Obama's Lip Service to Adam Smith

When addressing the British Parliament a few weeks ago President Obama decided to venture into the realm of economic theory.  Rather than outlining to his audience the virtues of Keynesian philosophy, however, Mr. Obama chose to highlight that great Scottish nemesis of heavy-handed government: Adam Smith.  In President Obama's words:

"Adam Smith's central insight remains true today: there is no greater generator of wealth and innovation than a system of free enterprise that unleashes the full potential of individual men and women."

Back home in America, however, President Obama and most Democrats seem committed to a much different agenda: rather than "unleashing" the individual's economic potential the Democrat agenda since 2008 has been less laissez-faire and more government command and control -- the very qualities that Adam Smith regarded as harmful to both wealth creation and human benevolence.

For example, if President Obama were serious about Adam Smith's "central insight" concerning wealth creation and innovation why has he allowed NLRB General Counsel Lafe Solomon to engage in, according to South Carolina Governor Nikki Haley, union sponsored "economic warfare" against Boeing's desire to move part of its production line to Haley's right-to-work state? 

Indeed, according to Boeing CEO Jim McNerney, moving part of the 787 Dreamliner production line to South Carolina "would expand the domestic footprint of the nation's leading exporter and make it more competitive against emerging plane makers from China, Russia and elsewhere."

Mr. Obama too wants to maintain America's "advantage in a world that's more competitive than ever," but instead of unleashing the competitive talents of individual men like Mr. McNerney, the President told Parliament that we should double down on our "investments in science and engineering, and renew our national commitments to educating our workforce."  When the President makes a plea for "investments" and "national commitments" rather than for the invisible hand he is channeling Keynes, not Adam Smith.

In addition to restricting Boeing's freedom of movement, policies that include nationalized health care, taxpayer bailouts, deficit spending, economic stimulus, the proliferation of regulatory "czars," warnings about the "assault" on education unions in places like Wisconsin clearly have established President Obama as a dubious friend of free enterprise.

Beyond the policy level however Mr. Obama has in the past demonstrated a deep and fundamental philosophical distaste for Adam Smith's vision of human nature, economics, and government. 

For example, during a radio interview back in 2001 then-Illinois state senator Barack Obama argued that the Warren Court's civil rights record wasn't really that "radical" because the court "didn't break free from the essential constraints that were placed by the Founding Fathers in the Constitution."  Mr. Obama remarked that since the Constitution is a "charter of negative liberties" it restrains what the "federal government must do on your behalf."  Mr. Obama concluded that the court failed to "venture into the issues of redistribution of wealth" in society.

In his 1759 publication Theory of Moral Sentiments Adam Smith -- like James Madison a few decades later -- noted that "mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbor."  Smith was well aware of the twin dangers to the individual of allowing government to break free of the essential constraints built into the negative liberty tradition.  What exactly are those dangers?

First -- on the economic side of the coin -- Smith argued in his 1776 masterpiece Wealth of Nations that "the species of domestic industry [an individual's] capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawmaker can do for him."  In other words, rather than Mr. Obama's "national commitments" and "investments" Smith understood that free individual choice at the local level was the real "engine of industry."

Smith was at pains to point out that politicians who attempted to instruct individuals on "how to employ their capitals" would be assuming an authority that could not "safely be trusted" and "which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it . . ."   Smith's warning about the "folly" of centralized economic planning was echoed by the brilliant economist and philosopher F.A. Hayek some two centuries later:

"[T]he totality of resources that one could employ in such a plan is simply not knowable to anybody, and therefore can hardly be centrally controlled."

Simply put, both Smith and Hayek were well aware that the Lockean tradition of "negative liberties" or limited government created the most locally auspicious environment for economic prosperity and innovation.

Second -- on the moral side of the coin -- Smith argued that since genuine human benevolence, charity, and altruism had to be grounded in free will then "even the most ordinary degree of kindness and beneficence . . . cannot be extorted by force."  In other words, when politicians speak of "what the federal government must do on your behalf" they are merely using coercion to destroy what makes us moral beings.

