The Wealth of Nations_ Books 4-5 - Adam Smith [19]
The person who finally pays this tax, therefore, gains by the application, more than he loses by the payment of it. His payment is exactly in proportion to his gain. It is in reality no more than a part of that gain which he is obliged to give up in order to get the rest. It seems impossible to imagine a more equitable method of raising a tax.136
Smith also defended the principle of direct payment on the grounds of efficiency. Only by this means, he contended, would it be possible to ensure that services are provided where there is a recognizable need.137
Smith further argued that while governments must be responsible for establishing major public works, care should be taken to ensure that services were administered by such bodies, or under such conditions, as made it in the interest of individuals to do so effectively.138Smith tirelessly emphasized the point, already noticed in the discussion of justice, that in every trade and profession ‘the exertion of the greater part of those who exercise it, is always in proportion to the necessity they are under of making that exertion’.139He therefore approved of the expedient used in France, whereby a construction engineer was made a present of the tolls on a canal for which he had been responsible – thus ensuring that it was in his interest to keep the canal in good repair. In fact, Smith used a number of such devices, advocating, for example, that the administration of roads would have to be handled in a different way from canals because they are passable even when full of holes. Here he suggested that the ‘wisdom of parliament’ would have to be applied to the appointment of proper persons, with ‘proper courts of inspection’ for ‘controuling their conduct, and for reducing the tolls to what is barely sufficient for executing the work to be done by them’.140
Education
The provision of education represents the fourth major division of Smith’s treatment of public services. This, of course, is a subject which is still topical today. There are echoes in Smith’s analysis here of his earlier Theory of Moral Sentiments. This discussion of education also significantly extends his views as to the appropriate organization of any public service.
Adam Smith recognized that education was important in its own right. But in Book V he also claimed that education could be the means of offsetting the debilitating effects of the division of labour. In Book I, Smith had argued that the division of labour helped to explain the superior productivity of labour in modern times and the greater command of the material requisites of well-being which the modern citizen enjoyed as compared to his savage counterpart. Readers of Book I may recall the famous claim
that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.141
But by way of qualification, Smith later observed,
In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations: frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations… has no occasion to exert his understanding, or to exercise his invention… He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.142
Looked at in this way, the savage is in fact better off than many of his modern counterparts; an important reminder of the point that welfare cannot only be measured in material terms.
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