Reference News Network, March 15 report: The U.S. "New York Times" website published an article titled "This Is the Moment Adam Smith Has Been Waiting For" on March 10. The author is Jason Furman, former chairman of the U.S. Council of Economic Advisers. The following is a compilation of the article:
For many Americans, the current economic situation is unsettling, and the future seems even worse. They direct their anxiety toward other countries, believing that those countries are taking advantage of us through trade; or they direct their anxiety toward artificial intelligence, as it has the potential to affect employment. The response from lawmakers is to propose antitrust policies, industrial policies, and trade policies. However, an intriguing phenomenon is that some of the clearest guidance for the current situation comes from a book published 250 years ago: Adam Smith's "The Wealth of Nations."
Smith's views are widely quoted but also widely misunderstood. Conservatives often simplify his views to advocate for laissez-faire, arguing that he promoted the market's "invisible hand" as the sole force guiding economic development. Liberals often find him unrealistic, dismissing him as an outspoken proponent of antisocial greed. In fact, the real situation behind these two perspectives is more interesting and more relevant to the complex issues we face today.
People instinctively believe that the correct way to respond to technological change is to try to regulate the change. But Smith understood that no one's mind can design or direct this complex network of specialization. Division of labor goes far beyond the scope of a single factory, linking farms with towns and one country with another. The division of labor that brings us artificial intelligence is even more unimaginable, incomprehensible, and uncontrollable.
This collaboration arises from individuals' pursuit of their own interests.
Although Smith's views have been misinterpreted too many times, he certainly did not simply praise greed. Before publishing "The Wealth of Nations," Smith wrote "The Theory of Moral Sentiments," emphasizing sympathy, moral judgment, and our desire for others' approval. However, Smith was also a realist. In the business world, Smith believed that policies must be based on people's actual behavior, not on how we expect them to act. In "The Wealth of Nations," he wrote, "Our dinner does not come from the benevolence of the butcher, brewer, or baker, but from their regard for their own interest. We address their benevolence, but we appeal to their self-interest; we never talk to them about our needs, but about what is in their interest."
Therefore, Smith questioned structures that hinder individuals' freedom to pursue their own interests—such as government preferences, employers lowering wages, and institutions limiting competition. These criticisms seem to hit the mark of today's issues. From occupational licensing regulations that restrict industry access to regulatory barriers that limit the construction of new hospitals or housing, modern economies still protect established interests at the expense of consumers and workers. Of course, we now understand better than Smith that companies can generate persistent monopoly power. This requires active antitrust measures to maintain competition, because we cannot simply assume that competition will emerge automatically.
Smith used his strongest anger against the dominant economic ideas of his time: mercantilism. Mercantilism measured success by gold reserves and trade surpluses, not by people's well-being. Mercantilism served special interest groups at the expense of the public good, favoring tariffs to block imports and subsidies to promote exports. Recently, as I observe economic decisions, I find myself repeating the points Smith first made 250 years ago: trade deficits themselves are not bad, imports are a source of real benefits for consumers, and trade expands the division of labor, increasing productivity and living standards. Today, we again clearly see an excessive focus on bilateral trade balance and micro-management of industries in our tariff policies. This would be a serious mistake in Smith's view. The result is fewer choices, higher prices, and slower growth—exactly the opposite of what these policies claim to ensure.
Now, when people's confidence in the market is decreasing and their confidence in the government is being tested, Smith's insight lies in constraining power, maintaining competition, and always keeping the focus on where Smith has always insisted: improving the lives of ordinary people. (Translated by Liu Ziyan)
Original: toutiao.com/article/7617391799950197302/
Statement: This article represents the personal views of the author.