“Whatever Happened to Adam Smith?”

That’s the title of a recent blog post by Matt Ridley in which he discusses the distressing rise of protectionism. Here’s an excerpt:

Last week both Hillary Clinton and Donald Trump set out their economic policies in set-piece speeches. Mr Trump’s … involves a trade policy designed to punish consumers and protect producers, a recipe for recession. But Mrs Clinton’s … was even worse. She too wants to pursue the old mercantilist fallacy of restricting imports and helping exports, but while spending more money, unleashing a blizzard of new regulations and doubling the minimum wage.

Never have the American people been faced with such paternalist, protectionist and authoritarian pair of options. The United States, long a beacon of economic libertarianism, is now being offered a choice between two forms of growth-killing, deficit-boosting, zero-sum, big-government economic nationalism. Long gone are the days when both Republicans and Democrats subscribed to some form of free-market economic philosophy while differing mainly over how to fight the cold war and the culture wars….

It is the same around the world. Economic liberty is out of fashion. There is almost no country trying the sort of free-market reforms – tax cuts, deregulation, privatisation – that so many countries achieved in the 1980s and 1990s. China and Russia, liberalised briefly in the late twentieth century, seem to be heading back to Big Brother. Brazil has seen its market reforms congeal into crony-corporatism. India and Japan are hardly paragons of small-government economic liberalism. Even here in Britain, I doubt Theresa May took Hayek’s “Road to Serfdom” to Switzerland as holiday reading.

Is Adam Smith’s influence fading? This is what the sage of Kirkcaldy said: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.” …

There is a long list of countries that were transformed by free-market reforms: post-war Germany under Ludwig Erhard, China under Deng Xiaoping, New Zealand under Roger Douglas, America under Ronald Reagan, Britain under Margaret Thatcher, Estonia under Mart Laar, India under Manmohan Singh. South Korea, Taiwan, Vietnam, Peru… Or Peel and Gladstone’s Britain, seventeenth century Holland, the city states of Renaissance Italy, Song dynasty China, ancient Athens, Tyre and Sidon under the Phoenicians. In every case, trade did that.

Hongkong is probably the most successful economy of the last half century, going from abject poverty to opulence without a natural resource of any kind. It did so largely because one man, Sir John Cowperthwaite, the financial secretary of the colony in the 1960s, insisted on minimal government interference in commerce, on low taxes and little regulation….

By contrast, I can point you to a list as long as your arm of countries ruined by too much government. Venezuela, North Korea, Belarus and Zimbabwe are top of the list today, but Hitler, Mao, Stalin and Pol Pot (plus most empires) are egregious reminders that government is a more dangerous toy than markets ever could be.

Why is economic libertarianism out of favour? Unlike welfare-socialism and crony-capitalism, it fails to create vested interests dependent on its subsidies. The whole point of running for president is to be able to hand other people’s money to your favourite causes and generate grateful patronage. Laissez-faire robs you of that treat.

Jon Guze / Director of Legal Studies

Jon Guze is the Director of Legal Studies at the John Locke Foundation. Before joining the John Locke Foundation, Jon practiced law in Durham, North Carolina for over twent...

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