There are three reasons I love this review of P.J. O'Rourke's new book, which riffs on Adam Smith's "The Wealth of Nations" so you don't have to trudge through all 900 pages yourself:
1. Its title: "Capitalist Punishment"
2. Its author (Allan Sloan, a colleague of mine)
3. These paragraphs, which are essentially a condensation of Sloan's condensation of O'Rourke's condensation of Smith:
Smith's thesis, which still resonates today, is that setting people free to pursue their own self-interest produces a collective result far superior to what you get if you try to impose political or religious diktats. Free people allowed to make free choices in free markets will satisfy their needs (and society's) far better than any government can. Finally, Smith believed passionately in free trade, both within countries and between them. He felt that allowing people and countries to specialize and to trade freely would produce enormous wealth, because freeing people and nations to do what they do best will produce vastly more wealth than if everyone strives for self-sufficiency.
Now, let's reduce this theory to microeconomic reality. I can go to my local hardware store, and for $1.79 (plus sales tax), I can purchase a pound of eight-penny nails manufactured in China, thousands of miles from my home. It would take me forever and a day to manufacture my own nails. Instead, I get paid to write articles, which is my specialty, and I can buy a pound of nails for the economic equivalent of a small amount of my time. The store owner, who specializes in helping people like me who'd rather get cheerfulness and good service than go to Home Depot, can use her profit to buy a copy of The New York Times, which helps give the paper the money to pay me for writing about O'Rourke writing about Smith writing about what makes nations wealthy. See? Isn't that simple?
This all works out fine for O'Rourke and me and whoever is running the nail-making machine in China; he or she is presumably better off doing that than being a peasant farmer or an unemployed urbanite. However, my ability to purchase cheap China-made nails is unlikely to have worked out well for the people who once made nails in the United States. This is Adam Smith's famous hand of the market at work: it pats specialists like O'Rourke and me on the head, while it gives unemployed blue-collar workers in the Midwest the middle finger.
The first chapter of O'Rourke's book is here for your free reading pleasure.