I just came across a blog which contained the following:
The rich should contribute to the public expense, not only in proportion to their revenue, but something more than that proportion.
Adam Smith, Wealth of Nations
The actual quote is:
It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
Not only has the blogger removed without notice the first seven words of the sentence, sharply changing its meaning, he has capitalized the word that starts his truncated sentence, thus pretending that what he is giving is the whole sentence.
Of course, the dishonesty is only in the blogger who first posted the supposed quote—various others seem to have copied it from him. I am not providing links to any of them, since I don't think they deserve the attention; readers who are curious should be able to find them easily enough.
I put a comment on one blog that had the quote, sourced to another. I'll see if the blogger is honest enough to let it show up.
I've commented in the past on the practice of ascribing to Smith views he did not hold, such as support for public schooling and progressive taxation, supported by selective quotation. Most of those are probably honest errors by people who didn't actually read the text with any care, but this looks like deliberate dishonesty.
For those who are curious, what Smith is saying in the quote is that a particular tax, desirable on other grounds, should not be rejected just because it falls more heavily on the rich. His first maxim of taxation, however, at the beginning of the relevant section of the book, is that tax burden should be proportional to income.
Perhaps I'm missing something, but what do you think is the difference between "the rich should" and "it is not very unreasonable that the rich should".
They seem to effectively say the same thing to me... I'm not seeing the change in meaning.
Don't both exhibit a support for progressive taxation?
If you google the quote your version comes up a lot... I'm not sure why they lopped it off. It doesn't seem to change anything substantive to me. Which I guess means I think you're right on a technicality :) but it's hard for me to think they're being "dishonest" if the exact same point from Smith is being communicated (and they didn't change anything in what they did quote, obviously).
Could this be an edition thing? It looks like the end of the sentence is a little different as well.
juss sum standard faggot liberal thinking that his idea of what should be need necessarily be progogated and made real, by moral authority, his moral authority. from there, it's only a matter of the acquisition of force. evil.
"It is not very unreasonable that the rich should" means "the fact that this falls more heavily on the rich isn't a strong reason to reject it." That's quite different from saying that it's desirable.
Smith's first maxim of taxation is:
"I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."
Another classic cherry-picked quote from Wealth of Nations:
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Sounds like he's railing against business, right?
In full context, it's clear that he's actually railing against laws compelling membership in trade unions.
A fixed-rate income tax would be a wonderful improvement over what we now have. You could withhold at the source from salaries, dividends, and interest. Even capital gains on stocks could largely be withheld at the source, because the stock brokers usually know your basis price. After all these withholdings, there would be no paperwork to fill out. No audits on these items. No one in jail because the IRS found out that they didn't report and pay up. Much (but not all) of the whole bureaucratic mess of taxation would be eliminated. In fact, think how silently Social Security operates. Yep, they withhold at the source at a fixed rate. Taxation at a uniform rate would also largely disable the massive govt use of the tax system to compel various kinds of behavior. And people in the lower income brackets would have a real incentive to minimize the scope of government, seeing as how they would be funding it on the same basis as the "rich". It would work a political revolution.
How is the removal of "It is not very unreasonable that" sharply changes the meaning of the proposition? It is a qualifier that expresses a degree of certainty. People wrote like that at the time to express high certainty. Today we do not pre-qualify high levels of certainty. Language changes. You read Bible in Aramaic?
That’s really interesting. You caused me to read the paragraphs before and after that famous quote. My take is that you’re partly right: that it’s about members of a trade getting together--what we would now call unions--and it’s also about companies getting together. Do you disagree?
I agree with your interpretation of the meaning of the correct quote, and how the truncated version changes that meaning. But even the correct version has Smith conceding that "something more than in that proportion" is also not unreasonable. Something that goes beyond his first maxim.
Just to chime in on how eliding the first seven words changes the meaning :
In the original quote the word "should" is being used in a (somewhat old-fashioned) subjunctive sense -- it could be replaced with "would" or "might" without changing the meaning. A straightforward reading of the out-of-contex quote makes "should" look flatly prescriptive -- as though it could be replaced with "ought" which would be a simply *wrong* transliteration of the original.
