What Can Adam Smith Teach Us Today?

- Today is March 10th, 2026, and my guest is Economist Ross Levine, the Booth Durby family, Edward Lazar, senior fellow at the Hoover Institution and Co-director of Ho Hoover's Financial Regulation working Group. Prior to joining Hoover, he was a faculty member at the University of California at Berkeley's High School of Business. Ross, welcome to EconTalk.

- Oh, it's great to be here. Ross.

- Our topic for today is Adam Smith. Today is March 10th. Yesterday, March 9th was the 250th anniversary of the publication of the Wealth of Nations. And Ross, you decided to honor this anniversary year in an unusual way. Describe the project, which you call from the hand of Adam Smith.

- So I decided that it was 250th anniversary of the Declaration of Independence, and more importantly, for an economist, the, the publication of the Wealth of Nations. And so I was asked to write something about the, the, the, the US Independence. And I proposed that I write a monthly letter from Adam Smith to America in 2026. And so the, the purpose of the letters is to be very true to Smith, but written in a way that is easy for somebody to read when they're waiting in online. And as you know very well from your own writings, Smith is oftentimes invoked and simplified and caricatured. But he's such a complex, insightful scholar, psychologist, and, and political scientist that I thought he would have a lot to offer to, to many of us today. So,

- And I love this project, you know, I tried to do something similar with my book, how Adam Smith Can Change Your Life. But these are shorter and they're very readable, and you can find them, we'll link to them, but you can find them at, it's called Freedom Frequency, which is a Hoover channel on Substack. And what we're gonna do is talk about the first two letters. So the first one begins this, when this will give listeners the flavor of, of the project. My dear friends, I look upon your age with admiration and astonishment. You enjoy conveniences and comforts that the barons and princes of my time could not have imagined. And yet you track your sleep as if peace could be graft, chase productivity, as if rest were a moral failing. And wake to voices urging you to optimize every hour and maximize every potential. It seldom pause to ask why. So I wanna start with that. I think, and by the way, what's nice about this writing, you're writing is that there, there are words that are your own, and they're written in a, I would say a smithian style. Like I just, like I just read. But you also try to quote Smith directly, verbatim as much as possible. And yes, that is a, that's a shtick that can be annoying, but it's not in your case. So I want to compliment you. Good. It's very, very nicely done. So why, you know, why would Smith, what, what is Smith asking here? What, what is he saying to a modern, from his perspective of the 18th century? What's he, what's he asking us?

- So the way I understood it and understand it is he's, he's asking, what are you doing? What motivates you? Why do you work so hard? And he comes back to a theme that oftentimes we work hard in order to be admired, in order to be held in esteem, in order to receive praise. And he understands that this is a motivation that has existed over time and across civilizations. But he's concerned about that as a motivation because he ultimately views it as leading to an emptiness and a dissatisfaction. And I thought that for today, and certainly in the us that people work extraordinarily hard and starting out to be true to Smith and asking the question, why do you do that? So it seemed the, it it was one of the ways in which Smith opens up the Theory of Moral Sentiments, his first book. And it seemed the right way to sort of engage readers from a very broad, from a very broad, a very broad array of readers.

- Now, when you, when you open this way though, you didn't ask the question directly. You focused on this optimization maximization. I think of it as sort of the, I think of it as the life hack industry, right? Here's, here's a trick. Yes, here's a trick, you know? Yes. Here's a shortcut. Here's a fantastic way to, you can at least, you only have to sleep four hours and you'll be more, even more rested. Here's a seven minute workout. I, I just got my, my second one, I thought I, that that fad died. Yes. It turns out all I need is a chair in seven minutes and I am gonna look so good. I'm looking at these guys on the web after seven minutes a day. Oh my, it's probably not true. That's what I'm thinking. So I'm curious why you picked this focus rather than asking why do you work so hard? Obviously it's related to it, but you picked a, a focus, this focus of optimization.

- So I live in Silicon Valley, so what you describe as people have sleeping devices and people wear all sorts of complicated watches and everything is to maximize their productivity. And people are very much in a rush to get where they're going. And so you, you look around and you ask why, and then you look around and housing prices here are truly astronomical. And there are other really great places in the United States, one can live with just much more reasonable housing prices in a style of life. So there's a question of why we're doing this. I think less on the optimization front, there was a personal aspect of this as well. I am sort of reaching an age where I don't really have to work for money. And so there's a question of, okay, I'm working very hard. Why am I doing that? Is this the best way for me to spend my time? So there was both a, a personal aspect and an aspect of looking at my surroundings.

- Yeah, I've quoted it before. There's a line from the poet, Gerard Baley Hopkins. I am my work for that. I came meaning that's what I'm on this earth for, is to do. And it is a very deep question, right? Of how much is too much enough, et cetera, what else you would do at the time. And then the question, motivation, and of course Smith understood that often and other economists understand this too. What we say when asked why do we do it is not always the same as to why we actually do it. And what Smith's answer as to why we do it.

