1776 was quite a year for American ideas — and not just because of the political philosophy embodied in the Declaration of Independence. Just as importantly, 1776 also saw the publication of Scottish economist Adam Smith’s The Wealth of Nations, the first textbook, if you will, on free-market economics.
As with the Declaration, The Wealth of Nations is a treasure trove of principles that are at the heart of America’s exceptionalism and unparalleled economic success. Adam Smith realized something revolutionary for his time: The wealth of nations is not dependent on finite factors like the precious metals nations possess. Rather, it is determined by the labor of their citizenry and how productively that labor is employed. This led Smith to additional modern economic concepts such as the opportunity for almost limitless economic growth through division of labor and employment of capital, and perhaps most famously, the “invisible hand” of the free market, which organizes economic activity with astounding efficiency.
Sound compelling? Don’t worry — 235 years and indescribable economic success later — the Obama crowd isn’t buying a bit of it. This is perhaps most evident in Obama’s approach to energy and the environment, particularly in the Gulf of Mexico and in my home state of Louisiana.
At the heart of America’s recipe for remarkable economic growth since World War II has been cheap energy. As mentioned, Adam Smith wrote about division of labor, employment of capital, and how those factors could increase productivity, economic output, and wealth. He gave eighteenth-century examples of how that works. But he couldn’t possibly have imagined just how powerful such an engine could become — or what cheap energy could do for American economic growth.
The Obama approach to cheap energy? Cheap energy is a key part of the problem. This attitude is perhaps even more worrisome than the president’s actual environmental goals like taxing and regulating away purported “man-made” climate change. His primary means of getting there is, pure and simple, dramatically raising the price of energy — not increasing productivity and innovation.
This impulse is so strong that it seems to be part of an emotional reaction against our very economic prosperity — as if that end in itself is outdated and suspect — stemming from the belief that it can only have been gained to the detriment of the less-developed world. In this way, the president would be right at home with most thinkers before Adam Smith, who considered economics a zero-sum game.
Before President Obama tapped Carol Browner to be his climate-change czar, she was listed as a leader of the Commission for a Sustainable World, which argued that developed countries actually must shrink their economies and consumption to address climate change. Similarly, White House science advisor John Holdren had advocated “de-industrializing” America. That means we all need to “face up to . . . zero net physical growth” in which we all need to consume far less. As a candidate, Barack Obama himself admitted that his cap-and-trade plan would necessarily create “skyrocketing” utility costs. And even in office, Obama’s energy secretary Steven Chu has baldly stated that he hoped the U.S. would “boost the price of gasoline to the levels in Europe,” currently about $7 per gallon.
Small wonder that President Obama still has the Gulf of Mexico virtually shut down to oil and gas activity nine months after the Deepwater Horizon disaster. The formal moratorium is lifted, and promises to resume drilling abound, but the reality remains — a virtual shutdown. And offshore may be the good news. Onshore, federal permitting for domestic energy resources has been reduced by a whopping 79 percent since Obama took office.
According to the International Energy Agency, these Obama trend-lines mean that we’ll need to import 300,000 barrels of oil more per day in 2015. Even at today’s oil prices (which are likely to look low in 2015), that’s $27 million more per day, $9.855 billion more per year flowing out of our national economy.
To me, this sure doesn’t add up to a renewal of American prosperity. Rather, it seems to be giving up on that very goal. It’s as if President Obama is saying: “Well, yes, our time has passed.” And that’s probably because the President never understood The Wealth of Nations and how America became so exceptional to begin with.
— David Vitter is a U.S. senator from Louisiana.
Let's have no more complaining here about CNN hiring Elliot Spitzer.
Reply to this commentLinkReport AbuseRead?
Reply to this commentLinkReport AbuseSince he is the repository of all wisdom, all conversations with the Dear Leader are simplex: he speaks, we listen.
His receiver is set to "OFF".
In addition to Adam Smith, it would be great if Obama -- and all politicians -- followed up with Thomas Sowell's Basic Economics and Applied Economics.
Reply to this commentLinkReport AbuseI have yet to read or hear anything which makes me think that Barack Obama has the slightest understanding of economics. And yes, his receiver is set to "OFF".
Reply to this commentLinkReport AbuseJason,
Reply to this commentLinkReport AbuseWell, Spitzer RESIGNED when it was found he used prostitutes! Louisiana reelects the guy.
This is a really simplistic representation of Smith's argument. Even PJ O'Rourke, in an excellent book on "Wealth of Nations," admits that Smith was far from what most conservatives think. For every "free market" principle he advances, he is surprisingly anti-business in other respects. Many of the companies conservatives tout as free market heroes would have been the ultimate mercantilists in Smith's eyes (oil companies, for instance).
Reply to this commentLinkReport Abuse@Jason
"Let's have no more complaining here about CNN hiring Elliot Spitzer."
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Whose complaining? The arguments against watching CNN have greatly simplified by this move. On to more pressing issues.
Although....one thing does trouble me. Why didn't Parker demand a large plate glass partition separating her from Spitzer on the set?
Reply to this commentLinkReport AbuseBig fan of the MyKu, O66.
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I agree with this assessment of Obama's political philosophy:
"This impulse is so strong that it seems to be part of an emotional reaction against our very economic prosperity — as if that end in itself is outdated and suspect — stemming from the belief that it can only have been gained to the detriment of the less-developed world."
