Big Spenders

Adam Smith warns that politicians are the last people who should lecture the public about how to run their affairs.

1776

Introduction

Adam Smith, the pioneering Scottish economist, objected very strongly when politicians criticised the public for their spending habits. Private individuals alone actually create wealth, he said. By definition, Governments spend other people’s money and never make a penny in return.

by Adam Smith 1723-1790

abridged

GREAT nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue is, in most countries, employed in maintaining unproductive hands.*

Such are the people who compose a numerous and splendid court, a great ecclesiastical establishment, great fleets and armies, who in time of peace produce nothing, and in time of war acquire nothing which can compensate the expense of maintaining them, even while the war lasts.* Such people, as they themselves produce nothing, are all maintained by the produce of other men’s labour. […]

It is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expense. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of the subject never will.

by Adam Smith 1723-1790

abridged

From ‘Wealth of Nations’ II.3, by Adam Smith (1723-1790).

That is to say, people who consume more than they produce. ‘Unproductive’ does not necessarily mean bad. As Smith says later, a man who throws lots of parties for his friends is all the poorer for it in monetary terms, but he is much more likeable than a miser.

Then as now, people argued that lavishing taxpayers’ money on government jobs or the arms industry boosted the economy. Smith shows that it actually drains the economy, far more than the little weaknesses and luxuries of wealth-creating private citizens do.

Précis

Adam Smith explained that while private individuals both create and consume wealth, governments only consume it. Consequently, he said, it was most inappropriate for politicians to criticise the public for the way they spend their own money, since extravagance in government was far more likely to beggar a nation than domestic extravagance was.

Questions for Critics

1. What is the author aiming to achieve in writing this?

2. Note any words, devices or turns of phrase that strike you. How do they help the author communicate his ideas more effectively?

3. What impression does this passage make on you? How might you put that impression into words?

Based on The English Critic (1939) by NL Clay, drawing on The New Criticism: A Lecture Delivered at Columbia University, March 9, 1910, by J. E. Spingarn, Professor of Comparative Literature in Columbia University, USA.

Sevens

Suggest answers to this question. See if you can limit one answer to exactly seven words.

What does Smith describe as impertinent and presumptuous in politicians?

Suggestion

Meddling in how we spend our money.

Jigsaws

Express the ideas below in a single sentence, using different words as much as possible. Do not be satisfied with the first answer you think of; think of several, and choose the best.

Politicians spend taxpayers’ money lavishly. They criticise the people for extravagance.