- So Smith, and it's a very interesting contrast with the way most economic, most economists approach it. But Smith's argued that the key reason, the key motivation is that we work to be seen, we work to be admired, we work to be praised, we work to be held in esteem. So a lot of our motivation is to get this approval from others. And the reason why it's in contrast with much of economics is that one of the, one of the main ways that my economist model human behavior, motivation is that my happiness or utility is based on what I consume, independent of what goes on around me. And I think anybody who has kids and anybody who engages with the world quickly realizes that that's not the case. That we are very much social animals. And this is from the beginning, this is what Smith argues, that even our sense of right and wrong or moral sentiments is very much shaped by social interactions with our parents and our community more generally. So that, that was, that that's at the essence of Smith is, is is that a big motivation, is seeking this esteem and approval of others. And then he says, look, this is, this is won't bring you happiness. This won't bring you tranquility. That you have to look inside to this impartial spectator and look to be admirable, not admired by others, and to be lovely, not necessarily seeking love and approval of of others. And it's a, a, a deep insight into what motivates us and a deep insight into what can make us truly happy in the long run. It's, it's quite remarkable that somebody who's only known for a narrow perspective of what the invisible hand means is writing as, as you explain extremely well in your book, essentially a self-help book on how to live a, a good life.

- Yeah. We'll link to an essay, a recent essay by Tim Ferris, who, who's been a guest on the program I really liked Tim. Tim is, is in many ways the king of the self-help world. He's got the four hour work week, which is a varied on the seven minute exercise. He's got a lot of life hacks and many of those he's practiced and experimented on himself with. It's interesting, he's got a quite an interesting business model, but he recently wrote a, a startling essay that says, you know, this self-help thing may not actually help. And that if you're always focused on yourself and making yourself more effective and happier and so on, you might end up being quite unhappy. Yes, it's a wonderful piece and it's a wonderful, I think, revelation for him. I, we'll see how long it lasts, but it'll change the way he, I think, behaves and, and rights going forward. But I think this question of, of, you know, what motivates us and, and the people around us, you know, the social pressures we face. It's a weird thing because, you know, you said you, you in your own life, you're thinking about it, but you, you've been a extremely successful academic. You've taught at some of the finest universities in the world. Isn't that enough? I mean, really are is, are you, are you going into the office now to rack up even more points? Don't you have enough love and and admiration from people around you? Or do you think you just stuck in a habit that you've acquired from long ago?

- It's a tough

- Question. Sorry about that.

- No, it's, it's, it's, it's a very good question, but I think I, I, I, at least for me, I think I have an answer. So in terms of the having the love and the approval of people who are closest to me, I am just extraordinarily fortunate. The issue for me was of one of work, and I think there was a driving force for much of my life to be held in esteem, to be approved of, to have to acquire a certain rank. And there's no question that this was a driving force. And I think over the last five to 10 years, there's been a reflection of, okay, now what do I want to do? And I think what motivates me now, I don't think I work that much less, but what motivates me now is to explore something different. For example, much of my life has been this, you know, it has been mainstream economic analysis, methodology identification, my work on finance. And I think now it's, I want to explore something broader and write for a broader audience. And I may fail, but it's something that gives me a lot of joy. This, this reading about Smith has just been thrilling and I'm writing a book that is more geared toward a broader audience and is not, doesn't have empirical work or any regressions in it. And so that has been very satisfying for me. And I think reading Smith gave gave me a little bit of extra insight and, and permission to do these other things.

- That's nice. I probably quoted it before, but I love this quote from George Allen, who was the coach of the Washington Redskins, who supposedly said, he supposedly said, I don't send Christmas cards. They don't help you win football games. And I don't know if he meant that. I have a feeling he did mean it, actually. And I think a lot of economists have that attitude. Their version would be, I don't do X, whatever it is, because it doesn't help me get peer reviewed articles in top tier journals. And that treadmill that a lot of academics are on. It's interesting because Part of it is as you get older, as you, as you're suggesting, you start to wonder whether there's some things that might be better, your time might be better spent on. It's also a question whether that particular treadmill's gonna pay off the way it used to. Right. We're in a very interesting moment with respect to peer review, which is falling into disrepair, excuse me, is falling into disrepute and ai, which might be generating thousands of new articles without, we're not sure how that's gonna, how that's gonna turn out, but it will, it will probably change the way some of our colleagues behave. I wanna talk about the parable of the poor man's son.

- One, one. I just want to interject. Yeah. One thing that I may be the only one of your only guests who knows who George Allen is, so It's true. It's

- True. Yeah. It's, yeah, I noticed that recognition when I mentioned him. So the poor man's son, the parable of the poor man's son. I, I, I'm tempted to read it, but it's, it's very long, but it's great. And we'll put a link up to where you can find it. Describe that. What, what is the parable, the poor man's son, and why is it relevant for this, this conversation?

- So it's a, it's, it's Smith's story, but it's, it's a story that has been told again and again in many different forms. So I think for, for listeners, it will be very familiar, but it, it's a story about a young man who's poor, who sort of sees what the rich has and looks at all the glitter and, and looks at the esteem with which the rich are held and says, if I can be rich, if I can acquire that, that that wealth, I will have that esteem and approval and that will make me happy. And the word he uses is Smith uses his tranquil. And so it's about this person who works his life and, you know, neglects his family, neglects, caring for himself in many ways, and then his old age hits. He realizes how much he has missed, how empty his, his life is. And that even though he is rich, all of this outside external esteem doesn't leave him tranquil because of the choices that he ma made throughout his life. And so it's a, it's a story about ultimately feeling regret and, and about not making the types of choices that would've led to a happier, more tranquil life for, for him. And it was about the, the about seeking the approval of others in a particular realm, becoming rich, rather than seeking internal approval and being a, what he would smith to say a virtuous person and a good person. Some of the things that you talked about being benevolent and good to other people, treating people well and all, all, and, and, and, and that he neglected those essentials.

- I mean, it's

- That, how about, how about yourself? How do you, how do you read it? You, you are very much an expert on Smith, and I'm curious, as do you have have the same perspective on the story? Yeah.

- Only, I'm not an expert on Smith. I only play one on tv on, on podcasts and, and videos, but, and YouTubes. But I, I love the story, but I think there's, there's a piece to it that, that's it, it's especially interesting. Certainly he emphasizes the sacrifices that, that the poor man's son makes. It's interesting, by the way, it doesn't call him the poor man, it's the poor man's son. So this person grows up in this environment of disappointment. And I, I, I think about is a ridiculous association, but I think about LBJ and Robert Car's biography that his father was a, was a small time politician who was a very honest man and his honesty limited his, his ascent and, and acquisition of power and LBJ as a young man and a boy thought, that's not gonna be me. I'm gonna cut every corner and I'm gonna show the world. I'm not gonna be like my dad. So he was in many ways the poor man's son in terms of both financial, well success and also political power. But anyway, the poor man's son, he looks over with envy at the, at the rich man's son growing up in, in ease. Fascinating to me. He's talking about the American dream in many ways. This idea that anybody can succeed through hard work, which of course, at Smith Day wasn't particularly true. It could happen, I guess. And Smith was particularly worried about people who would follow corrupt paths as a way to acquiring wealth, because there, it was much harder to say, start a business or pull yourself up by your bootstraps or whatever language you wanna use. But anyway, so part of it is the sacrifice, the things you have to do to acquire the, the wealth. But the other part is that the wealth itself is so empty. And I, I don't know, you know, in Smith's age, you know, I, I joke about it a lot in my book, you know, the, the, the technological devices of Smith's times were ear pickers and, and toothpicks things that we, we, yeah, we've moved on. We've got more inter entertaining toys. And it's, you wonder if Smith in today's world would be a little more understanding of the desire to acquire some of those things. But I, I think the, the essential part is exactly what you said. This is the wrong path. There's a certain condescension to Smith's story saying to this kid, don't be a fool. You don't know, you're not gonna like this. When you get what you want, be careful what you wish for. And of course, longtime listeners will know that my favorite quote from Smith's, which you've alluded to already, man, naturally desires not only to be loved, but to be lovely, and loveliness, meaning being praiseworthy, admirable as opposed to praised and admired, lovable, rather than just loved being intrinsically good is Smith's recipe for happiness. And in particular, to be a, it's a really subtle point. 'cause he's not saying it's foolish to care about what people around you think, but he's saying you should have a certain perspective on it. Talk about that.

- Well, my understanding was that this, that the perspective on this is that you, it's okay to, to want to be, to be held in esteem, to be approved of, but that you develop an impartial spectator, a conscious, we may call it today a sense of right and wrong that's developed from really the moment you're born and you start to interact with your parents. Do you get a smile? Do you get a hug? Do you get approval? So it's very, he's he, he, again, very contrary to some of the philosophers that time and the contrary to some economists, your sense of right and wrong is, is based on your social interactions. It doesn't just emerge. And that when there's a consistency between, you know, being this good virtuous person, this person that you are conscious approves of, and being in a society that also finds those things admirable, then you, I you, I read Smith is saying, this is when you have a very good life. But like you say, there, there's, there's is, and you get to this more when he moves to the social interactions between an individual's choice in society, is there's very much this notion that if, if you're admired for the right things or kind of virtue, then you will pursue all sorts of activities that seek to gain that approval that are consistent with yourself. That will be socially beneficial. If in contrast society admires only wealth regardless of how it's achieved, for example, through fraud or through coercion, through other types of, of force, then this is going to encourage those types of actions on the part of individuals which will cause this, this distinction between gaining the approval from outside and having the internal approval of your, of your own actions. That, that's was my reading of it.

