wealth of nations
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By Devon and Chris
Wealth of Nations
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HistoryGeneral economic view at the time: gold and silver = wealth
Nations focused on exports over imports
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1776- Smith rejected the Townshend act which declared that there would be taxes on tea, paint, glass etc…
Refused this act because of his beliefs:• Nations wealth is in goods and services (not silver and gold)
• Basically embodied mercantilism: developed industry based on the balance of trade in Europe.
• Wrote Wealth of Nations to express views
More History
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“In those great manufactures, on the
contrary, which are destined to supply the
great wants of the great body of the people,
every different branch of the work employs
so great a number of workmen, that it is
impossible to collect all into the same
workhouse.”
-Claiming that division of the manufacturers
helps supply a greater amount of products
-Example: Trade of pin-making
Division of Labor
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Laissez faire economics: No government interference
- Tariffs/taxes
- Restrictions/limitations
- Corruption
Allow free competition, free trading
Let the market expand to its full production capabilities
Adam Smith disagreed on one thing: government involvement is necessary to uphold contracts, laws, needed for security
Government needed to get involved after stock market crash-1929
New deal-1930
Economics
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Roles of Government- Defense
- Justice
- Education
- Maintenance of commerce
-Fair and clear taxation
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Nations need to save money for economic progress
Invest in labor-saving technologies
More investing/saving = more efficient production
- Everyone will become wealthier
Accumulation of Capital
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Countries should do what they are best at
-ex: France should produce and trade grapes because they are plentiful; not Scotland
Restrictions of foreign trade should be prohibited
Foreign Trade
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How would you think that the government is involved with the economy today?
And what are some ways that they restrict the market?
Reference Today