Thread by @adamsmithworks

BUT WHAT ABOUT THE ROADS?
Yes, #adasmSmith says sovereigns should also maintain public institutions and public works that are good for society but that people won’t pay for on their own. (V.i.c.1) #WealthOfTweets #SmithTweets

And yes, this category of expenses includes education, about which more later. We promise. (V.i.c.1) #WealthOfTweets #SmithTweets

The first kind of public works Smith is concerned with are the kind that facilitate commerce in general. Like ROADS. (V.i.d.1) #WealthOfTweets #SmithTweets

These projects should be funded through tolls rather than taxes. That way you pay to maintain what you use. That’s fair. (V.i.d.2–5) #WealthOfTweets #SmithTweets

Plus, if you charge a higher toll for fancy and heavy rich-people-carriages, their vanity is made into something useful to the poor. (V.i.d.2–5) #WealthOfTweets #SmithTweets

(Bonus fancy and heavy rich-people-carriage content for #JaneAusten fans.) jasnanorcal.org/inkwell/ink9

Paying for roads this way—based on use and traffic—means you only get roads, bridges, etc. where they are really useful for commerce. You can’t just throw them up willy nilly to enhance the scenery. (V.i.d.6) #SmithTweets

It’s even better if the maintenance of canals, along with the profits from the tolls, are in private hands. They canals will be better taken care of. (V.i.d.7) #WealthOfTweets #SmithTweets

But you can’t do that for roads. Canals become useless if neglected, but badly maintained roads are still passable and could still collect tolls.
This means the owners of roads could ignore their responsibility and still profit. That’s bad. (V.i.d.8) #WealthOfTweets #SmithTweets

How does Smith know this? Because it’s going on all over Great Britain. (Complaining about potholes is apparently not just a 21st century sport.) (V.i.d.9) cbc.ca/1.3158488
#WealthOfTweets #SmithTweets

Lots of people think tolls are so profitable they could make a huge contribution to the revenue of the country.
Smith doesn't think this sounds accurate or practical. (V.i.d.10) #WealthOfTweets #SmithTweets

First, this would inevitably increase the costs of tolls, and increase them quickly. That's just how government works. (V.i.d.12) #WealthOfTweets #SmithTweets

Secondly, that tax on carriages by weight? That’s fair if the taxes are going to repair the roads, but not fair if they’re going to spend the money in other ways. And it would raise cost of bulky goods as well.(V.i.d.13) #WealthOfTweets #SmithTweets

Last, how are you supposed to make sure that the government bothers to fix the roads with the toll money? They could charge high tolls, neglect the roads, and the people would have no recourse. (V.i.d.14) #WealthOfTweets #SmithTweets

And now...a brief survey of roads around the world:

There are lots.

They have potholes. cnn.com/2019/07/01/us/…
(V.i.d.16–17) #WealthOfTweets #SmithTweets

It’s better to have roads and other public works maintained at a local or provincial level rather than at a national level whenever possible. And that means tax money would be kept local as well. (V.i.d.18) #WealthOfTweets #SmithTweets

Again, Smith isn’t an idiot. He knows there's plenty of abuse and neglect of public works at the local level, but unlike national abuses they’re limited in their extent. (Edinburgh can't ruin the roads in Kirkcaldy.) (V.i.d.18) #WealthOfTweets #SmithTweets

Up until now we’ve been talking about public works that support commerce in general, but there are also public works that support particular kinds of commerce. (V.i.e.1) #WealthOfTweets #SmithTweets

Oh, hey, barbarous and uncivilized nations again.
#Sigh (V.i.e.2) threadreaderapp.com/thread/1346098…
#WealthOfTweets #SmithTweets

Trading with nations that are inclined to violence means the need for special protections. These can be paid for with taxes, a fine on traders who choose to trade there, or a duty on the goods they trade. (V.i.e.3) #WealthOfTweets #SmithTweets

You get companies like the East India Co. (spoiler: Smith's no fan) when merchants convince the state to let them take on the duty of the sovereign to oversee trade in a particular location. They start out useful, end up harmful. (V.i.e.4–5) #WealthOfTweets #SmithTweets

There are two kinds of these foreign trading companies: regulated and joint stock.
Neither is great, but Smith has a particular dislike for the joint stock company in foreign trade. (V.i.e.7–40) #WealthOfTweets #SmithTweets

Regulated companies are companies made up of people engaged in trading. They use apprenticeships, membership fees, and lobbying for burdensome regulation to keep competition to a minimum. (V.i.e.7) #WealthOfTweets #SmithTweets

They’re not great, but Smith saves his ire for the joint stock companies. Dorothy Parker would have said “Regulated companies are just plain terrible, but joint stock companies are fancy terrible. They’re terrible with raisins in it." (V.i.e.15–40) #WealthOfTweets #SmithTweets

Joint stock companies allow people to shrug off responsibility and make it too easy to admit new people who don’t know the business. Company directors are generally “adventurers” rather than experienced traders. (V.i.e.15–18) #WealthOfTweets #SmithTweets

And THIS is how you end up with things like the South Sea Company. (V.i.e.15–18) resobscura.blogspot.com/2011/03/playin…
#WealthOfTweets #SmithTweets

Anyone else having a hard time having sympathy for the decline and fall of the Royal African Company’s forays into the slave trade? Evil AND incompetent. Here’s a solid discussion of Smith on Slavery. (V.i.e.19–20) adamsmithworks.org/documents/adam… #SmithTweets

Basically, the history of this kind of trading company is a history of slavery, incompetence, greed, and irresponsibility.
Smith is NOT here for it, as demonstrated by his 6.5 page, single paragraph takedown of the East India Company. (V.i.e.26) #WealthOfTweets #SmithTweets

Companies like these produce “bad stewards and bad sovereigns” and offer people “either the pleasure of wasting or the profit of embezzling whatever surplus might remain” after the stock dividends are paid. (V.i.e.26–27) #WealthOfTweets #SmithTweets

It’s all the worse when the company is given the right to take over the forts and garrisons in the places where they trade. That means they end up with the right to make war, which they do “unjustly, capriciously, and cruelly.” (V.i.e.28) #WealthOfTweets #SmithTweets

It might make sense to give some advantage to merchants who open new lines of trade at their own risk and expense. But letting that advantage stay in place forever is a disaster. It supports negligence and corruption. (V.i.e.30) #WealthOfTweets #SmithTweets

[Can we just take a minute here? We, the SmithTweeters, have long been on record saying that people who love free markets should be the strongest critics of people who corrupt them and use them to oppress. This is why we are on TeamSmith.] #WealthOfTweets #SmithTweets

[It is, in fact, why we are tweeting #WealthOfNations, because we think it's incredibly important that people realize this kind of critique is part of Smith's economic arguments.] #WealthOfTweets #SmithTweets

Smith will allow that it’s possible to have a functioning and not-evil joint stock company for businesses like banking and insurance, as well as for a few engineering enterprises. That’s because the rules are so clear cut. (V.i.e.32–39) #WealthOfTweets #SmithTweets

But aside from those very few exceptions, joint stock companies are a disaster, and they fail at everything except causing harm. (V.i.e.40) #WealthOfTweets #SmithTweets

#TLDR: Joint stock companies? Smith hates ‘em. (V.i.e) #WealthOfTweets #SmithTweets