He doesn't say it is not unreasonable. He says it is not *very* unreasonable.
Consider the difference between "cabbage doesn't taste very bad" and "cabbage tastes good."
I'm not entirely sure. I don't have the full historical context, but it seems to me that he's using the term "incorporation" to refer to something akin to the guild system. He mentions things like apprenticeship requirements and limits on the numbers of apprentices which a master may take on, and fines for practicing a trade without the permission of the corporation.
I don't see anything that refers unambiguously to an association of firms rather than a union of individual tradesmen. I have no doubt based on this that Smith would object to laws requiring membership in such an association, but I don't know whether such laws actually existed at that time.
David- Have you ever thought about doing a book club on your blog, like the one Bryan Caplan did for Rothbard's For a New Liberty (http://econlog.econlib.org/archives/2009/01/econlog_book_cl.html), or or the one Tyler Cowen did for the General Theory?
It would be interesting to read through the Wealth of Nations with you and read your commentary as we go along. I've always wished bloggers would do more of these.
On my reading, the use of "very" here is equivalent to "wildly". And so the statement, "it is not wildly unreasonable that..." versus "it is not unreasonable that..." merely changes the degree of his concession, but not its essence.
On the book club idea ... .
It sounds like a lot of work. You can fairly detailed notes on the book in my lecture notes from teaching history of economic thought:
I don't understand your point. One could say "it is unreasonable, but not very unreasonable, that ... ." Doesn't that imply that "it is not very unreasonable that" is essentially different from "it is not unreasonable that"?
Yes, the two statements are different, but as I thought I had clearly explained, in the context of Smith's quote, they are different only in degree, not in essence.
Again, on my reading, the "It" that Smith is conceding as not very (wildly) unreasonable, is the claim that the rich should contribute more than some proportion of their revenue.
Saying a claim (or argument) is not very unreasonable means it's not so wild as to not merit consideration.
Of course just conceding that a claim merits consideration doesn't mean one agrees with it, but without the benefit of his elaboration it doesn't mean Smith didn't agree. And if he did agree it would exceed his first maxim.
For all I know, Adam Smith wrote somewhere that "cabbage tastes good". Ask me if I care one way or t'other.
Adam Smith was an exceptionally smart guy, but even middling modern-day humans know some things he didn't. Never mind electricity and DNA; we know about 250 years more of history than he did. If his words still seem wise today, it's because they still make sense in light of our additional knowledge. If we like (or dislike) progressive taxation it's because WE like it (or dislike it), not because we are slaves to the exact nuances of Adam Smith's tastes.
Actually, I should speak only for myself: whether the Right or the Left throws an Adam Smith quote at me; whether the quote is in or out of context; whether in fact it came from Adam Smith or Karl Marx or Joe the Plumber; my first inclination is to ask "Does this make sense?" rather than to say "If Adam Smith wrote it, it must make sense."
On taxation in particular, I think it makes more sense to tax wealth than to tax income. I think that's a "not unreasonable" position because here in the US that's the most popular form of taxation at the local level -- where Government is allegedly closest to The People. We tend to tax only a particular form of wealth at the local level, of course, namely real estate. But the mere fact that some form of wealth is taxed by almost every local government in the US seems adequate justification to call wealth taxation "not unreasonable" as a concept.
Whether taxing wealth instead of income would make sense at the national level is still a valid question. No doubt Adam Smith addressed it. No doubt he said something about it that would "make sense" to me, possibly even enough sense to change my mind. If an Adam Smith quote should persuade me to change my mind, and then it turns out that the quote was "out of context", should I remain persuaded? Or not?
Tony P. might wish to note that Dr. Smith wrote that the ground rents of land were a still more suitable basis for taxation than rents (corresponding roughly to property values) in general. There are, IMHO, good reasons to prefer land value taxation as the source of government revenue.
Of course, we are not obliged to believe this because Adam Smith said a few words more or less along those lines, or even because Thomas Paine and Henry George, among others, said much more. The key question is what the merits of the case are.
Adam Smith had some very profound insights.
(1) The benefits of free trade with other countries (comparative advantage).
