Located 30 miles from Cape Cod, Massachusetts, the island of Nantucket has no traffic lights. Instead, drivers respond to stop signs, rotaries, and courtesy. More often than not, if a pedestrian, a walker, or a biker needs to cross the street, cars stop. When someone is making a left turn or leaving a parking lot on a busy street, cars stop. And, drivers usually smile and street crossers wave thank you.
Nantucket’s lack of lights started me thinking about Adam Smith. Economic thinker (there were no economists in 1776) Adam Smith suggested that less government was better than more government. Smith believed that human nature was so diverse and policy consequences so unpredictable, that, although imperfect, less government could ultimately lead to more virtuous human behavior. For example, told their taxes will be increased to help the less fortunate, certain people express resentment. And yet voluntarily giving the same amount to charity can evoke pride and generosity.
What are the implications for our society if what we do voluntarily makes us feel better and can make us more virtuous than when we are forced to do something?
The Economic Lesson
In his first major book, The Theory of Moral Sentiments (1759), Adam Smith sought to describe a just society. Displaying a thorough grasp of human nature, he said that the path to a just society started with profit seeking businesses. Building from his first book, he then wrote The Wealth of Nations (1776), through which his analysis brought order and insight to the seemingly chaotic market system that was spreading through Europe.