Nowhere is President Obama's manifest confusion about Adam Smith's moral and economic philosophy more apparent however than in a speech he gave to the House Democratic Congress prior to the Health Care vote last March.  When addressing his fellow Democrats the president said that "something inspired you to be a Democrat instead of running as a Republican."  The President went on to clarify his argument:

"Somewhere deep in your heart you said to yourself, I believe in an America in which we don't just look out for ourselves, that we don't just tell people you're on your own . . . but we also have a sense of neighborliness and a sense of community and we are willing to look out for one another and help people who are vulnerable and give them a pathway to success and give them a ladder into the middle class."

Deep in a Republican's heart, in other words, there is little sense of neighborliness, community, charity, compassion, empathy, and, in addition, any remote concern about helping Americans gain entry into the middle class.  In other words, Republicans are immoral.  A claim like this would have been utterly astonishing to Adam Smith. 

Smith's genius was in understanding that prosperity and morality both depended on freedom, not government coercion.  Political philosopher Joseph Cropsey, commenting on Smith's legacy, noted that "the reconciliation of the private good and the common good by the medium not of coercion but of freedom on a basis of moral duty had perhaps never been seen before."  Smith's "never been seen before" philosophical brilliance was most probably the precise theory of prosperity and freedom that Mr. Obama set out to "change" in his last presidential campaign.

Aside from President Obama's extraordinary insinuation that his Republican constituents are patently selfish and immoral what separates Mr. Obama from Adam Smith I think is both a lack of education and a rather thin perception of human nature.  In Cropsey's words, "the capitalistic project is not animated by a search for methods of institutionally liberating the inner drives of every man in the interest of the moral will.  It is animated by a search for methods of institutionally liberating every man's natural instinct for self-preservation in the interest of external, politically intelligible freedom and peaceful, prosperous life for mankind as a whole."

In other words, for Adam Smith, politicians who make attractive claims about using the power of government to create both prosperity and morality will end up destroying both. 

Such profound Scottish wisdom might just inspire quite a few Democrats (and Republicans) to take a second look at what's truly deep in their hearts.

When addressing the British Parliament a few weeks ago President Obama decided to venture into the realm of economic theory.  Rather than outlining to his audience the virtues of Keynesian philosophy, however, Mr. Obama chose to highlight that great Scottish nemesis of heavy-handed government: Adam Smith.  In President Obama's words:

"Adam Smith's central insight remains true today: there is no greater generator of wealth and innovation than a system of free enterprise that unleashes the full potential of individual men and women."

Back home in America, however, President Obama and most Democrats seem committed to a much different agenda: rather than "unleashing" the individual's economic potential the Democrat agenda since 2008 has been less laissez-faire and more government command and control -- the very qualities that Adam Smith regarded as harmful to both wealth creation and human benevolence.

For example, if President Obama were serious about Adam Smith's "central insight" concerning wealth creation and innovation why has he allowed NLRB General Counsel Lafe Solomon to engage in, according to South Carolina Governor Nikki Haley, union sponsored "economic warfare" against Boeing's desire to move part of its production line to Haley's right-to-work state? 

Indeed, according to Boeing CEO Jim McNerney, moving part of the 787 Dreamliner production line to South Carolina "would expand the domestic footprint of the nation's leading exporter and make it more competitive against emerging plane makers from China, Russia and elsewhere."

Mr. Obama too wants to maintain America's "advantage in a world that's more competitive than ever," but instead of unleashing the competitive talents of individual men like Mr. McNerney, the President told Parliament that we should double down on our "investments in science and engineering, and renew our national commitments to educating our workforce."  When the President makes a plea for "investments" and "national commitments" rather than for the invisible hand he is channeling Keynes, not Adam Smith.

In addition to restricting Boeing's freedom of movement, policies that include nationalized health care, taxpayer bailouts, deficit spending, economic stimulus, the proliferation of regulatory "czars," warnings about the "assault" on education unions in places like Wisconsin clearly have established President Obama as a dubious friend of free enterprise.

Beyond the policy level however Mr. Obama has in the past demonstrated a deep and fundamental philosophical distaste for Adam Smith's vision of human nature, economics, and government. 

