20160413 Variations on a theme of Adam Smith

Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun May 14, 2017 6:33 pm

Re: 20160413 Variations on a theme of Adam Smith

20170514 Pages 819-846

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 1

Of the Expenses of the Sovereign or Commonwealth

Part 3 Article II

Of the Expense of the Institutions for the Education of Youth

This Article treats a subject which (it seems to me) ranks with the most significant of the entire exposition, both in Smith's time and today, in 2017.

Smith opens with discussion of human nature with respect to compensation of teachers/instructors/professors.

It would appear that he favors payment of anyone setting up shop as an instructor via disbursement by students themselves, because (he appears to believe) this insures the greatest exertion by those who have chosen this profession.

He points out that those of great talent will be inclined to exert themselves in activities that might lead to fortune, to the neglect of teaching, if they are paid a salary from public endowments.

Looking out at the scene in 2017, as well as I can understand it, it appears to me that over the intervening two centuries, institutions of higher education have attempted to find useful employment for those who enjoy (and hopefully are good at) teaching, while at the same time, encouraging those who are interested in and capable of research to pursue those paths. As nearly as I can tell, the exertion that Smith favors appears to arise in the case of researchers, in the necessity for them to seek funding.

In the case of teaching, while I have little insight into the state of instruction in most institutions today, it seems to me likely that the performance of teachers with respect to the achievements of the students is fed back into the management structure of the institutions.

Again, working only from my perspective as an observer, it seems to me that competition between institutions is where Smith's vision of the benefits of competition may be seen today.

Smith closes this Article with such passion that I find it almost difficult to read, primarily because the conditions against which Smith rails seem to me to exist in abundance in the United States in 2017, due in large part to the decision of the Founders to assign responsibility for education of citizens to the States. It seems to me that the performance of States of the United States has been uneven from the beginning of the Nation, and the deficiencies of the public education system are as severe as they have ever been.

Nations competing with the United States for global leadership often (appear to) undertake education of their citizens with a much more serious attention to detail, and do not leave such important matters to the managers of regions within their borders.

***
Looking forward to the time when communities will be growing in locations away from Earth, I join with Smith in his closing of this Article, by hoping that these communities will NOT allow education of the citizens to be left to the haphazard and quirky or even counterproductive thinking of citizens in locations remote from the foundation elements of such communities.

It would be better for such isolated groups to separate themselves entirely from the greater community, than to train "citizens" who would then work to destroy the founding community.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon May 22, 2017 7:26 pm

Re: 20160413 Variations on a theme of Adam Smith

20170521 Pages 846-875

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 1

Of the Expenses of the Sovereign or Commonwealth

Part 3 Article III

Of the Expense of the Institutions for the Education of People of All Ages

The most interesting (to me at least) element of this Article is Smith's (apparent) anticipation that religion will fade away as enough centuries pass.

The passage in question appears on page 862. Smith is referring to the edifice of superstition and unreason built by religion ...

Begin Quotation:
But that immense and well-built fabric, which all the wisdom and virtue of man could never have shaken, much less overturned, was by the natural course of things, first weakened, and afterwards in part destroyed, and is now likely, in the course of a few centuries more, perhaps, to crumble into ruins altogether.
End Quotation.

As I look out at the world of 2017, I do see encouraging signs of the growth and acceptance of science in some members of the population, but religion surely hangs on in every region and in vast numbers of people.

Smith's observations in this Article cover several centuries, and even refer briefly back to Greek and Roman times. His discussion of the challenge to civil authority posed by ascendant and entrenched religious orders includes King Henry the Eighth solution, to set himself up as the head of the Church of England.

***
In the general theme of economics, I would like to point out the recent work of Igor Teper (igorteper.com) published in the current (May/June 2017) issue of Analog Science Fact and Fiction.

Teper proposes a collapse of civilization expressed as regression of human colonies created during an expansion from Earth, after which the Earth is presumed destroyed.

In Teper's scenario, only one space ship remains, and its crew spends its time travelling between the colonies which continue to send out electromagnetic communications, implying that they remain sufficiently viable to support the technology needed.

The economics I ** think ** I see at work here may well have been seen in prior centuries on Earth .... A vessel travels between ports of call, exchanging technology in return for crew members.

This is clearly a barter proposition, and since the colony Teper features in his story consists of only 311 people, I find it unlikely any kind of sophisticated monetary exchange system would exist.

