ASI and friends gathered yesterday to commemorate the birthday of Adam Smith, our favourite classical economist. The reception was held at St. Steven’s Club, followed by a lecture by Irwin Stelzer, business economist, columnist for the Guardian and the Sunday Times (among others) and the co-founder of The National Economic Research Associates. The topic of the speech was the relevance of Adam Smith’s teachings on modern economic policy.
Mr. Stelzer took an unorthodox approach in his lecture: assuming everyone on the audience was a free marketeer, he argued in favour of some government intervention, and attempted to define the proper role of government within the economy. He highlighted six key areas in which some intervention would be desirable:
- Fostering competition
- Regulating when necessary
- Internalizing externalities
- Offsetting market failures
- Preserving Free trade
- Ensuring fairness of distribution
Mr. Stelzer labelled his approach “neo-orthodoxy”: a free economy with minimal, but well thought-out regulation to counterbalance market imperfections. Referencing Smith, he asserted that if the incentives are chosen well enough, “much good will follow”.
Well, maybe. But I wasn’t wholly convinced. As the ASI’s Dr. Eamonn Butler pointed out during the question and answer session, many – if not all – of the market failures Mr Stelzer drew attention to have their roots in previous government failure or intervention. He argued that if we got the first point right, and ensured that markets were genuinely free and competitive, government wouldn’t really need to concern itself with the five that followed.