- Yeah. I wanna take a quote that you have here that elaborates on it from your, from your letter before you we do that. I wanna talk for a second and get your thoughts on imposter syndrome. So imposter syndrome I think is the idea that, you know, you're not worthy, but other people don't. And so you're treated in a certain way and you're an imposter. You're not really the person that they think you are. And it seems to be such a common human insecurity. I certainly have it. And I often, and I, and I feel often I get prayed

- Even in your, even in your quotation when you said that you're not a, an expert on Smith, you just play one on tv. It was a good, it was, it's a good joke. But there's there's an element of the imposter element there. Exactly. That's well said. When you really, you, you wrote a book you really are an expert on, on Smith. So

- I'm not so sure I, you know, I, I'm serious. I I, but I, I don't know, but I do, I do know there people know a lot more about Adam Smith than, than I do. So, so in that sense, I think I'm something, I'm an imposter when I get treated as an expert. Okay. But I'm thinking just in general about the kind of esteem that people have for us in our social circles that among our friends and family, often, of course we know more than they do about our, our shortcomings. They're not just imagined, they're all, they're sometimes real. Yeah. But, but what Smith I think is saying is that you wanna avoid that if you can. You, you you want to yes. Achieve your reputation honestly, and come by it honestly and, and have it have that reputation and match what people think of you.

- Yes. No, it's, it's a very good point. And so it's a, now we can do, we can develop it devolve into psychotherapy a little bit here. Sure. Bring it on. Yes. We all, we, we, we all sort of feel this sense of of of maybe, maybe not all of us, but I do, many people do have this, the, the imposter syndrome. And I think, at least for myself, part of what has happened over time is to just not engage with this thought of, am I really what people think I am? And to simply to say I am what I am, people will make their own assessments and I am just going to try to be, you know, professional to do my best and to be as comfortable as as I can with trying to be a good person and a good economist. And so, and again, I view that very consistent with Smith and why reading him really starting to read him 10 years ago or so was, had a very positive effect on my own approach to life more generally. And that's why I thought your book, and I think that people reading Smith or these, the is can be a, a useful way to lead a happier life, you know, and be a be a good Yeah. So I, and I think that you, you brought up a point earlier that Smith did not view one's happiness simply as what they consume. That he, he, that this notion of virtue of being praiseworthy was how one dealt with society as a whole. This did not mean foregoing self-interest, but it did mean not being greedy. And it, it, it meant, so he was, for someone who lived very much alone as a scholar, he had a very intricate view of how people engage with society more broadly and how important that was for their own sense of contentment.

- So you have a really nice way of putting it here from your letter, you say, you know, make a reference to the, we have these two desires. We want to be loved, we want people to think highly of us, respected, admired, et cetera, praised, we wanna matter, right? That's what Smith's saying. And at the same time, we wanna be lovely. We don't just wanna be love, we wanna merit these reactions from the people around us. And you're right, this is very, I think, very deep. You say these two desires are easy to confuse. The love of praise seeks the opinions of others. The love of praise worthiness seeks inner integrity. One depends on spectators. The other depends on conscience. One is fleeting and hollow, the other is steady and deeply satisfying. Much of human dissatisfaction comes from pursuing the first while neglecting the second. How do you know when you are truly praiseworthy and not really flattered for this? You must look within. And I think this, this is a great insight about these two things that we, we care about both of 'em. Obviously we don't, we, we don't want to always fool people that we're successful. We'd like to be right, have no imposter syndrome. But basically it's a question of getting your motivation from the outside versus the inside is what you're saying. You wanna expand on that? Yeah.

- Now what I'm, it's beautiful. Now what I, I I, I wish I was insightful enough to say it, but I'm just trying to say what Smith said in Substack Lang substack language. So it's easy to digest. So yeah,

- But then you go on and you say, when your labor serves the desire to be worthy, rather than merely admired everything changes, ambition becomes a source of meaning rather than anxiety. Hard work brings satisfaction rather than exhaustion. So work hard by all means. But first ask what desire your work serves? Ask not will this impress others, but rather will this satisfy the impartial spectator within? That's great advice.

- And, and by, by the way, so I was, I was, when when I start, I, I have lots of letters to go, but I, I kind of wrote the first, first four. When I'm writing those just apropos of this, I would, I would wake up in the morning and it would be like dark outside and I'd like, man, I really hope it's past five. 'cause then I can start up and I can get up and kind of keep working on those, on, on, on the letters. And so that's, I think, very consistent with Smith's view that, you know, are you engaged in something that you think is worthwhile internally and maybe will, you know, hey, it's very, it's, it's just wonderful to be on the show with you. But it, it's, it's so, it's he's not against working hard. He's against, you know, are you working hard in a way that is really going to give you this, an inner peace or inner peace and, and, and, and content and also involves serving a social role. Yeah.

- And I think the challenge, of course, it's easy to say that it's easy to give this advice. It

- Is.

- And it's so much harder to actually follow the advice. And what thoughts do you have on how to help people internalize that message of listening to your inner drive versus your desire for approval of others?