What Teper did NOT consider (or if he did, it did not appear in the story) is the possibility envisioned by Edward M. Lerner (see InterstellarNet books), that communities based in solar systems remote from each other might communicate electronically.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun May 28, 2017 5:58 pm

Re: 20160413 Variations on a theme of Adam Smith

20170528 Pages 876-878

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 1

Of the Expenses of the Sovereign or Commonwealth

Part 3 Article IV

Of the Expense of supporting the Dignity of the Sovereign

This little wrapup section for the chapter is a welcome break from the study of expense, and the equally dense consideration of taxation that lies ahead.

Mr. Smith concludes this chapter with a reprise of the many points made in recent pages, and a hint of the issues that lie immediately ahead, regarding the balance that must be struck between expenses that can be and should be borne by affected parties, or local populations, and those expenses that are reasonably distributed to the entire population of a Nation or Region.

The issues Mr. Smith and his peers were struggling to manage are (I suspect) of an eternal nature that will be perplexing angelic beings who have evolved from the state we observe in 2017.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Jun 04, 2017 4:15 pm

Re: 20160413 Variations on a theme of Adam Smith

20170604 Pages 879-887

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Part 1

Of the Funds or Sources of Revenue which may peculiarly belong to the Sovereign or Commonwealth

In this relatively short section, Mr. Smith considers land as a time honored resource for earning income for the government. He argues in favor of private ownership of land as highly likely to bring about the maximum possible return to the nation as a whole. I do appreciate his concluding support for lands for the "pleasure and magnificence" which benefit the public. The United States is particularly blessed with an abundance of land owned by the nation as a whole, of which a portion has been reserved for public parks and for preservation to benefit future generations.

This little wrapup section for the chapter is a welcome break from the study of expense, and the equally dense consideration of taxation that lies ahead.

Mr. Smith concludes this chapter with a reprise of the many points made in recent pages, and a hint of the issues that lie immediately ahead, regarding the balance that must be struck between expenses that can be and should be borne by affected parties, or local populations, and those expenses that are reasonably distributed to the entire population of a Nation or Region.

However, Mr. Smith concludes this opening with a forecast of the use of taxes to provide the "greater part" of the revenue needed by the government to pay for the expenses of maintaining and developing the nation.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Jun 12, 2017 1:57 pm

Re: 20160413 Variations on a theme of Adam Smith

20170611 Pages 887-912

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Part 2 Of Taxes

Although this text was written and published around 1775, I find that very little has changed in broad perspective, as taxation is administered in the United States in 2017. The details of how buildings are assessed have certainly changed, from the crude early attempts cited by Smith, such as the Hearth Tax and the Windows Tax. In current assessment, I observe that many details are collected by a paid assessor, usually at the time a property is sold. In addition, there exist systems for registration of improvements to property, which I assume feed back into the taxing authority database.

The four principles Smith cites for administration of taxation on pages 888 and 889 appear to me to stand the test of time.

As we humans look forward to establishing communities away from Earth, it seems to me that the need for all members of the community to contribute to the well-being of the community will always lead to consideration of how best to levy those contributions.

An observation by Smith caught my eye, on page 893:
Begin Quotation:
But though empires, like all the other works of men, have all hitherto proved mortal, yet every empire aims at immortality.
End Quotation.

This observation then leads Smith into discussion of taxation of rent, and various schemes which have been attempted over the centuries to levy taxes upon land.

Smith concludes this chapter with the observation that levy of taxes upon rents tends to lower those rents.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Jun 18, 2017 9:22 pm

Re: 20160413 Variations on a theme of Adam Smith

20170618 Pages 912-924

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Article 2

Taxes upon Profit, or upon the Revenue arising from Stock

In this Article, Mr. Smith continues his discussion of the topic of taxation, which has (no doubt) always been a subject of vexation to members of any community which would seek to survive by supporting individual members through collective action, and (I suspect) always will be, with rare exceptions where the abundance of the environment is so great as to eliminate the need for cooperation.

On page 914, Smith brings forward a concept which I find enlightened, considering the era:
Begin Quotation:
The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country.
End Quotation.

In 2017, those who are responsible for collection of taxes to fund the United States government are (understandably) frustrated by the practice of keeping money earned over seas in those countries, instead of bringing it home where it would be taxed at what are considered by many observers to be high rates.

The situation described by Smith in the paragraph from which the quotation is taken is remarkably similar to what we observe in the world of 2017.

Smith describes some (to my eye quite remarkable) historical examples of willing self-taxation which have occurred (very rarely) in Europe. Indeed, it seems to me (upon reflection) that the United States system of taxation depends to a great extent, upon the trust of the citizens in each other, to declare their taxes accurately. I admit that the many reporting tools established over the years to “assist” citizens in their inclination towards honesty have been effective.

I note in passing, that slavery was very much alive and thriving in various places, most certainly including the colonies established in North America at the time, so Smith has occasion to comment upon the “poll-tax” which included slaves as property to be assessed of the owners.


