• Samuel at Gilgal

    This year I will be sharing brief excerpts from the articles, sermons, and books I am currently reading. My posts will not follow a regular schedule but will be published as I find well-written thoughts that should be of interest to maturing Christian readers. Whenever possible, I encourage you to go to the source and read the complete work of the author.

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  • March 2010
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Adam Smith On The Government Debt Crisis

Adam Smith

From an article by Robert Romano:

In 1776, when Adam Smith published The Wealth of Nations, Great Britain was faced with a monumental sovereign debt crisis that would not be seen again until the 21st Century — when the U.S. finds itself with a rapidly accelerating $12.4 trillion national debt, soon rising to 100 percent of the Gross Domestic Product within a few years. The last chapter of his opus magnum, “Of Public Debts,” was dedicated to persuading the British Parliament of the calamity the British Empire was faced with. And, alas, they did not listen.

Reading through it today, one might easily surmise that Adam Smith, the Scottish economist and Enlightenment political philosopher, was actually a time-traveler who had foreknowledge of the crisis that faces the world today. For, the crisis he describes in exquisite, haunting detail is, nearly verbatim, eerily reminiscent of the calamity that now threatens the economic survival of the modern world — and threatens to enslave future generations for decades to come.

But, the truth is, there is nothing new under the sun. The crisis today that the U.S. faces — and troubled European debtor-nations Greece, Spain, Portugal, and Italy — with the increasing risk of a national debt default, is just the latest example in the factual and unfortunately oft-repeated economic history of the world. And Smith saw it coming.

In short, republics, empires, and other nations since the dawn of time have fallen for the same exact reason: they spent far beyond their means.

Smith, an inexhaustible student of economic history, cited numerous examples in history back to ancient Rome of nations that had ruined themselves from within by violating the critical principle of parsimony: “ordinary expense [ought to be] equal to… ordinary revenue, and it is well if it does not frequently exceed it.” As early as 1776, Smith was advocating for a balanced budget, a lesson that, tragically, has gone unheeded in the halls of Congress.

Continue reading. . . .

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