- That's a very good question. So first of all, I do recognize that I am in such a, I don't wanna use the word privilege 'cause it's overused, but I am in a unique, unique position. And so, and, and, and many people must do a lot of work on things that are not intrinsically satisfying, but that provide the means to support their families. So that, that is, and, and that's has to be recognized. So the the point is that within the context of the control that somebody has, and if they're fortunate enough to have really what they need to survive, to ask themselves what, what they are doing, you know, and why they are doing it, have some introspection. And to think about the degree to which they're working to try to gain approval from others. Because those others, their opinions can change day to day, week to week. And you may devote your life and they may approve of it now and disapprove of it later. And they may be on to the next shiny thing that they're going to admire. So there's a sense of trying to get, learn about yourself and figure out is this something that you, we, me as an individual want to pursue view as worthwhile. And that it, it it's a, it can be a false and constantly moving target if one is seeking the approval of quote the, the others. And I think that's, I think that's how I would frame it, say for my kids who were trying to make their way in their world and are not, you know, and turning toward their late sixties with the comforts to be able to just pursue their intellectual curiosities.

- Yeah, I think, I think there's some soul work that has to take place. And I, that's a phrase that's increasingly falling out of fashion and, and anything with soul in it is, is out of fashion. 'cause quote, we don't have one, but we do have something deep inside us that drives us. And what I mean by soul work is I think it's worthwhile for young people to put some time and to figure out who you want to become. And I think that's part of what Smith's talking about. And that work is not easy. It's, there are many ways to get there from here. Religion, I've mentioned this before on the program, therapy, meditation, reading, great works of literature. I think all of these help people figure out who they want to become and what's at their core that matters. And it's worth spending some time on that as opposed to racing ahead. I think there's a fear that if you don't race ahead, you'll be left behind. And that's probably

- Absolutely

- Not a good worry.

- Absolutely, yes.

- Let, let's turn to your second letter, which is, which I love be for many reasons, but one of which is just, you ask a question that I think most people wouldn't associate with Smith or what, or I think it's particularly important, you ask Smith asks through your voice, are you admiring the right people? And most of us don't think about that much. We might think about who our friends are, who, you know, we spend our time with. We all understand that we get influenced by the people around us. But you know, really what's the harm of admiring, fill in the blank. Some entertainer, some athlete, some flawed human being like we all are because of their one piece of their success, say, and you could argue it really doesn't matter. So why, why did you decide to focus on this, this issue?

- I think I, I decided to focus on it for, for two reasons. One is that I really saw it as essential to portraying Smith that this is something that he viewed as very important. 'cause we can talk about this as we go, that links up to what he viewed as essential for prosperity, broadly defined. And that is justice. And the other reason was that I wanted to, I I I wanted talk to people today, especially today, EE especially given the, the media and the political environment that when we admire people, we tend to want, we want, part of that is wanting to become like them. And part of that is cutting them some slack on whatever they've done to get there. And part of that is giving them whatever they say, more credit than maybe it deserves. And it poses, again, the question that goes back to the way I'll put it, the way you put it. Like, who do we want to become? You know, are these people virtuous? Are they good? Are they benevolent and and or are they just rich? Have they become powerful through good means? And so is, is that what we want to reward in society via our admiration? And again, it comes back to what you were saying, it's like, who do we want to be? And part of who we want to be is what do we value? So I I very much like the way you, you pose it. I think that, that, that's, that's wonderful. And so that, that those, it was those two reasons. It's really very true to Smith. It's not looking for something on the side where I wanted to say something and I looked to Smith, this is front and center,

- You know, he has a lot to say that's really fascinating and I think completely underappreciated about how we admire the powerful. And of course there, there's two ways to be loved. One is to be virtuous, and we'll talk about that in a little bit. The other way is to be rich, powerful, famous and rich, powerful, famous people are loved, meaning admired, praised people pay attention to 'em, they matter. And Smith has a lot of fascinating psychological insights on how much we care about people who are not in our lives, famous people. That their, that their narrative goes well. He has a lot of thoughtful things to say about the suffering of kings and the thriving of kings, and how we, we want their stories to turn out happily. And when they don't, we get upset. And even when they're horrible people, when they're depo, even when they're autocrats. And so it's, that's a fascinating thing. We, which I'm, we're not gonna talk about, but what I'd like you to talk about is you actually make a very bold claim. You argue that admiring the wrong people isn't just like a har you call it a harmless social habit. You say, it's not that You say it threatens the foundation of a free society. You get four reasons. I have them here. I don't know if you have them nearby or if you know 'em by heart. So I don't wanna put you on the spot. So if you need help, I'll help you out. But you get four reasons for why this is socially, in other words, not just personally, gee, you think a lot of that person, that person's not so nice. It's not good for you to admire somebody who's not a nice person. You know, I think a lot of our, of our entertainment, which honors gangsters to be blunt, murderers, thugs, people who shed blood on screen and we think they're cool. And I think that's really unhealthy personally, it corrodes your soul or your inner self, but you're worried about the social set, the social impact of this. Talk about that.

