Adam Smith Would Argue Against Rent Controls

On Friday afternoon, in response to the announcement that the new Scottish SNP/Green coalition government plans to introduce rent controls, Guido remarked on Twitter that “Adam Smith’s homeland plans to implement rent controls.” In August, we at Guido tend to digitally detox on weekends; we even give the Twitterbot some downtime. So it was only on Monday that we discovered thousands of cybernats ranting in our timeline about Adam Smith. The Queen of the Cybernats herself had tweeted a response:

Even though it has been a few decades since the editor read “The Wealth of Nations, he was pretty sure that Adam Smith had not written anything recently, and everything he had ever read by Adam Smith was against price controls and such like. A lot of cybernats were quoting back what he had written about taxing ground rents. Taxation obviously is nothing to do with price caps or controls, and in any event, rent is already taxed as income. This is not a new policy.

Nevertheless, Guido thought it best to consult an expert: arguably the foremost scholar on the father of economics is Dr. Eamonn Butler, who literally wrote the textbook on Adam Smith, and co-authoredForty Centuries of Wage and Price Controls. Nobody knows more about Adam Smith and rent controls than the man who has written books on both the subjects. Dr. Butler pointed out that Adam Smith warned explicitly:

“When the government, in order to remedy the inconveniences of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season. The unlimited, unrestrained freedom of the corn trade, as it is the only effectual preventative of the miseries of a famine, so it is the best palliative of the inconveniences of a dearth; for the inconveniences of a real scarcity cannot be remedied, they can only be palliated. No trade deserves more the full protection of the law, and no trade requires it so much, because no trade is so much exposed to popular odium.

Dr. Butler explained further that Smith was “talking about food prices, but rents are completely analogous, since today the ‘odium’ has transferred from farmers to landlords.” So what does the world’s foremost expert think of Nicola Sturgeon’s take on Adam Smith’s likely attitude specifically to rent controls? 

“If Nicola had actually read and understood Adam Smith herself, she would not be so careless about the views that she attributed to him. Which were the complete opposite from what she (for her own political purposes) claims them to be.”

Despite five thousand supportive retweets by cybernats, she clearly needs to read up on Adam Smith’s policy advice.

mdi-timer 24 August 2021 @ 12:17 24 Aug 2021 @ 12:17 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments