On the Wealth of Nations by P.J. O'Rourke

Author:P.J. O'Rourke
Language: eng
Format: epub
Publisher: Atlantic Books Ltd

So maybe we will end up in armed conflict with China – the Consumer Electronic Goods Wars, with Chinese gunboats cruising the fountains in our malls. But even if war comes we shouldn't worry that the Chinese have all our money. 'Fleets and armies are maintained, not with gold and silver,' Smith wrote, 'but with consumable goods.'20 Oops, we should worry. The Chinese are making all our consumable goods. Our unfavorable balance of trade with China has destroyed our industrial infrastructure. We don't have the factories and skilled workers to fight a major war.

And yet, as of this writing, America is fighting a war anyway. And it's turned out to be fairly major. And America's helicopter gunships are not being assembled in Guangdong Province.

Military power depends on economic success. Economic success depends on freedom. 'No regulation of commerce,' Smith wrote, 'can increase the quantity of industry in any society … It can only divert a part of it into a direction into which it might not otherwise have gone.'21 Trust to capitalism that industry would have gone in that direction already, if more economic success was to be found there. Schumer and Graham should shut up. That was Smith's most important public policy recommendation for achieving economic success: 'The law ought always to trust people with the care of their own interest, as … they must generally be able to judge better of it than the legislator can do.'22

A negative balance of trade, Smith declared, does not invalidate that rule:

A nation may import to a greater value than it exports for half a century … even the debts too which it contracts in the principal nations with whom it deals, may be gradually increasing; and yet its real wealth, the exchangeable value of the annual produce of its lands and labour, may, during the same period, have been increasing in a much greater proportion.23

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