The proud landlord, says Adam Smith, gives no thought to the needs of his brethren, and would keep all his income for himself if he could. But in order to keep in working order all the “baubles and trinkets” he uses to impress himself and his guests, he must pay a portion of his income to workers. The workers thus get from his capricious desire for luxury what they never would have gotten from his meager kindness and charity. This arrangement, says Smith, ends up producing a distribution of the necessaries of life that differs little from what we might have found “had the earth been divided into equal portions among all its inhabitants.”
The problem with this arrangement is that those who are employed in providing the landlord’s baubles and trinkets might have other talents. They might be painting canvases and writing poetry if they weren’t obliged to clean mansions and cook meals. Of course some people have to do gruntwork some of the time. But the vanity of the owners of capital makes this far more than necessary. A truly great aristocrat would allow his subjects to pursue intellectual pursuits of their own choosing. He would encourage and assist those pursuits as far as his resources permitted. By insisting that his subjects produce the baubles and trinkets he desires, rather than trying to discover where their true talents lie, he leaves these talents idle and undeveloped.
The idea that each of us can pursue our own capricious desire for luxury, and, as if guided by an invisible hand, inevitably advance the interest of society, is perhaps the most fundamental axiom of today’s economy. It is also transparently false. For every dollar I spend entertaining and pampering myself, I have one less dollar to spend educating and improving myself. For every dollar I spend trying to impress others, I have one less dollar to help others.
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