- So I, I would point out just as a a a, a quotation, which I think I'll get right, but he, he, when I say Smith really emphasized this, he's this sort of calls this admiration of the rich and the powerful kind of the major threat. It, the, it need the major source of the corruption of our moral sentiment. So the be major way in which our sense of right and wrong is corrupted. And so I, he, he, he very genuinely thought that this was an enormous deal. So let's see if I can get all, all four off the, off the top of my head. So I think one is, is, is is very much as an economist, and, and it goes back to the first thing we talked about in that if society, if we admire the wrong types of activities and people want to be admired, then they are going to engage in the wrong types of activities. And so this is, this is, this is really essential and it feeds into his understanding of the motivation of human beings. So that that's one. And so he, he's not saying that the rich and the power are because they are rich and powerful unvirtuous, but he's saying that they're not necessarily virtuous 'cause they're rich and they're powerful. And if we admire the one thing, the rich and the power as opposed to the virtuousness, then that is what's going to lead to potentially fraud and coercion. And really the, the disintegration of a free society that comes to the next point, which is both about a free society and a peaceful society. And also later what leads to his notion of what is go, how the market is going to work to foster prosperity. And that is how much he stressed justice. So a sense of, you know, rules and a judicial system that focus normal self-interest in ways that are socially benevolent. And so the issue here is that if what we do is we, we admire the wrong people or we admire the wrong activities, we simply, if we just admire, then this can give rise to fraud and the seeking of various types of monopoly privileges and the undermining of the judicial system. And people have less faith in, in the, in the entire social apparatus, you can have a breakdown of, of freedom because the, every, the for smith freedom and the market ultimately are founded on a judicial system. And a sense that the just judicial system is reasonably fair. And so that's why this admiring the wrong people is fundamental to Smith. The other two are, are interrelated with these. And that is is that if we admire it, it's what you told the, the way you told the story about the, the the kings. We, we want the rich and the powerful. We, we just, we we we admire them. We want them to do well. Part of that can also mean that we cut them some slack when they do wrong. And that again means that the judicial system fails to be, fails to provide justice. And again, you people can lose faith if it's not a reasonably equitable administration of justice across, across people. So

- There's one more, I

- Say there's one more, I'm, I'm slipping my mind right now.

- You had it, but I think it's, oh you said misplaced admiration breeds civility. Yes. That we grow deferential to those above Oh yes. Us and negligent towards those near them.

- Yes. So, so in many, I, I would guess that in many of the places where people work, that people can become extraordinarily deferential to those in positions of power across a number of dimensions. And therefore, rather than calling out or speaking up, when they view things as wrong, they will defer. And that's part of this admiration of the rich and the powerful. And again, it's not the rich and the powerful just because they're rich and powerful, it's admiring them for, for reasons other than kind of their ver virtue and their honesty and, and their, and, and the degree to which they live a life of integrity. And if, if that's the case, then we're going to defer to leaders who, who don't exhibit those types of virtuous traits. We're simply gonna defer to people who've ha who have achieved power and wealth regardless of how they've gone about it.

- You know, when I was a little boy, my, my father gave me a book of stories. I think at the time it was probably a, not really at the time, but in his time when he was a little boy, it was a book that was influential and it was story, there were stories of virtue. One that I recently reheard, I hadn't heard it in 50, 60 years, was the story of Damon and Pitus. Damon and Pitus are two friends, the king sentences, one of them to death for treason or some real reason actually, it's not there. He doesn't like the king or he says something bad about him. So the king sentenced him to death. And, and Damon, I, I'm not sure which one it was, I'll pretend it's Damon. Damon says, can I just, before you kill me, can I go home and say goodbye to my family? And he says, you think I'm a sucker? You think I'm gonna let you go? Is he pretending you're gonna come back? I mean, this is ancient times. It's not like a, you can't put a track, you know, a device on him doesn't have GPS. So he says, no, you can't go. And he says, his friend Pitus says, I'll tell you what, I'll stand in his place. I trust him. I know he will come back and if he doesn't come back, he can kill me. Which of course really an unsatisfying outcome for the king. But, but he's relying on the friendship which he understands is real for whatever reason why, I don't know why, but he knows it's real. So he knows that the, he thinks the other one will come back. So he lets him go. And of course the, you know, the execution is scheduled for 9:00 AM a week from then. And it, you know, that he does not back the day before. He is not back that night. He's not back that morning. It's seven 30 and is, they're about to kill poor Pitus Damon bursts in the door and says, you know, my ship sank and I got robbed by ba by Bandits. And I did the best I could tell, I'm really sorry I made you nervous, but here I am and the king pardons, both of them. And because he's so impressed by the friendship and the loyalty and the kindness. And he says, I pardon you on condition that you teach me to be as good a friend. And you know, those are the kind of stories I grew up with. I'm not saying I'm a good friend. I don't, and I have no idea if I'm a good friend or not. I don't think I'm particularly a good friend. But I'm more interested in the fact that in America, when I was a little boy, people were raised on such stories. They were not raised on the rogue, they were not raised on the, the kid who did the wrong thing and got rich and got, you know, was the cool kid. And something happened in, in modernity, I think, I'm not sure what it is. It probably goes well, well before my childhood, something about the 20th century, that simple virtue became somewhat for suckers. And that's a bad thing for society. That's a really bad thing. And I think that's what Smith was saying. That's what I understand you to be saying, that the people we admire, who we see as role models matter. You know, I once her to talk, we're in March and the Academy Awards are coming, there are the people we admire, you know, they get all the glory. They, a billion people are watching, I don't know how many millions, tens of millions in America. These are the people who are the coolest. These are the people who are loved and they're, I mean, I like 'em a lot, some of 'em. But they're actors. They're, they're not truly virtuous people. Yeah, they're skilled. I like what they do. They've given me a lot of happiness and satisfaction and they've moved me to tears and made me laugh. But they're actors. It's not the most, we don't have an Oscars for the best people. We have an Oscars for the best movie stars.