(2) The fact that when each individual pursues his own interest under the rule of law, the material well-being of society is maximized. (I believe this is encoded as the First Theorem of Welfare Economics.) In other words, calling other people selfish shows that YOU are an ignoramus. Contrarily, direct attempts to help others often backfire.
(3) The enormous benefits of a flat-tax system.
Adam Smith was ahead of his time. He's still way ahead of our current president.
Being selfish and controlling your own resources are two completely orthogonal things.
I can have control over my labor and my property, and then choose to spend the money on completely unselfish ends, or I can choose to spend the money on selfish ends.
Some acts go against society's morals in a way that would prompt people to call them selfish acts, even if they are fully legal.
There is no evidence that when each individual pursues his own interest under the rule of law, the material well-being of society is maximized. So far as we know, that does work better than (say) communism, but that does not mean it is optimal.
<< Some acts go against society's morals in a way that would prompt people to call them selfish acts, even if they are fully legal. >>
The assumption seems to be that you adjust the law so that conforming with the law automatically means you can't violate the laws morality. Of course, we've been working on this project for thousands of years.
<< There is no evidence that when each individual pursues his own interest under the rule of law, the material well-being of society is maximized. >>
When each individual is free, within the constraints of the law, to employ his labor and capital in a way that maximizes his income, society's total income is also maximized. Individuals taking advantage of their best opportunities simultaneously increase their own income and the total income of society. In other words, when you do what's best for you, you do not reduce the total. Essentially, your selfish actions are not anti-social. This is a mathematical proposition that can be proved under a variety of assumptions.
How is Smith's first maxim justifiable?
<< How is Smith's first maxim justifiable? >>
Freeing up trade almost always increases a country's total material well-being. The individual trades with others because it's vastly more efficient than if he tried to do everything himself. I think the same holds for various countries. A given country can concentrate on what it does most efficiently, and trade with others to get the rest.
However, there are cases where government intervention into trade can increase a country's income. For example, suppose America was the only country in the world that could produce food. In the absence of govt intervention, Americans and everyone else in the world would pay approximately the same price for food. However, in this kind of situation, the US govt could intervene and charge an export tariff on food. The foreigners would have no choice but to pay the higher price. This could increase America's total income. However, I believe situations such as this are rare. Still, the theoretical possibility makes analysis more difficult, in the general case. In other words, you can't flatly say that govt intervention will always cause reduction in total income.
I was asking why people should pay taxes in proportion to their revenue.
You would have to put that question to Mr. Smith. The point of my post wasn't that Smith was or was not correct but that his views were being misrepresented.
Yes, David, that was the point of your post. But what's the point of your point?
I mean, suppose it turns out that Jesus actually did say: "Blessed are the cheesemakers". Would it cause anybody to rethink his views on either peace or dairy products? Should it?
What do you mean "how is it justifiable"? The justification is right there in the text: "that is, in proportion to the revenue which they respectively enjoy under the protection of the state". Does that not seem obviously just to you? What other principle do you think is more justifiable, and why?
nice posting.. thanks for sharing.
What Dr. Friedman has identified is an instance of eliding a litotes. Smith was not asserting a principle. He was saying that the principle he rejects isn't as horrible as some other principles he rejects.
The litotes allows understatement. But it's effect is not always just rhetorical, and not always just an example of habitual irony. It allows the speaker to assert a range of values. Sure: "Not bad" may often mean simply "good"; but "not unkind" is often a way for subtle people to say "perhaps kind or perhaps indifferent."
Adam Smith had a subtle mind. His use of the litotes is just one of many signs of his subtlety.
Auto-correct added an apostrophe to my "its" above. For that reason I never apostrophize auto-correct.
The Anonymous comment three above this one is spam.
Here is another good Adam Smith quote taken out of context:
…every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. BY PREFERRING THE SUPPORT OF DOMESTIC TO THAT OF FOREIGN INDUSTRY, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
This quote is taken out of context in order to argue that Smith was an advocate of protectionism. You can easily find this on the web as well...
Socialists taking Smith out of context and portraying him as some sort of left wing revolutionary?
This is why we have market "extremists", folks. They are needed for those who lack nuance, so that there is no room for misinterpretation.
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