Miscellaneous Dr. Eamonn Butler Miscellaneous Dr. Eamonn Butler

239 years of The Wealth of Nations

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Today is the 239th anniversary of the publication of The Wealth of Nations by Adam Smith. For nearly a quarter of a millennium, we have actually known the principles by which wealth is created and maximised. The trouble is, that for a fair chunk of the same time, we have been trying to resist that information, thinking that we can somehow do better than the market. The Wealth of Nations is a great book: most objective commentators would probably put it among the top five books ever written, in terms of its influence on humankind and the way we live.

Yes, it's very eighteenth-century stuff, sprawling and wordy, with enormous digressions on things that do not seem very interesting to us today. Luckily, you do not have to read it, because you can download my Condensed Wealth of Nations instead.

And yet, Adam Smith's original is the book which took economics out of its primitive phase and made it distinctly modern. With a bit of time and effort, any of us can understand what Smith says because what he is describing is all around us today.

The very first sentence of the book dismisses the old idea that the wealth of a nation was the amount of gold and silver that it had hoarded up in its vaults. Rather, says Smith, the measure of a country's wealth is what it produces. In that first sentence, he had invented the idea of gross domestic product. In the second, he notes the wealth of individual citizens of that country depends on how many citizens are sharing this GDP. (So there,he had invented the idea of GDP per capita.) In the third, he talks about how many people are actually working to produce this wealth. (The concepts of the participation rate, and productivity.) Before we are past the first page, we can see that this is sensational stuff.

But surely his greatest breakthrough was the realisation that we do not have to conquer people or make things in order to increase our wealth. We can also increase it by simply exchanging things. If you have something I want and I have something you want, we are both better off by swapping it. And that is the foundation of market exchange and trade, and of the specialisation that makes our production and exchange system so spectacularly efficient, creating and spreading benefit throughout the world.

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Miscellaneous Dr. Eamonn Butler Miscellaneous Dr. Eamonn Butler

RIP Matthew Young

MJYoung June 2012  

We are very sad to report the death of our friend Matthew Young, who died suddenly at the weekend following an undiagnosed illness. He worked on major projects for the Adam Smith Institute, but also had a significant career in government, under both Labour and Conservative administrations.

Matthew rose quickly through Whitehall to become Private Secretary to Lord Armstrong, head of the civil service under the Conservative Prime Minister Edward Heath, in 1971. He went on to be Press Secretary to the Labour Prime Ministers Harold Wilson and James Callaghan, conducting twice daily Lobby briefings in Downing Street and preparing instant responses to the numerous political issues that arose.

From 1976 he became responsible for policies to control and reduce costs in the civil service, with direct responsibility for controlling expenditure limits on government departments. During this time he exposed some of the profligate spending in ministries – such as the Ministry of Defence, which he found was still issuing detailed specifications on headlight seals for their trucks, long after this technology had been replaced by cheaper, more reliable one-piece headlight manufacture.

In the Thatcher years, Matthew worked on privatisation, drafting plans to privatise HMSO, the Laboratory of the Government Chemist, the Building Research Establishment and the Agricultural Development Advisory Service. He also pushed forward the contracting-out of Defence functions such as Navy Air Training, Radio Communications, and Met Office observation functions. He estimated that these activities amounted to more than £300m of savings for the taxpayer.

In the 1990s he directed major projects for the Adam Smith Institute, involving key players from industry, government and the civil service. One of these, the Trafficflow Project, identified the potential for road congestion pricing in the UK, and convinced the then Mayor of London, Ken Livingstone, to adopt it. Another, involving national pension and finance experts, laid out plans for a simplified pension system, which was the foundation for the Stakeholder Pension introduced soon after.

From 1996, Matthew created his own think-tank, Public Policy Projects, concentrating mainly on health policy. Hundreds of key players from private and public sectors would attend his events and Parliamentary Breakfasts, to hear an impressive array of ministers and experts talking about current concerns.

The Adam Smith Institute has lost a good and loyal friend, and someone who not only thought deeply about the structure of government, but actually made change happen.

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Miscellaneous Dr. Madsen Pirie Miscellaneous Dr. Madsen Pirie

Tribute to Prof John Hibbs

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The late John Hibbs was a transport specialist who was a fellow of the Adam Smith Institute and published seminal works with us. A group of his friends and colleagues have put together what they intended to be a 90th birthday tribute book, but alas it became a memorial to him when he died 6 months before then. "John Hibbs - His journey by bus, coach and train" is a celebration of his life and achievements. It is more than that, though, because the personality of the man emerges through its pages and through what people who knew him say about him. He was a remarkable man, one who changed transport policy. His scholarship and his determined advocacy helped liberate bus transport and free it from a virtual state monopoly. But he also had an impact on train transport, and pioneered road pricing. He was committed to competition and deregulation, and put their stamp firmly on the ASI's transport output.

We shall miss him at our seminars and conferences, and this tribute reminds us why. It was an extraordinary life and it is entirely fitting that this book, compiled and edited by Michael Goldstein and Cyrrhian Macrae, puts that life on the record for others to admire and appreciate.

John Hibbs – His Journey by Bus, Coach and Train by Michael Goldstein and Cyrrhian Macrae, is published by Twig Books ISBN 978-1-907953-63-7 £9.99.

 

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