Celebrate 1776 - But for a different reason !!

As we head into the July 4th weekend, everyone will be thinking about 1776 and the birth of our nation.  But there is another reason to think about and celebrate 1776.  

The Wealth of Nations

In 1776,  Adam Smith wrote The Wealth of Nations and the world has never been the same.  Now before I go on and on about how important and how great the book is... you should know that I almost never recommend that people read it.  I only recommend it to serious lovers of economics, history and political economies.  Adam Smith wrote a LONG book with lots of side arguments and bunny trails.  A tight and concise writer he was not.  I feel about it a bit like I feel about Moby Dick.  You need a basic understanding of it.  If you run with a literate  crowd, they will allude to it ... even if they haven't read it.... so you need to know what it is about and why it is important.

Pour A Dram of  Single Malt Scotch, Have a Seat, and...

Let's Discuss Adam Smith and the Book

Adam Smith was a Scot.  Before he wrote The Wealth of Nations, he wrote The Theory of Morale Sentiments.    It was Theory made him famous in Scotland and Europe ... and Smith always thought it was a better book.  Certainly, it laid the groundwork for Wealth.  Smith was a great speaker and was in great demand.

Before 1776 and The Wealth of Nations, there was significantly less focus on the individual.  Further,  there was almost no interest shown in individuals outside of the elite.  While there is much to take away from the book,  Adam Smith introduced 3 basic but iportant concepts you need to know:

1. Pursuing your own self interest in decisions is good for you and has the residual value of being good for the collective good.
2. The division of labor is imperative for individuals to maximize their economic potential (Even more so for the non-elite.)
3. Freedom to trade without government interference is good for all. If the two parties didn't think that the trade was good for both, a trade would never happen!  By definition, both parties must consider the transaction a win-win.

Another obvious by-product of #2 is that you must have #3.  In a world where division of labor exists, free trade is an imperative because you no longer make all the goods you consume.  Others in the division of labor chain make things you need... you must trade.

All these things seem obvious today.  But remember, every great idea had an origin and an originator. 

If You Want A Little More

If you have an interest in free markets and Adam Smith's roll, I'd point you to two fun resources.

1. How The Scots Invented The Modern World by Herman is a fun book and has a great section on Smith and his friends.
2. The Libertarian Reader published by The Cato Institute has a terrific 7-8 pages that will give you the essence of Wealth of Nations

1776 ... It was a great year !