For example, during a radio interview back in 2001 then-Illinois state senator Barack Obama argued that the Warren Court's civil rights record wasn't really that "radical" because the court "didn't break free from the essential constraints that were placed by the Founding Fathers in the Constitution."  Mr. Obama remarked that since the Constitution is a "charter of negative liberties" it restrains what the "federal government must do on your behalf."  Mr. Obama concluded that the court failed to "venture into the issues of redistribution of wealth" in society.

In his 1759 publication Theory of Moral Sentiments Adam Smith -- like James Madison a few decades later -- noted that "mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbor."  Smith was well aware of the twin dangers to the individual of allowing government to break free of the essential constraints built into the negative liberty tradition.  What exactly are those dangers?

First -- on the economic side of the coin -- Smith argued in his 1776 masterpiece Wealth of Nations that "the species of domestic industry [an individual's] capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawmaker can do for him."  In other words, rather than Mr. Obama's "national commitments" and "investments" Smith understood that free individual choice at the local level was the real "engine of industry."

Smith was at pains to point out that politicians who attempted to instruct individuals on "how to employ their capitals" would be assuming an authority that could not "safely be trusted" and "which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it . . ."   Smith's warning about the "folly" of centralized economic planning was echoed by the brilliant economist and philosopher F.A. Hayek some two centuries later:

"[T]he totality of resources that one could employ in such a plan is simply not knowable to anybody, and therefore can hardly be centrally controlled."

Simply put, both Smith and Hayek were well aware that the Lockean tradition of "negative liberties" or limited government created the most locally auspicious environment for economic prosperity and innovation.

Second -- on the moral side of the coin -- Smith argued that since genuine human benevolence, charity, and altruism had to be grounded in free will then "even the most ordinary degree of kindness and beneficence . . . cannot be extorted by force."  In other words, when politicians speak of "what the federal government must do on your behalf" they are merely using coercion to destroy what makes us moral beings.

Nowhere is President Obama's manifest confusion about Adam Smith's moral and economic philosophy more apparent however than in a speech he gave to the House Democratic Congress prior to the Health Care vote last March.  When addressing his fellow Democrats the president said that "something inspired you to be a Democrat instead of running as a Republican."  The President went on to clarify his argument:

"Somewhere deep in your heart you said to yourself, I believe in an America in which we don't just look out for ourselves, that we don't just tell people you're on your own . . . but we also have a sense of neighborliness and a sense of community and we are willing to look out for one another and help people who are vulnerable and give them a pathway to success and give them a ladder into the middle class."

Deep in a Republican's heart, in other words, there is little sense of neighborliness, community, charity, compassion, empathy, and, in addition, any remote concern about helping Americans gain entry into the middle class.  In other words, Republicans are immoral.  A claim like this would have been utterly astonishing to Adam Smith. 

Smith's genius was in understanding that prosperity and morality both depended on freedom, not government coercion.  Political philosopher Joseph Cropsey, commenting on Smith's legacy, noted that "the reconciliation of the private good and the common good by the medium not of coercion but of freedom on a basis of moral duty had perhaps never been seen before."  Smith's "never been seen before" philosophical brilliance was most probably the precise theory of prosperity and freedom that Mr. Obama set out to "change" in his last presidential campaign.

Aside from President Obama's extraordinary insinuation that his Republican constituents are patently selfish and immoral what separates Mr. Obama from Adam Smith I think is both a lack of education and a rather thin perception of human nature.  In Cropsey's words, "the capitalistic project is not animated by a search for methods of institutionally liberating the inner drives of every man in the interest of the moral will.  It is animated by a search for methods of institutionally liberating every man's natural instinct for self-preservation in the interest of external, politically intelligible freedom and peaceful, prosperous life for mankind as a whole."

In other words, for Adam Smith, politicians who make attractive claims about using the power of government to create both prosperity and morality will end up destroying both. 

Such profound Scottish wisdom might just inspire quite a few Democrats (and Republicans) to take a second look at what's truly deep in their hearts.