What is prudence in the conduct of every private family,” said Adam Smith’s strong common sense in reply to the sophists of his time, “can scarce be folly in that of a great kingdom.
It is as foolish to try to preserve obsolescent industries as to try to preserve obsolescent methods of production: this is often, in fact, merely two ways of describing the same thing.
Nothing is easier to achieve than full employment, once it is divorced from the goal of full production and taken as an end in itself.
It is exports that pay for imports, and vice versa. The greater exports we have, the greater imports we must have, if we ever expect to get paid.
The interest rate is merely the special name for the price of loaned capital. It is a price like any other.
In sum, so far as the politicians are concerned, the lesson that this book tried to instill more than thirty years ago does not seem to have been learned anywhere.
For it is the very commodities selected for maximum price-fixing that the regulators most want to keep in abundant supply. But when they limit the wages and the profits of those who make these commodities, without also limiting the wages and profits of those who make luxuries or semiluxuries, they discourage the production of the price-controlled necessities while they relatively stimulate the production of less essential goods.
It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths.
Many of the most frequent fallacies in economic reasoning come from the propensity, especially marked today, to think in terms of an abstraction – the collectivity, the “nation” – and to forget or ignore the individuals who make it up and give it meaning.
The “virtue” of Keynes’s teaching is that it praised thriftlessness, reckless spending, and unbalanced budgets and was therefore extremely palatable to the politicians in power.
The simple truth is that there is an optimum rate of replacement, a best time for replacement. It would be an advantage for a manufacturer to have his factory and equipment destroyed by bombs only if the time had arrived when, through deterioration and obsolescence, his plant and equipment had already acquired a null or a negative value and the bombs fell just when he should have called in a wrecking crew or ordered new equipment anyway.
If we try to run the economy for the benefit of a single group or class, we shall injure or destroy all groups, including the members of the very class for whose benefit we have been trying to run it. We must run the economy for everybody.
There will not be a “surplus” of capital until the most backward country is as well equipped technologically as the most advanced, until the most inefficient factory in America is brought abreast of the factory with the latest and finest equipment, and until the most modern tools of production have reached a point where human ingenuity is at a dead end, and can improve them no further. As long as any of these conditions remains unfulfilled, there will be indefinite room for more capital.
There is no limit to the amount of work to be done as long as any human need or wish that work could fill remains unsatisfied.
The same reasoning applies to civilian government officials whenever they are retained in excessive numbers and do not perform services for the community reasonably equivalent to the remuneration they receive.
They tell us how much better off economically we all are in war than in peace.
For as Alexander Hamilton pointed out in the Federalist Papers nearly two centuries ago, “A power over a man’s subsistence amounts to a power over his will.
No man burns down his own house on the theory that the need to rebuild it will stimulate his energies.
When your money is taken by a thief, you get nothing in return. When your money is taken through taxes to support needless bureaucrats, precisely the same situation exists.
The progress of civilization has meant the reduction of employment, not its increase. It is because we have become increasingly wealthy as a nation that we have been able virtually to eliminate child labor, to remove the necessity of work for many of the aged and to make it unnecessary for millions of women to take jobs.
It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it.