Smith Would Have Voted for Sanders
Bernie Sanders and Adam Smith: just two guys with crazy hair?
He visited Voltaire in Geneva, hung out with Ben Franklin in London, was best buds with fabled Scottish philosopher David Hume and wrote the book known as “the bible of capitalism,” “The Wealth of Nations.” Sounds pretty fancy! But anyone who’s read the feel-good manifesto of the free market knows that Adam Smith was no elitist; nor would anyone couch him as liberal.
His first chapter, “Division of Labor” (he invented the term), acknowledges the beneficial effects of collaboration, discussing in some detail each worker’s importance in the supply chain. Self-interest and the profit motive are also explored at length.
Smith’s personal politics defy categorization; both the Left and Right can find things to love or hate in his teachings. He was probably first true political independent. Honest to a fault and always true to his own rigorous intellectual calculations, he’s a worthwhile role model for either party. He was an equal-opportunity critic, taking issue with things that leaned too populist, and eager in censuring efforts to artificially engineer economic systems (a favorite pastime of the Right, despite protestations to the contrary).
He would have hated the notion of a Federal Bank, and anyone who has any doubt that the public is getting screwed by both sides of the political equation need look no further than into a history of the U.S. Federal Reserve Bank. Signed into law in 1913 by Democratic president Woodrow Wilson, the Fed went into effect in 1915, bestowing on the government the right “to print paper money whenever Congress wanted,” it delighted Wall Street interests, sending both factions on a bender throughout the Roaring Twenties that culminated in the Crash of 1929 and the Great Depression.
While there were many factors at work, it is possible to directly trace the crash to the capricious manipulation of interest rates and stock-market speculation, which “diverted resources from productive uses, like commerce and industry.” For his part, Smith was a lassiez faire capitalist who believed government intervention would upset the natural order of things, which he referred to as “the invisible hand.” He believed in trickle up, but only if it led to trickle down.
An Enlightenment optimist, he didn’t foresee the invisible hand becoming the upper hand. Whether it’s the corporate industrial complex or the unions, is there really any difference insofar as the average citizen is concerned? Really, not much. An impartial observer would have to admit that the gravitational pull of greed has allowed unnatural forces to take effect on the free market.
Which leads us back to Bernie Sanders, the self-proclaimed “democratic socialist” formerly independent senator from Vermont. Though at a glance, he wouldn’t seem an exemplar of the free market. But on closer examination, it’s apparent that his alleged desire for a “90% tax rate” is pretty much made up, at least at this point. Sanders himself has been vague on the specifics of his tax plan.
At FeelTheBern.org, he includes a helpful passage explaining “progressive tax,” pointing out that the top U.S. tax bracket is currently 39.6%, but that even for the wealthiest Americans that rate only applies to income over $400,000. Immediately following, he tackles the tax rumor head-on, positing, “I heard Bernie wants to raise the top tax bracket to 90 percent. That seems too high.” Then responding, “That’s actually not true. Bernie has never said he wants to do that. He has recently said that he is “working right now on a comprehensive tax package, which I suspect will, for the top marginal rates, go over 50 percent.”
That sounds awfully mild for a candidate whose reputation in the popular media is that of a wealth-sucking vampire eager to feed at the bulging arteries of affluence that circulate among the privileged rich. No doubt Sanders does legitimately want to see a more equitable distribution of wealth, which would have a beneficial effect on the entire national economy, as Smith would agree. But he also seems like a guy who would be happy leaving well enough alone if the “invisible hand” was doing its job, reining in the free market.
While it’s the Democrats that are saddled with the reputation for “big government,” meddling legislation introduced by supposedly free-market loving Republicans has not been in short supply. And the fact that the nation’s largest union, the National Education Association, endorsed Hillary Clinton rather than the supposedly socialist-leaning Sanders should tell you something. The NEA is an adjunct of big government — it lives off regulatory largesse, and is in fact the nation’s biggest lobby group.
While Smith would have nothing against unions per se, as with capitalist enterprise and free trade, which he heartily endorses, he’d take issue with any of the three in instances where the pendelum was so polarized as to upset market equilibrium.
Like Smith (and unlike the front-runners on both sides of the aisle) Sanders has been remarkably consistent in his views. Like Smith, he seems inherently decent and to be responding genuinely to legitimate issues.
While still somewhat novel, this view is not unique, prompting a Forbes.com columnist to write last month, “The odd thing about Sanders is that in some ways, he is more truly conservative than many of the Republican candidates. They seem to alternate between a libertarian paradise or some sort of vision of how things must have been in 1795 when the Founding Fathers were still keeping an eye on things.”
Even Donald Trump, creature of capitalism though he may be, falls short of Smith in contrast with Sanders. (For Smith would pretty obviously find immigrants — legal or otherwise — acceptable in his economic framework; as long as they were working, earning they would qualify as creating wealth for their nation. A protectionist in no sense of word, Smith was a growth-happy expansionist.)
Would Sanders make a great president, or even a good one? I’m not attempting to make that case, just pointing out that the Free Market’s leading light would likely find in him much to appreciate. Counter-intuitive, perhaps, but tough times call for close scrutiny. The invisible hand … it’s come into focus … its back to capitol hill, a single finger pointing skyward; an unmistakable gesture.
http://adamsmithslostlegacy.blogspot.com/2012/08/a-debate-on-adam-smith-left-or-right.html
http://robertreich.org/
http://www.forbes.com/sites/peterjreilly/2015/12/18/bernie-sanders-and-the-90-income-tax-rate-that-he-does-not-call-for/