Adam Smith, laissez-faire and traffic lights

Adam Smith and Traffic Lights

by Elaine Schwartz    •    Jul 14, 2014    •    277 Views

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. As they accept the right-of-way, drivers usually smile and street crossers wave thank you.

Nantucket’s lack of traffic 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 no one could possibly know what was best for everyone. All too often, when mandated by government, incentives become distorted.

Where are we going? Just some thoughts about benevolent behavior that results from a less government.

In his first major book, The Theory of Moral Sentiments (1759), Adam Smith sought to describe a just society. Building from his first book, in The Wealth of Nations (1776), he then brought order and insight to the seemingly chaotic market system that was spreading through Europe.

In both books, Smith displayed why the path to a just society started with profit-seeking individuals. He perceived that the orderliness and honesty that business required would spillover into a more virtuous society that is dependent on the interaction of consumers and businesses in markets rather than government.

And that returns me to traffic lights. i wonder if we need to be careful about government taking over “beneficient” acts. Is a society (and an island) more virtuous when individuals have the opportunity to enjoy doing good?

Sources and more...In addition to including sections from a 2010 econlife post, I revisited to 3 of Jerry Z. Muller's excellent Great Courses lectures on Adam Smith in "Thinking About Capitalism."

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