Certainly the system has challenges, so do the operators (Naked Capitalism)

Wild Rose - Fish Creek Park, AB
Photo Credit PSJalkotzy

Yves Smith blog is absolutely one of the top tier blogs in the universe.  Her appearances on BNN and other network demonstrate her clear and unique thought patterns (and she obviously loves animals with her daily Anitdote du jour - special to me as well!).  Simply put, her blog is a daily must read.


One of this morning's posts, a guest post from Washington's Blog discusses the financial and legal systems and how Adam Smith would not approve.  I don't know much about Adam - sorry not much of a 'history' buff, but regardless of his beliefs, I can agree that the current goings on south of our border are testing human tolerance of stupidity.  Canada has it's own, as does everywhere you wish to look.  And to me that is the issue.  It is not the system that is necessarily at fault, but the operators. And the general trust afforded them.


And as Washington states, trust varies across geographies and that degrees of enforcement provide opportunity for those seeking it.  As I have written (HERE) , trust and integrity are core to a harmonious modern society.  And it is this trust and integrity that has been exchanged for selfish personal advancement.  The systems may have their flaws, but regardless of almost anything and everything else, people still have to do the right thing.

SUNDAY, JULY 31, 2011

Guest Post: Adam Smith Would Neither Recognize Nor Approve Of Our Financial, Monetary, Economic Or Legal Systems

By Washington’s Blog

The father of modern economics – Adam Smith – is used as a poster child to support the status quo that we have today. Smith is invoked as the patron saint of free market economics.

In fact, Smith would neither recognize or approve of our current financial, monetary, economic or legal systems.

I noted last year:

Americans have traditionally believed that the “invisible hand of the market” means that capitalism will benefit us all without requiring any oversight. However, as the New York Times notes, the real Adam Smith did not believe in a magically benevolent market which operates for the benefit of all without any checks and balances:

Smith railed against monopolies and the political influence that accompanies economic power …

Smith worried about the encroachment of government on economic activity, but his concerns were directed at least as much toward parish councils, church wardens,big corporations, guilds and religious institutions as to the national government; these institutions were part and parcel of 18th-century government…

Smith was sometimes tolerant of government intervention, ”especially when the object is to reduce poverty.” Smith passionately argued, ”When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.” He saw a tacit conspiracy on the part of employers ”always and everywhere” to keep wages as low as possible.

Paul Krugman pointed out:

Adam Smith … may have been the father of free-market economics, but he argued that bank regulation was as necessary as fire codes on urban buildings, and called for a ban on high-risk, high-interest lending, the 18th-century version of subprime.

READ FULL POST HERE