Saturday, April 1, 2017

To be pillaged and plundered at any time by the inferior mandarins

From The Great Degeneration: How Institutions Decay and Economies Decline by Niall Ferguson, page 8, quoting Adam Smith in The Wealth of Nations.
In two seldom quoted passages of The Wealth of Nations, Adam Smith describe what he called"the stationary state': the condition of a formerly wealthy country that had ceased to grow. What were the characteristics of this state? Significantly, Smith singled out its ocially regressive character. First, wages for the majority of people were miserably low:
Though the wealth of a country should be very great, yet if it has been long stationary, we must not expect to find the wages of labour very high in it. . . . It deserves to be remarked, perhaps, that it is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state. The progressive state is, in reality, the cheerful and the hearty state to all the different orders of the society; the stationary is dull; the declining melancholy.
The second hallmark of the stationary state was the ability of a corrupt and monopolistic elite to exploit the system of law and administration to their own advantage.
In a country, too, where, though the rich, or the owners of large capitals, enjoy a good deal of security, the poor, or the owners of small capitals, enjoy scarce any, but are liable, under the pretence of justice, to be pillaged and plundered at any time by the inferior mandarins, the quantity of stock employed in all the different branches of business transacted within it, can never be equal to what the nature and extent of that business might admit. In every different branch, the oppression of the poor must establish the monopoly of the rich, who, by engrossing the whole trade to themselves, will be able to make very large profits.
I defy the Western reader not to feel an uneasy sense of recognition in conemplating those two passages.
The Great Degeneration was published in 2012. The increasing sense of stagnation combined with elite protectionism remains as strong or stronger today. Hence, likely, the "perversity" of electorates around the OECD, insisting on changing out the status quo again and again, against the advice of their establishment "betters".

The best solution for everyone as a community are the conditions that foster increased productivity and therefore economic growth, the interests of the establishment are best served via the sclerosis of rent seeking and regulatory capture.

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