This week, I would like to point out a column by Robert J. Samuelson, who writes for the Washington Post Writers Group.

http://www.dispatch.com/opinion/2017061 ... to-correct

In consideration of Mr. Smith's disapproval of excessive concern with trade balance in his time, I find Mr. Samuelson's discussion of the global distribution of balances of trade to be quite interesting. In particular, I liked this statement:
Begin Quotation:
If all countries tried to balance their trade with all other countries, global commerce would break down.
End Quotation.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Jun 25, 2017 5:52 pm

Re: 20160413 Variations on a theme of Adam Smith

20170625 Pages 924-931

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Appendix to Articles I and II

Taxes upon the capital Value of Land, Houses and Stock

This little appendix considers appropriation of some of the capital value of a property when it is transferred from one person to another, or from one owner to another.

In 2017, arguments about this practice remain alive and well in the United States, where imposition of taxes upon transfer of estate property is assailed as a “Death Tax”.

Smith's discussion includes consideration of the practices of the Romans, who (Smith reports) exacted a 5% tax upon inheritances.

Inasmuch as every citizen of a community has an assumed responsibility to support that community, as Smith points out, at the point of transfer of wealth is the ideal time for the community to extract a portion of that wealth, because the source needs to dispose of it, and the recipient did not possess it previously.

I note that the same argument applies to taxes upon transactions of all kinds, and that is why all communities attempt to insure that transactions are carried out in public, so that the percentage to be delivered to the community can be readily identified.

Mr. Smith mentions the use of special paper (or parchment) which must be secured for a fee, and which provides a guarantee by the community of the agreement embodied in the contract.

As I look out at the scene in 2017 in the United States, I can see that many if not all of the practices Smith describes have carried forward to the present day.

Smith summarizes the value of “registration” with these words:
Begin Quotation:
The registration of mortgages, and in general of all rights upon immoveable (sic) property, as it gives great security both to creditors and purchasers, is extremely advantageous to the public.
End Quotation.

Smith then points out that human beings what they are, abuses can occur and have occurred in the past, when the rituals of registration are not audited closely, and enforced with suitable embarrassment to perpetrators.

Because this review of Adam Smith is about economics, I would like to include here a report that highlights the interaction of agriculture with the commons. In Smith's time, environmental degradation was certainly going on, but it seems to me that the abundance of supplies of materials were so great in the North American continent, that depletion of resources in Britain itself were (apparently) not recognized as of concern.

In 2017, it seems to me that the visibility of the carrying capacity of the Earth is much more widely recognized, but it is still most emphatically NOT universally recognized.

http://www.dispatch.com/sports/20170624 ... xtinctions

I note with interest that the author of the article quotes the author of a study which was published in a recent edition of “Nature”:
Begin Quotation:
“With so many people on Earth now, and the numbers increasing by another 3 or 4 billion before we finally level off at our carrying capacity, the impact on extinctions is really great,” said David Tilman, the study’s lead author. 
End Quotation.

Mr. Tilman appears optimistic to me, in his projection that the human population will level off.

It seems to me that if the historical record is taken into account, it is more likely than not that human beings will collectively fail to “level off”, which is one of the underlying considerations for Dr. Dartnell's work.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Jun 25, 2017 5:53 pm

Re: 20160413 Variations on a theme of Adam Smith

20170625 Pages 924-931

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Appendix to Articles I and II

Taxes upon the capital Value of Land, Houses and Stock

This little appendix considers appropriation of some of the capital value of a property when it is transferred from one person to another, or from one owner to another.

In 2017, arguments about this practice remain alive and well in the United States, where imposition of taxes upon transfer of estate property is assailed as a “Death Tax”.

Smith's discussion includes consideration of the practices of the Romans, who (Smith reports) exacted a 5% tax upon inheritances.

Inasmuch as every citizen of a community has an assumed responsibility to support that community, as Smith points out, at the point of transfer of wealth is the ideal time for the community to extract a portion of that wealth, because the source needs to dispose of it, and the recipient did not possess it previously.

I note that the same argument applies to taxes upon transactions of all kinds, and that is why all communities attempt to insure that transactions are carried out in public, so that the percentage to be delivered to the community can be readily identified.

Mr. Smith mentions the use of special paper (or parchment) which must be secured for a fee, and which provides a guarantee by the community of the agreement embodied in the contract.

As I look out at the scene in 2017 in the United States, I can see that many if not all of the practices Smith describes have carried forward to the present day.

