Inquiry into the Nature and Causes of the Wealth of Nations,” often shortened to “The Wealth of Nations,” is recognized as the first modern work of economics. “The Wealth of Nations” includes complete theories of society, ethics, politics, law and theology.
At the time Smith wrote “The Wealth of Nations” the country’s economic prosperity was defined by the country’s inventory of gold and silver. Criticizing this, Smith came to his “invisible hand” metaphor. Giving credit to entrepreneurs, Smith recognized that the hard work of individuals would benefit the common good of the country as a whole, if only the government would let the “invisible hand” of the market do its own thing and grow without government intervention.
Misguided economists will say that government interference in market regulation is necessary due to the selfishness of consumers. In saying “Smith’s assertion was that purely selfish individuals are led by an invisible hand to produce the greatest good for all,” they also argue that “macroeconomics is dead.” While critiques of Smith’s theory will stand against those with common sense and logic in saying that the invisible hand of the market doesn’t exist, Gov. Mitt Romney has stated, “the invisible hand of the market always moves faster and better than the heavy hand of the government.”
Take for instance, the recent Environmental Protection Agency (EPA) hydraulic fracturing study. The study has dismayed many bureaucrats and their long fight to put an end to hydraulic fracturing, stating that it pollutes drinking water. The EPA study found no evidence that hydraulic fracturing has “led to widespread, systematic impacts on drinking water resources in the United States” and insists this process is perfectly safe. The continuation of this process will in turn give more access to oil and natural gas which keeps gas prices at a lower cost, keeping more money in the pockets of Americans and boosting the economy. As Romney stated, the heavy hand of the government has swept in on this harmless procedure faster and heavier than the invisible hand of the market ever could.