EconLog Archive
Adam Smith
The Wealth of Nations: A Classic of English Literature
The Wealth of Nations is a true classic of English literature. It is just not one that has ever been widely loved or popularly read. When The Wealth of Nations was published in 1776, Thomas Strahan, its publisher, said “the sale … has been more than I could have expected from a work that requires .. MORE
Adam Smith
Why Adam Smith Embraced Commercial Society: The Wealth of Nations, Book 3 at Econlib
We’re joining our friends at Liberty Matters in their celebration of the 250th anniversary of the publication of An Inquiry into the Nature and Causes of the Wealth of Nations through a series of six weekly essays. In this third essay, Dennis C. Rasmussen explores Book III of Wealth of Nations, where Smith uses a story .. MORE
Adam Smith
Adam Smith on the Labor Theory of Value
There are many things Adam Smith got right about economics, including the discipline’s fundamental insight about the unplanned nature of market-driven economic and social order. He is rightly called the founder of economics for that reason. However, he did not get everything right. One of his most important errors, and one he shared with .. MORE
Adam Smith
Bargaining with the Butcher, Baker, and Brewer: A New Look at Smith’s Most Famous Sentences
“Give us this day our daily bread.” Adam Smith was at best an indifferent Kirk of Scotland churchman, but he would have known these words, which Jesus prescribes to his followers in the Sermon on the Mount, very well. The Lord’s Prayer speaks to one of the most basic questions of human survival. How will we .. MORE
Adam Smith
Wealth of Nations, Book 2: Prudence, Competition, and Party Walls at Econlib
We’re joining our friends at Liberty Matters in their celebration of the 250th anniversary of the publication of An Inquiry into the Nature and Causes of the Wealth of Nations through a series of six weekly essays. In the second essay, Maria Pia Paganelli explores Book II of Wealth of Nations, which is, she says, about .. MORE
Money and Inflation
The Sacrifice Ratio Puzzle
Inflation began rising in 2021 due to pandemic-related supply chain disruptions and reopening dynamics. The Russia-Ukraine war that started in February 2022 intensified these pressures through a commodity super cycle (a broad and sustained surge in energy and raw material prices) that sent inflationary shockwaves to nearly all major economies, including the U.S., where CPI .. MORE
Adam Smith
Why Does the Division of Labor Matter?
Smith begins An Inquiry into the Nature and Causes of the Wealth of Nations with the following claim: “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division .. MORE
Adam Smith
Innovation and Governance in Book 1 of Wealth of Nations at Econlib
Today at Econlib, we’re joining our friends at Liberty Matters in their celebration of the 250th anniversary of the publication of An Inquiry into the Nature and Causes of the Wealth of Nations through a series of six weekly essays. In the first of these, Eric Schliesser writes about implications of Adam Smith‘s theory of the division .. MORE
Adam Smith
Happy Birthday, Wealth of Nations
Today marks the 250th anniversary of the publication of Adam Smith‘s An Inquiry into the Nature and Causes of the Wealth of Nations on March 9, 1776. Wealth of Nations remains a remarkable book, not only establishing Adam Smith as “the father of economics” but laying a part of the foundation for liberal political theory. The .. MORE
Price Theory
EconLog Price Theory: Housing Quantity and Price
This is the latest in our series of posts in our series on price theory problems with Professor Bryan Cutsinger. You can see all of Cutsinger’s problems and solutions by subscribing to his EconLog RSS feed. Share your proposed solutions in the comments. Professor Cutsinger will be present in the comments for the next couple .. MORE
Economic Theory
Don’t Reason from a Quantity Change, Either
Over winter break, I was back in Massachusetts visiting family for the holidays. The conversation turned toward the difference in cost of living between my home state (Massachusetts) and my adopted state (Louisiana). The difference is quite stark. According to the World Population Review’s Cost of Living Index, the overall cost of living in Massachusetts .. MORE
Price Theory
Federal Reserve Revenue: Cutsinger’s Solution
Question: The U.S. Federal Reserve differs from most government agencies in two important ways. First, the Federal Reserve determines its own operating budget and remits any remaining revenue to the U.S. Treasury. Second, the Federal Reserve has some control over its revenue, since it earns income from issuing money and holding interest-bearing assets. Issuing more .. MORE
Sam's Links
Sam’s Links: February Edition
Sam Enright works on innovation policy at Progress Ireland, an independent policy think tank in Dublin, and runs a publication called The Fitzwilliam. Most relevant to us, on his personal blog, he writes a popular link roundup; what follows is an abridged version of his Links for January. Blogs and short links 1. Henry Oliver .. MORE
Tariffs
Trade, Tariffs, and Trust at Econlib
We’ve posted the second of two cross-posted articles with Law & Liberty in response to the Supreme Court ruling in Learning Resources v. Trump. Today, David Hebert explains why the economic fallout from the tariffs can’t be reversed by the Court’s ruling. From the article: Just over a year ago, citing the International Emergency Economic .. MORE
Tariffs
The Major Tariffs Question at Econlib
This morning we’re hosting the first of two cross-posted articles with Law & Liberty in response to the Supreme Court’s decision in Learning Resources v. Trump. The first, by John O. McGinnis, provides an overview of the legal aspects of the ruling. From the article: The Supreme Court’s decision in Learning Resources v. Trump will have immediate political .. MORE
Labor Mobility, Immigration, Outsourcing
Friedman on Immigration: Setting the Record Straight
Even people who are otherwise enthusiastic about a free market in labor can get cold feet about immigration once redistribution enters the picture. Some are fond of quoting Milton Friedman, who famously (or infamously) said: “It’s just obvious you can’t have free immigration and a welfare state.” On this view, immigration is fine under fully .. MORE
Economic Growth
AI, Technology, and Work
Generative artificial intelligence (AI) is upending professions as diverse as art, cinema, accounting, national defense, and education. Some even argue that AI will render almost all work obsolete. They say its ability to “think” and accomplish tasks previously solely in the realm of human ability will mean that humans will not need to work; the .. MORE
Technology
Learning the Bitter Lesson in 2026
To prepare for teaching, I am reading a famous article in AI research: The Bitter Lesson, written by Richard Sutton in 2019. I wondered what would seem prescient and if anything would feel like Sutton had gotten it wrong. At the end, I’ll discuss economic implications. Sutton draws from decades of AI history to argue .. MORE
Economics and Culture
Show You Care (with Econ)
For someone like me, economics is everywhere, if only you know where and how to look. Where is “economics” when it comes to Valentine’s Day? Here are some of the less romantic suggestions: Some economists have tried to model “marriage” as joint production functions, implicitly modeling a marriage as a “firm” that “produces” things like .. MORE
Sports Economics
Will Commodity Sports Last?
If you wanted to bet on the Super Bowl this past weekend, you had options. You may have bet with a friend. If you live in a state where it’s legal, you could have gone to a casino or used a casino’s app. Or, starting last year, you could have entered into an event contract .. MORE
International Trade
The US is a Small Country
In my recent post on US manufacturing jobs and tariffs, I mentioned a Wall Street Journal article that pointed toward American tariffs having little impact on Chinese exports; the exports are simply being shifted to other countries. In the earlier post, I discussed what that fact meant for US manufacturing jobs. Here, I discuss what .. MORE