Thread by @adamsmithworks

Now you know all the things #AdamSmith has to say about what the government should spend money on. But that money's gotta come from somewhere. What does #WealthOfNations say about how governments should get money to spend? (V.ii.) #WealthOfTweets #SmithTweets

I know the tax nerds have been waiting for this chapter (we ❤ you, nerds), but first Smith wants to talk about other sources of revenue "which may peculiarly belong to the Sovereign or Commonwealth". (V.ii.a) #WealthOfTweets #SmithTweets

IOW, before we get to taxes we've gotta cover businesses run by the sovereign (like the post office), public banks, public lending, and revenue from public lands.

But don't worry, we can do that pretty quickly...ish. (V.ii.a) #WealthOfTweets #SmithTweets

States are generally bad at running businesses. The incentives don't line up, and the character of the two activities is too different to succeed in both. (V.ii.a.4–7) #WealthOfTweets #SmithTweets

Except the post office. I mean, *no one* could lose money via a public post office, right? (V.ii.a.5) #WealthOfTweets #SmithTweets

Another exception is very small states running weird little businesses like the public wine merchant and apothecary in Hamburg.

Smith grants that might work out, but these states "cannot be very great" if they have income like this. #Burn (V.ii.a.4) #WealthOfTweets #SmithTweets

Governments might also try to earn interest on stock, but this is unusual since international lending goes badly wrong in wartime, when foreign governments just keep the money. (V.ii.a.8–12) #WealthOfTweets #SmithTweets

Pennsylvania has this wacky system where they issue bills of credit (on which interest is paid and which is secured by land) for use as money to its citizens and they circulate and spend it and raise money that way. (V.ii.a.11) #WealthOfTweets #SmithTweets

This worked out OK for Pennsylvania, but the other American colonies that tried to do this without Pennsylvania's "moderation" created "much more disorder than conveniency." (V.ii.a.11) #WealthOfTweets #SmithTweets

#TLDR, Smith says that profits from stock and credit are not appropriate revenues for any kind of great nation. (V.ii.a.12) #WealthOfTweets #SmithTweets

But land! Surely owning land is a great way for governments to ensure they have the money they need, right? Rent is a monopoly price and all that. Plus, having lots of land is impressive and stuff. (V.ii.a.13) #WealthOfTweets #SmithTweets

OK, MAYBE, says Smith, unless you're a modern state and you're going to war. Since not everyone is a soldier any more, it's too expensive to wage war on the rent of public land alone. (V.ii.a.16) #WealthOfTweets #SmithTweets

Now Smith is sort of going to talk about land tax revenue but not land tax yet (spoilers, Dr. Smith!). (V.ii.a.16) #WealthOfTweets #SmithTweets

The produce of crown lands are just not high enough to yield the kind of income that a modern nation needs. Those lands aren't productive enough. (V.ii.a.17–18) #WealthOfTweets #SmithTweets

There's a misconception, says Smith, that even though crown lands aren't super productive, at least they don't cost anything. Wrong! The revenue they COULD generate if they were distributed to private people is a huge missed opportunity. (V.ii.a.19) #WealthOfTweets #SmithTweets

Smith isn't against publicly owned land, he just thinks it oughta be considered an expense, not a source of revenue. (V.ii.a.20) #WeathOfTweets #SmithTweets

And so, having dismissed stock and lands as appropriate sources of revenue for a great nation, Smith is ready to move on to taxes! And that's what we'll tackle tomorrow. #TheWaitIsAlmostOver (V.ii.a.21) #WealthOfTweets #SmithTweets