Noah Smith on Adam Smith

In his substack Noahpinion, Noah Smith offers five quotes from The Wealth of Nations in order to show that Adam Smith was not really a wicked conservative (true) but a modern progressive (false), opposed to property and inequality and supporting progressive taxation. To support the latter claim, Noah offers:

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.

If Noah had actually read the book he is quoting he would know that Smith starts his discussion of taxation with a series of maxims, of which the first is:

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.

Tax burden in proportion to revenue is a flat tax. The context of Noah's quote is a discussion of a tax on the rent of houses, where the fact that it falls more than proportionally on the rich is a disadvantage but not a decisive one. Saying something is “not very unreasonable” does not imply it is desirable.

Another quote Noah offers to show that Adam shares the views of a modern progressive is:

Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.

Noah interprets this as “Adam Smith decries the existence of inequality and poverty, blames property rights for this inequality …”

In fact, the passage continues:

The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security.

...Where there is no property, or at least none that exceeds the value of two or three days' labour, civil government is not so necessary.

Smith isn’t decrying the existence of inequality, he is arguing that the existence of inequality makes government necessary to protect property.

A third quote:

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.”

Noah does not quote the next two sentences:

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.

Smith isn’t arguing for antitrust law, he is arguing against government doing things that encourage cartel formation, the 18^th century equivalent of the 20^th century cartelization of the airlines by the CAB.

Noah’s conclusion:

Adam Smith decries the existence of inequality and poverty, blames property rights for this inequality, advocates progressive taxation as a remedy, and is innately suspicious of profit. He sounds more like Thomas Piketty than Milton Friedman.

It is true that Smith, like most people, decries poverty. All of the rest of the sentence is false. Adam Smith was an 18^th century radical who supported laissez-faire in large part because he thought it resulted in less poverty than the alternative, not the 21^st century progressive of Noah Smith’s imagination.

The important lesson from this is the danger of believing things you want to believe on the basis of quotations selected by people who share your views. To have written what he did after actually reading The Wealth of Nations Noah would have to be deliberately dishonest, which, so far as I can tell, he is not. He is, however, saying things in public which he has no good reason to believe are true — and are not.

This not the first, nor the second, time that I have found someone complaining that other people misrepresent Adam Smith while himself doing do.