- Yeah, yeah, yeah. No, I think, I guess I would, I think what I'm not sure of this is, this is a, what I'm not sure of in the US is there's an admiration for what glitters as you point out, I would say that there's an admiration for certain political leaders that to me doesn't seem to be based on virtue or you know, what Smith would admire. Yeah. But at a, at, at, at very local levels that those, those types of traits I think are still very much valued. For example, I'll just give it a small example. My parents had a small, had a small house in Maine, and the, the neighbors couldn't have been more different politically. And it was simply not possible to discuss national politics with them. But in terms of, if I needed anything and if they needed anything, we would be there for each other. And at a local level dealing with how to raise money to address this problem or that problem, there was much a very much shared sense. And in terms of the, the story you gave about the friends going for death, I mean, trusting with money, resources, houses, anything. So this, this, there's sort of in me a hope that some of those traits that we see in each other, these smaller levels can, with some work, replace what's going on at a, at a bigger level. There. There's a, a hope in me that some of the anger, some of the constant desire to be angered by what's going on at the national and international level, where we tap into that all of the time and the media feeds it to us all of the time, that we'll become tired of it. And maybe my optimism is irrational, but seeing it at a small level, I'm hoping we can reclaim it at a bigger level.

- Yeah, I think that's a great point. Not enough. No, that's a great point. And I think There is a temptation to think that politics is the most important arena when in fact, usually it is not. It is the interactions we have with the people who live near us or friends or family and so on. You know, being a, a good brother, being a good sister, being a good parent, being a good child, these are so much more important than being a smart voter or, or, or a wise consumer of social media. I'm gonna read this quote from Smith, which I love, it's a little long, but it kind of summarizes what we've been talking about. I wanna close with something else. Quote, to desire to acquire and to enjoy the respect and admiration to mankind are the great objects of ambition and emulation. Two different roads are presented to us equally leading to the attainment of this so much desired object. The one by the study of wisdom and the practice of virtue the other by the acquisition of wealth and greatness. Two different characters are presented to our emulation. The one of proud ambition. And ostentatious avidity, the other of humble modesty and equitable justice. Two different models, two different pictures are held out to us according to which we may fashion our own character and behavior. The one more gaudy and glittering in its coloring the other more correct and more exquisite exquisitely beautiful. Its outline the one forcing itself upon the notice of every wandering eye. The other attracting the attention of scarce anybody but the most studious and careful observer. They're the wise and the virtuous. Chiefly a select though I'm afraid, but a small party who are the real and steady admirers of wisdom and virtue. The great mob of mankind are the admirers and worshipers and what may seem more extraordinary. Extraordinary most frequently the disinterested admirers and worshipers of wealth and greatness. Close quote,

- How can you not love this guy?

- I know. Yeah.

- Like when you read that, it's so beautiful. I kind of then question, so why do you, why do I have to rewrite it in a way for substack? Just read the guy. Yeah. But yeah, he's, yeah, it's true. He's, he's, he's a, it, it's, you can't, that's why it's can annoying when Smith gets caricatured, like in the movie Wall Street with Michael Douglas, you know, greed is good. You know, it's like that, that guy's not saying greed is good.

- No, he's definitely not. Anyway, it's just such a fascinating thing when you know your observation that, that you should just read Smith. The reason it, the reason Smith is great, I wanna suggest there are many reasons, but one of them is if you summarize that with chat GPT, and you don't have to use it 'cause it's pretty easy to summarize. It says pursue wisdom and virtue don't pursue wealth and fame. And that's good advice kind of. I, I guess. But that's not why Smith is great. 'cause he's giving you good advice. He's giving, the reason he's great is he says it in a way that first of all warns you about the temptation to take the wrong path. He's explaining to you how easy it is to succumb to the seductions of wealth and fame. And that's great. He's telling you an insight about your own character that you might otherwise he's not just lecturing, he's not just preaching anger. Correct. He's giving you an insight into the human heart. That is, that is quite profound. It, it's interesting to think about his own wife. He lived pretty well. He wasn't a popper, he wasn't a the poor man's son or the poor man. It might have been something of the poor man's son, but, you know, most of his life was devoted to understanding things and his friendship, you know, in many ways with David Hume, which he valued greatly. And of course he's an easy guy to be friends with. He's very stimulating company. But you, you could debate how well Smith lived up to his own advice, but I think he did pretty good.

