Today, investors are feeling uneasy about the economy, and some believe that the future looks worse. It is easy to blame unfair trade practices, AI, and efforts by foreign countries to take advantage of the American consumer. The easy political responses often seem to be directed toward more regulation, including antitrust, industrial and trade policies.
Perhaps it’s time to take a new look at Smith’s book, “The Wealth of Nations,” published 250 years ago. Smith’s ideas have been widely quoted but may have been misunderstood. Conservatives too often see his philosophy as an endorsement of laissez-faire, leaving everything to the “invisible hand” as the economy’s only guidance. Liberals tend to believe that he was a spokesperson for naked, anti-social greed.
Perhaps investors should consider a more balanced view of Smith’s work and his underlying belief that ordinary people, given a chance, pursuing ordinary lives could make societies richer, fairer, and freer. With that in mind, it might be constructive if government reaction to every real and perceived problem was toned down. Smith seemed to believe that, just getting out of the way could often be the best course of action.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