Smith summarizes the value of “registration” with these words:
Begin Quotation:
The registration of mortgages, and in general of all rights upon immoveable (sic) property, as it gives great security both to creditors and purchasers, is extremely advantageous to the public.
End Quotation.

Smith then points out that human beings what they are, abuses can occur and have occurred in the past, when the rituals of registration are not audited closely, and enforced with suitable embarrassment to perpetrators.

Because this review of Adam Smith is about economics, I would like to include here a report that highlights the interaction of agriculture with the commons. In Smith's time, environmental degradation was certainly going on, but it seems to me that the abundance of supplies of materials were so great in the North American continent, that depletion of resources in Britain itself were (apparently) not recognized as of concern.

In 2017, it seems to me that the visibility of the carrying capacity of the Earth is much more widely recognized, but it is still most emphatically NOT universally recognized.

http://www.dispatch.com/sports/20170624 ... xtinctions

I note with interest that the author of the article quotes the author of a study which was published in a recent edition of “Nature”:
Begin Quotation:
“With so many people on Earth now, and the numbers increasing by another 3 or 4 billion before we finally level off at our carrying capacity, the impact on extinctions is really great,” said David Tilman, the study’s lead author. 
End Quotation.

Mr. Tilman appears optimistic to me, in his projection that the human population will level off.

It seems to me that if the historical record is taken into account, it is more likely than not that human beings will collectively fail to “level off”, which is one of the underlying considerations for Dr. Dartnell's work.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Jul 02, 2017 6:16 pm

Re: 20160413 Variations on a theme of Adam Smith

20170702 Pages 931-935

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Article 3

Taxes upon the Wages of Labor

In this short Article, Mr. Smith advances an argument that I interpret as critical of the practice of imposing wages directly upon wages for labor.

It would appear (as I read him) that Mr. Smith would prefer a tax upon the goods or services sold.

240 years later, while those citizens in the United States who earn their living with wages are expected to contribute to the costs of government, I observe that taxes upon income are generally forgiven below an arbitrarily chosen total annual income, so that the greater part of taxes paid by persons in this group are sales taxes, which are equivalent to Mr. Smith's tax upon consumables.

Mr. Smith closes this Article with an observation about his countrymen which seems to me very likely to be universal in scope:

Begin Quotation:
The persons, besides, who enjoy public offices, especially the more lucrative, are in all countries the objects of general envy; and a tax upon their emoluments, even though it should be somewhat higher than upon any other sort of revenue, is always a very popular tax.
End Quotation.

240 years later, I observe that in the United States, those who hold public office are indeed expected to pay taxes at the vary same rate as those whose labor generated the income that is subsequently distributed to the holders of public office.

To my eye this practice is somewhat cosmetic, because the holders of public office do not contribute in any way to the wealth of the nation. It might be just as effective to pay such persons less, and I concede, this is indeed the effect of the imposition of tax upon them. The arithmetic of reducing the wages of such persons could be performed at the time of payment, but in effect the reduction of their wages is performed once a year as the entire nation settles its respective scores.

In Article 4 of the current Chapter, Mr. Smith addresses taxes which fall indifferently upon every Species of Revenue.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Tue Jul 11, 2017 5:07 pm

20170709 Pages 935-938

Book Five

Of the Revenue of the Sovereign or Commonwealth

Chapter 2

Of the Sources of the General or Public Revenue of the Society

Article 4

Taxes which, it is intended, should fall indifferently upon every different Species of Revenue

This section: Capitation Taxes

Upon first reading of this short section, I thought that Capitation Taxes might be a thing of the past, in 2017, in the United States.

Mr. Google quickly updated my understanding of this topic ... It turns out that poll taxes have been part of the structure of the United States from the beginning, and they are even mentioned in the Constitution. What is more, they have been in active use in the Southern part of the United States as recently as 1966, when the US Supreme Court put an end to the last of them.

https://en.wikipedia.org/wiki/Poll_taxe ... ted_States

However, the spirit of the tax, which Smith describes in various implementations in his time, lives on in fees for many government services, such as driver's licenses, hunting licenses, and (I'm sure) a myriad of other assessments to cover costs of public services.

The essential element of this kind of tax, as I understand Smith's discussion, is that it is assessed without regard to the ability to pay of the individual. Those who can afford to pay the tax are able to enjoy whatever benefits follow, and those who cannot afford the payment are obliged to forego whatever benefits might follow.

The next section of this Chapter is a long discussion of taxes upon consumables.

Of special interest (to me at least) is that Smith describes an early attempt to impose a Value Added Tax, but the attempt was so clumsy that (apparently) it drove commerce out of the locality where it was tried.

The modern European Value Added Tax has apparently evolved to achieve acceptability to a sufficient part of the population.

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