- Oh yeah, I, I, I think so too. I think the other thing by the way, in the quotation, just building on what you were saying, is that he, he also, this is, goes back to the beginning part of our conversation is that he, he sort of says, look, it, it's, it's, it's quite natural for us to seek this admiration of others. You know, part of the, that's part of the reason we work hard. And, and he, and he sort of is telling you where this conflict comes from. 'cause you, we seek that and yet we're socialized. We have this internal, you know, impartial spectator, this conscious, and there can be a conflict. And that he wants us to reflect and find that path that is consistent with our internal, you know, our internal morality or internal sense of, of right or wrong. And so it's, it's, it's very nuanced. It's not like a wealth and power or bad. And so it's, it's a very, very sophisticated perspective on human nature. And that's why I appreciate him so much.

- You know, I guess the other way to be critical of him is that he's one of the most famous people in the history of human thought. He didn't Right. But, but I think, and this is a point about the nuance, he did not pursue that in a particularly aggressive way. He did not count how many downloads of his YouTube video describing the wealth of nations. In eight minutes, he was able to get,

- Yeah,

- Of course he lived in a different time. It was harder to be as ambitious as it's possible to be now through all kinds of ways that are not so healthy for the soul. But it is, he, he in a way got lucky. You know, I don't think he intended to be the greatest economist or most influential economist of all time. Hmm. Lemme ask you a question. Where'd you go to graduate school?

- UCLA?

- Did you read Smith in graduate school? What years were

- You

- There? No,

- No, I didn't read Smith in graduate school. I, there may have been small, small, small segments of the Wealth of Nations. So actually reading, the reading of the Theory of Moral Sentiments, if, if, if, I'll tell you a, a a little story about that. So my father, who is a professor of history and a Marxist and writes a lot of books on Marx, felt that Marx did not understand Adam Smith. And so he, he was, this is during COVID and he wanted to read Smith with me. So he decided to start with the Theory of Moral Sentiments, which I like, I had mentioned had not read. So we were gonna read this chapter by chapter, section by section and, and then chat. So we read and then we got together and I was very annoyed with my father because I felt that he had read Smith simply trying to find in Smith what he wanted to read. And then I realized that I had read Smith simply wanting to find in Smith what I wanted to read. And so I went back and I read the sections again. And you know, at first I had highlighted, then I highlighted more, and then I realized, man, this, I can't caricature this guy into what I want him to be given as a modern trained economist. And it was just taking a deep breath and reading and appreciating him, and then talking to my, my father about it. And as, as I mentioned to you out outside, is that by the time I got done reading Smith, the entire book was essentially highlighted and I had to buy another copy so I could read it. And so that, that's, that's sort of how, so, no, not graduate school way after graduate school,

- But I think, and so, you know, I, I had to read I think the Division of Labor chapter, maybe the compensating differentials labor wage chapter for my labor economics class in graduate school. But I suspect Smith's not read at all anymore at grad, at the graduate level in economics. And just to tell a, a quick story, when I gave a seminar on Smith at an institution, I will not name one of the faculty who doesn't have a Nobel Prize, but he could get one sooner than later said to me, Mike, why would you read something written in 1759? I was talking about the Theory of Moral Sentiments. He said, Evan, hasn't everything in there been, you know, superseded by other things? I mean, don't we already know all this stuff? And, and I should just mention that, well, all the quotes I've read, I I'm pretty sure are from the Theory of Moral Sentiment 1759, not Wealth and Nation, 1776. And I, I said, well, I wasn't quite sure how to respond to that, but I think it was Don Boudreaux, who's been a guest many times on the program, pointed me to an essay by K Ronald Coast that I'll will link to where K gives a, he writes an essay on assessing where, you know, Smith's contributions. It's a fantastic essay. And toward the end he says something about how, yeah, well, and I'm gonna paraphrase it, but you know, some something like, yeah, You know, modern psychology, comma, when it's true, comma has some of Smith's insights, meaning, you know, this great advance, these great advances we've made over the last 250 plus years, that they're, they're kind of small and, and Smith's wisdom and insight into the human condition are just as vivid and probably as correct as they were then, and are remain true and are worth reading for that reason. So that's absolutely, he's not a, you don't read him to find out the theory of chemistry in 1759, which we've made some advances. You read him to understand the human heart. And I don't think we've gotten that far since then.

- I couldn't agree more. I don't, I I just could not agree more. It's funny to be, like, if you go to economics before the movement and behavioral economics, I mean, Smith would've looked at, look, looked at the profession like, what are you guys doing? Yeah. You know, have any of you sort of engaged with the world before? You know? So I think that yes, and, and like you say, I, I'm sure there've been immense advances in psychology, but Smith is, I think writing a century or more before psychology even becomes a, its its own discipline. So, and I think the passage you read earlier that this, there's, there are a lot of insights and I, I certainly not only have learned a lot, but have, it's given me great joy learning from Smith. It's just been, it's been a real pleasure.

- My guest today has been Ross Levine. Check out his letters, well linked to them. And Ross, thanks for being part of EconTalk.

- Thank you very much for having me. It's been a pleasure.