PJ O'Rourke provides wisdom via Adam Smith (HT: Mark Kobey):
The free market is dead. It was killed by the Bolshevik Revolution,
fascist dirigisme, Keynesianism, the Great Depression, the second world
war economic controls, the Labour party victory of 1945, Keynesianism
again, the Arab oil embargo, Anthony Giddens’s “third way” and the
current financial crisis. The free market has died at least 10 times in
the past century. And whenever the market expires people want to know
what Adam Smith would say. It is a moment of, “Hello, God, how’s my
atheism going?”
Adam
Smith would be laughing too hard to say anything. Smith spotted the
precise cause of our economic calamity not just before it happened but
232 years before – probably a record for going short.
“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant,” Smith said in The Wealth of Nations.
“If it is lett [sic] to a tenant for rent, as the house itself can
produce nothing, the tenant must always pay the rent out of some other
revenue.” Therefore Smith concluded that, although a house can make
money for its owner if it is rented, “the revenue of the whole body of
the people can never be in the smallest degree increased by it”. [281]*
Smith was familiar with rampant speculation, or “overtrading” as he politely called it.
The rest is equally astute. Read it.
