Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 4, Chapter 3 (page 303):

"... though... in the case of a free trade between France and England... the balance would be in favour of France, it would by no means follow that such a trade would be disadvantageous to England...  If the wines of France are better and cheaper than those of Portugal, or its linens than those of Germany, it would be more advantageous for Great Britain to purchase both the wine and the foreign linen which it had occasion for of France, than of Portugal and Germany."

Quotation of the Day

"The economic rationale for government policy requires that it generate benefits to society that are likely greater than the costs it imposes."

From this post about the economics of climate change by Steve Sexton on the Freakonomics blog.  Of course, this quote applies far more generally than this specific instance.

Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 4, Chapter 2 (pages 292-293):

"To give the monopoly of the home market to the produce of domestick industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.  If the produce of domestick can be bought there as cheap as that of foreign industry, the regulation is evidently useless.  If it cannot, it must generally be hurtful.  It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.  The taylor does not attempt to make his own shoes, but buys them of the shoemaker.  The shoemaker does not attempt to make his own cloaths, but employs a taylor.  The farmer attempts to make neither the one nor the other, but employs those different artificers.  All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for.
What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.  If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.  The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished, no more than that of the above-mentioned artificers; but only left to find out the way in which it can be employed with the greatest advantage."

Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 4, Chapter 1 (pages 276-277):

"That wealth consists in money, or in gold and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce, and as the measure of value.  In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for, than by means of any other commodity.  The great affair, we always find, is to get money.  When that is obtained, there is no difficulty in making any subsequent purchase.  In consequence of its being the measure of value, we estimate that of all other commodities by the quantity of money which they will exchange for.  We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money.  A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it.  To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous.
A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver in any country is supposed to be the readiest way to enrich it.  For some time after the discovery of America, the first enquiry of the Spaniards, when they arrived upon any unknown coast, used to be, if there was any gold or silver to be found in the neighbourhood?  By the information which they received, they judged whether it was worth while to make a settlement there, or if a country was worth the conquering.  Plano Carpino, a monk sent ambassador from the king of France to one of the sons of the famous Gengis Khan, says that the Tartars used frequently to ask him, if there was plenty of sheep and oxen in the kingdom of France?  Their enquiry had the same object with that of the Spaniards.  They wanted to know if the country was rich enough to be worth the conquering.  Among the Tartars, as among all other nations of shepherds, who are generally ignorant of the use of money, cattle are the instruments of commerce and the measures of value.  Wealth, therefore, according to them, consisted in cattle, as according to the Spaniards it consisted in gold and silver.  Of the two, the Tartar notion, perhaps, was the nearest to the truth."

Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 1, Chapter 5 (page 36):

"Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life.  But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him.  The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase.  The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.  Labour, therefore, is the real measure of the exchangeable value of all commodities."