Thread by @adamsmithworks

Yesterday we were excited but today we're feeling a little misty-eyed, to tell you the truth. 🥺🥺🥺 We'll be wrapping up #AdamSmith's #WealthOfNations with the end of Book V, Chapter 3, on public debts. (V.iii.47–92) #WealthOfTweets #SmithTweets

Also yesterday: Smith laid out the situation of European (and especially British) government debt. It seemed bad!
But not everyone thought so! Some people argued that debt effectively adds to a country's capital.
Nah, says Smith. (V.iii.47–51) #WealthOfTweets #SmithTweets

There's a set amount of capital available in any given country. The government borrowing can't create more, it can only divert some of what there already was (to less productive purposes!). (V.iii.47–51) #WealthOfTweets #SmithTweets

Other folks'll say that government debt is OK because it's just people in the country lending to each other.
We, the SmithTweeters, think that the kids today call this "We owe it to ourselves".
Nah, says Smith. econlib.org/owing-the-publ…
(V.iii.51–52)

First of all, that's just a hot pile of mercantile system sophistry.
Second, it's not like foreign countries don't own government debt.
It's just a silly idea all around. (V.iii.52) #WealthOfTweets #SmithTweets

There's another argument that says public creditors have the right incentives to make sure the capital is used well because they need the country to do well enough to pay them.
Nah, says Smith. (V.iii.53–56) #WealthOfTweets #SmithTweets

Public creditors want the government to pay its debts, but they don't have any of the knowledge, nor the decision making power, to ensure that land and capital are kept up and not degraded by over-borrowing by government. (V.iii.53–56) #WealthOfTweets #SmithTweets

Some people say that even though these methods of funding government have worked out badly everywhere else, Britain is better managed and has better revenue streams, so it'll be OK.
Nah, says Smith. (V.iii.57–58) #WealthOfTweets #SmithTweets

Britain's tax system is better, but so long as government sets spending based on revenue, it will keep needing more. Even the best government will switch to bad taxes when it's exhausted all the good ones. (V.iii.57–58) #WealthOfTweets #SmithTweets

Don't assume that because Britain (or any country) is carrying its debt load well that it can carry a debt of any size or even deal well with a slightly larger debt. (V.iii.58) #WealthOfTweets #SmithTweets

Governments that really and truly run out of money can resolve the situation by declaring bankruptcy and pretending to pay their debts by devaluing the currency. (V.iii.59–65) #WealthOfTweets #SmithTweets

Devaluing the currency is a calamitous disgrace. It punishes people with money and rewards those deepest in debt to meet the needs of a negligent sovereign. (V.iii.59–65) #WealthOfTweets #SmithTweets

Currency can be devalued by augmentation—openly changing the denomination of the currency,
or by adulterating the currency—secretly changing the silver content to devalue it. (V.iii.59–65) #WealthOfTweets #SmithTweets

Both adulteration and augmentation are unjust. But augmentation is at least just open violence. Adulteration is treacherous fraud.
How do you really feel, Dr. Smith? (V.iii.59–65) #WealthOfTweets #SmithTweets

The only way any country will actually pay off its debt is either by raising a lot more revenue or reducing its expenses.
Smith is probably annoyed that he has to tell anyone this. (V.iii.66) #WealthOfTweets #SmithTweets

Smith has some ideas about this (in addition to all the ideas he had about this in Chapter 2) involving extending taxation, freedom to trade, and representation to the colonies to make them proper provinces of the British Empire. (V.iii.68–77) #WealthOfTweets #SmithTweets

[We would go into detail about this, but the Canadian contingent of the SmithTweeters is distracted by the small American flag being waved around by our American counterpart.] (V.iii.68–77) #WealthOfTweets #SmithTweets

We will, though, take a moment for the comment on Black slaves, who Smith says are worse off than even the poorest Scottish or Irish citizen because they are enslaved. Even if they are well fed and provided with luxuries by their enslavers. (V.iii.77) #WealthOfTweets #SmithTweets

[And may we just point the attention of the @Edinburgh_CC to this particular moment in #AdamSmith's work as well as to the following few tweets in this thread??]

"The Scottish poor are better off than a well-fed slave" is a very strong claim.
Smith says poor Scottish mothers often lost 90% of their children to starvation. (I.viii.23) It was horrific to be poor. #SmithAgainstSlavery (V.iii.77) #WealthOfNations #SmithTweets

But Black workers, however well fed and supplied with luxuries, were enslaved.
And the poor, however horrific their condition, are free.
Adam Smith 𝙝𝙖𝙩𝙚𝙙 slavery.
We, the SmithTweeters, say: damn straight.
#SmithAgainstSlavery (V.iii.77) #WealthOfNations #SmithTweets

But we can't fangirl forever. (At least not here.)

Smith thinks that if making the colonies into provinces worked out, it might increase revenues by rather a lot and allow Britain to pay off its debt and reduce the tax burden. (V.iii.68–77) #WealthOfTweets #SmithTweets

[We,the SmithTweeters, think it's awfully convenient to say that this plan would pay off Britain's debt after spending the first 2/3 of this chapter explaining governments will spend however much they can get their hands on.] (V.iii.68–77) #WealthOfTweets #SmithTweets

Some people say that the American colonies can't be taxed because they don't have any gold or silver to pay their taxes.
Nah, says Smith. (V.iii.78–87) #WealthOfTweets #SmithTweets

If anything, Smith's probably excited that Americans seem to agree with him about gold and silver: they're just commodities. If you have the means to buy them, you can get what you want. The Americans just don't want it. (V.iii.78–87) #WealthOfTweets #SmithTweets

Americans colonists have to send all their goods straight to Britain because they're in colonies. They don't need to sell them to Britain in exchange for gold or silver as they probably would under free trade. (V.iii.78–87) #WealthOfTweets #SmithTweets

(And if they did sell it to Britain for gold or silver, says Smith, mercantilists would have to think those goods were bad for Britain's economy #SmithSnark). (V.iii.78–87) #WealthOfTweets #SmithTweets

Smith thinks that both the American colonies and Ireland would be obviously better off if they were proper provinces.
We, the SmithTweeters, doubt that either the Irish or most American colonists agreed. (V.iii.88–90) #WealthOfTweets #SmithTweets

[We would go into detail about this, but the Canadian contingent of the SmithTweeters is worried by the violent fidgeting that Smith's claim that Americans owe everything to the Brits is inspiring in our American counterpart.] (V.iii.88–90) #WealthOfTweets #SmithTweets

Smith is less glowing in his description of how great it would be for the territories of the East India Company to become provinces but he does think they'd be less oppressed. He thinks that's a low bar. (V.iii.91) #WealthOfTweets #SmithTweets

And now some EPIC shade cast on British Empire, which has hitherto existed "in imagination only."
Smith says: Put up or shut up. Stop with this silly mercantilist nonsense and do yer jobs. (V.iii.92) #WealthOfTweets #SmithTweets

That. Is. 𝙄𝙏.

#WealthOfTweets #SmithTweets

What did we learn in Book V?
1) There's a proper role for government.
2) There are good ways to fund government.
3) Governments ignore 1 and 2. That makes debt. (It's bad.)
4) Death to the mercantile system or death to the British Empire.
#WealthOfTweets #SmithTweets

And, finally, that maybe the real wealth...was the friends we made along the way?
Thanks for sticking with us. SmithTweeters out! #WealthOfTweets #SmithTweets