But take it to its logical conclusion: if Obama does think that this nation is exceptional, it must only be that it is exceptionally immoral, exploitive, oppressive, etc. I don't believe that we can assume that Obama is acting in good faith on behalf of our best interests, but I'm not sure how prudent it is to express that in the political arena -- not when the "commanding heights" of the media permit so much vitriol on the left but so little even sincere criticism from the right.
Jonah's right to point out that the propriety of calling Obama a socialist depends entirely on whether its from a hopeful fellow traveller or a critical advocate of free markets.
We should probably still speak truth to power (to use that detestible phrase of the left), without regard for the political consequences: truth is too important to abandon for reasons of expediency.
Reply to this commentLinkReport AbuseOrder66, once again you impress me with your haiku prowess. You've got a knack for these things, but a filthy mind. I recommend a spiritual retreat to correct yourself. Or, you could check the unmoderated forums at Reason magazine, where the standards of decorum are much lower.
Seriously though, you should put all these together in a small book. I bet you'd could land a $5.95er on the checkout shelves at Borders.
Reply to this commentLinkReport Abuse"For every 'free market' principle he advances, he is surprisingly anti-business in other respects."
Actually, he was more anti-authority than anything, but nice try to make Adam Smith appear to be more anti-business.
As time goes on, "The Wealth of Nations" is proved more prescient.
Reply to this commentLinkReport Abusechrisboltssr-
Smith was anti-authority, and large corporations that snuffed out smaller ventures possessed quite a bit of authority in his day. And let's not forget his disdain for pernicious gains. I'm not trying to say Smith was some sort of socialist, but merely that if most contemporary conservatives actually read all of both "Wealth of Nations" and "Theory of Moral Sentiments," they'd see that the "invisible hand" isn't totally invisible, and that Smith had much more complex ideas than Vitter makes them out to be. Smith wouldn't have been a big fan of any of our contemporary oil companies, by any stretch of the imagination.
Reply to this commentLinkReport AbuseThe next Republican presidential candidate should kick off his campaign at ground zero with a promise, "that these towers will be built before my first term is done!" and then head across the country with one promise and one promise alone "to take the chains off the American economy and off of American workers, to turn the free market system loose again."
Reply to this commentLinkReport AbuseI enjoyed the article Mr. Vitter.
I would propose however, that a primer in finance would not help Mr. Obama in the least.
His is an agenda of socialism, and the use of whatever means is necessary to bring it to fruition. His "legacy" if you will.
All else is but mere semantics to him.
Reply to this commentLinkReport AbuseRE: "Order66, once again you impress me with your haiku prowess."
Heh...thanks, but I obviously crossed the line with that one, seeing as it was deleted. Let's hope that's a first and last time for that! My apologies. I have re-calibrated accordingly.
Now I know, and knowing is half the battle. G.I. Joe, porkchop sandwiches, and whatnot. :)
Reply to this commentLinkReport Abuse@bobbymike
"The next Republican presidential candidate should kick off his campaign at ground zero with a promise, "that these towers will be built before my first term is done!""
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Amen to that. Those towers should be rebuilt exactly as they were on Sept. 10. I believe it would be a tremendously restorative act for the psyche of our nation.
Reply to this commentLinkReport Abuse@theliberalreader
Well, you've recalibrated from a slander of Smith to a generalized insult to conservatives. I think you'd do your cause more good by sticking to facts and logical argument.
I would say Smith is better characterized by having given a very realistic, nuts-and-bolts consideration to the limits of the free market. It turns out (he explains) that the free market is the most efficient means of distributing scarce resources yet discovered by man, but "most efficient" doesn't mean "perfect." Characteristic of the taxonomic science of the era, he carefully catalogs the cases in which the invisible hand fails us.
Nor is it especially fair to suggest that contemporary conservatives are oblivious to this. "Small government" doesn't mean "no government." It simply means that, before embracing government intervention, we should pause to consider whether one of those well-understood limitations of the free market is at work, giving rise to a reasonable expectation that the government's power to use the threat of physical violence might produce better results.
Reply to this commentLinkReport AbuseTo the Leftist, the pie has always been a fixed size; to be cut into tiny equitable slices for the masses by their evolutionary betters (the Leftist - to no one's surprise of course). Whenever the pie feels the threat of the Leftist's pie cutter, it instinctively shrinks itself, as a survival measure.
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Reply to this commentLinkReport Abuse"Because the Only Good Progressive is a Failed Progressive"
Mr. Vitter, good work. Big Mo, good point but BHO could have private lessons on economics from the great Thomas Sowell himself and it would do no good!!! BHO is a redistribution of wealth liberal/progressive (a PC phrase for kleptomaniac)...he will say and do anything to get re-elected...the fools who voted for him 2 years ago will be fooled once again and vote for the "centrist" BHO in 2012, he will get re-elected, and then be he will able to finish his "6 year project"...the fundamental transformation of America!!!
Reply to this commentLinkReport Abuse“Mr. libertarian” Murray Rothbard showed how Adam Smith should not be called the founder of economics, nor a theorist who improved on economic science, nor even a consistent defender of the market economy. Rothbard saw him as unoriginal, confused, opportunistic, vastly overrated, and even dishonest. See:
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Reply to this commentLinkReport AbuseGreat post. Vitter puts his finger on the problem. Cheap and abundant energy is out there, available, and in some cases, without environmental cost (nuclear).
To enslave our economy and our treasure to continued (in fact increased) dependence on foreign sources of energy is dangerous. That should be obvious even to the Democrats.
All it takes to move America back to a great and peaceful power is to shed the shackles of rigid fixation on environmental perfection, and embrace technologies that will give us the cheap energy we need, while respecting the environment.
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