Thread by @adamsmithworks

We, the SmithTweeters, understand you may have bigger fish to fry today than tweets about #AdamSmith and silver. We get it. But here's today's #WealthOfTweets, because--tough times or happy times--we think it's never a bad time to talk about Smith. #WealthOfTweets #SmithTweets

Wait. Still silver? Didn't Smith say he was talking about silver over 3 periods? OK FINE. FINE. It's fine. So the value of gold relative to silver was regulated by the mints of Europe until the Spaniards found those pesky American mines. (I.xi.h.1) #WealthOfTweets #SmithTweets

(Reminder: This is still, somehow, about RENT.) #WhatIsHappening #WealthOfTweets #SmithTweets

So anyway the American mines get found and then both gold and silver get cheaper because of ballooning supply, but silver gets cheaperer. (I.xi.h.1) #WealthOfTweets #SmithTweets

Oh hey, more #SmithSnark. Poor Mr. Meggens, he thinks that the relative price is the result of the relative quantities available, and Smith is having none of it in a book that will be widely read for centuries. (I.xi.h.3) #WealthOfTweets #SmithTweets

Look, MEGGENS. It's not like anyone thinks that because an ox costs threescore times the price of a lamb that there are threescore lambs for each ox! Guffaw! (I.xi.h.4) giphy.com/gifs/sweaty-hv…
#SmithSnark #WealthOfTweets #SmithTweets

A bit more pleasingly counterintuitive (but still part of the Meggens smackdown): We should actually expect the overall value of the cheaper good on the market to be greater. (I.xi.h.5) #SmithSnark #WealthOfTweets #SmithTweets

Demand is greater, so more people will have it, and likely enough more to make up for the lower price compared to the more luxurious good. (I.xi.h.5) #WealthOfTweets #SmithTweets

Holy moly we're explicitly talking about rent. It's in a discussion of another way things can be cheap—it's not just relative to other things, but about whether a good can command a price sufficient to pay rent or even bring it to market. (I.xi.h.6) #WealthOfTweets #SmithTweets

Even if the price is high, a good might not be able to pay any rent to the landowner. In this case, the landowner might choose to use their own stock and labor to bring the good to market. (I.xi.h.6) #WealthOfTweets #SmithTweets

But if the price won't even cover those, it's too cheap to get to market, says Smith. Unorthodox, but OK. (I.xi.h.6) reactiongifs.us/ill-allow-it-c…
#WealthOfTweets #SmithTweets

This explains why mines containing expensive stuff, like diamonds and silver and gold, might not be mined. Especially if there's a tax, which is like rent you can't get out of paying. (I.xi.h.6) #WealthOfTweets #SmithTweets

Since we're challenging definitions anyway, Smith figures, here's another: even if there's a lot of something, it is scarce if it takes a lot of work (labor and stock) to get it. This makes a lot of sense if you're an economist. (I.xi.h.9) #WealthOfTweets #SmithTweets

And so Smith would like for you to consider that if kings would just reduce the tax (rent) on their mines, it would make the expense of exploiting more mines worthwhile and might actually increase mine-tax revenue. #PagingDrLaffer (I.xi.h.10) #WealthOfTweets #SmithTweets

Which is...OK surprisingly interesting. Better than expected. But WHY are we talking about it here? Oh, it's because Smith is (still) REALLY ANNOYED by all the people who are wrong about what's been going on with the price of silver. (I.xi.h.11–13) #WealthOfTweets #SmithTweets

Also, at some point we've gotta dismiss the supposed specialness of silver. Supply, demand, and market dynamics still affect the price and quantity in the market, subject to the discovery or exploitation of new mines. (I.xi.h.12–13) #WealthOfTweets #SmithTweets

Which is all to say that Smith does not buy the conventional wisdom that the value of silver is still decreasing. Stay tuned for tomorrow because he is really not even a little close to done with this. (I.xi.h.12–13) #WealthOfTweets #SmithTweets