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On Tuesday, I had the honor of delivering the 2026 Lev Dobriansky Distinguished Lecture in Political Economy at George Mason University. In celebration of the 250th anniversary of both the Declaration of Independence and Adam Smith’s influential book, The Wealth of Nations, I was invited to discuss how Smith’s ideas still shape U. S. public policy, particularly in trade and protectionism. This will serve as a written version of that lecture.
Three quotes from this classic capture some of Smith’s most important political concepts-showing him not just as an economist from the 18th century but also as an insightful political theorist whose words could easily apply to Washington today rather than Scotland over two centuries ago.
‘A conspiracy against the publick.’
The first quote might be one of Smith’s most recognized statements regarding politics and policy; however it’s often misinterpreted. In Book I of The Wealth of Nations he wrote:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick or in some contrivance to raise prices. It is impossible indeed to prevent such meetings by any law which either could be executed or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
The often-overlooked second part makes it clear that contrary to many contemporary interpretations, Smith isn’t advocating for government antitrust actions against private businesses meeting up. Instead he’s emphasizing a point about political economy: since industries tend to focus on boosting their own profits at consumers’ expense (by charging higher prices), government should avoid encouraging such gatherings.
Yet this is exactly what U. S. trade policy does-and has done for hundreds of years now.
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In early America (when government was quite small), tariffs served mainly as tools for generating revenue while providing “rents” to businesses that successfully organized lobbying efforts for them. The famously named Tariff of Abominations (1828) was largely influenced by Northern textile manufacturers and iron producers. Following the Civil War era ushered in a peak time for tariff rent-seeking where various sectors like iron, steel, wool, and sugar essentially dictated U. S. tariff schedules themselves. As I’ve detailed through research at Cato along with Dartmouth historian Douglas Irwin’s thorough examination in Clashing Over Commerce , 19th-century tariff lobbying laid much groundwork for today’s extensive lobbying landscape in America-all starting when American trade policy was openly auctioned off to whoever bid highest.
Offer up those rents? Then expect folks will go after them.
The heightening cronyism surrounding congressional tariffs reached its peak with Smoot-Hawley Tariff Act in 1930. As economic historian Phillip Magness pointed out , tariff-loving Republicans gave industry lobbyists another chance at price-inflating import protections; these lobbyists swarmed Congress: “Special interests flooded committee rooms exchanging cash under-the-table for favorable rates so they could shield themselves from foreign competition during [the ongoing economic] downturn.” Almost every group got its own specific tariff line item resulting in average rates nearing 50 percent-which triggered retaliatory measures deepening what became known as Great Depression.
To counteract this trend Congress enacted Reciprocal Trade Agreements Act (RTAA) in 1934 aiming to limit its influence by assigning authority over negotiations around tariffs back into executive hands-a move that likely would’ve pleased Adam Smith. This approach aimed at minimizing corporate rent-seeking behavior within Congress by shifting tariff rate-setting away from legislators’ oversight while encouraging exporters’ voices helping balance protective interest groups via new market openings abroad conditioned upon keeping import channels open domestically.
That reform worked-for some time. Legislated rates went down significantly while corruption around tariffs reduced overall activity levels during that era too; however America’s lobbying machine didn’t vanish-it simply adapted itself according to newer forms offered up through governmental initiatives. By 1960s things gained solid legal reinforcement through Noerr-Pennington doctrine established via multiple Supreme Court rulings stating joint corporate efforts aimed towards securing favorable policies-even if explicitly anti-competitive-were constitutionally protected First Amendment activities hence immune from antitrust repercussions. While defendable based upon First Amendment grounds (and arguably aligning with what smith saw regarding “liberty & justice”), this effectively endorsed corporations’ organized “conspiracy against publick”-as long they conspired within D. C instead outside boardrooms
And so we see modern-day complexities surrounding lobbying machines enabled by Noerr-Pennington have grown vast & effective. Cato researchers Clark Packard & Alfredo Carrillo Obregon demonstrated last year how “Big Steel” comprising American Iron & Steel Institute plus union representatives have scored protective measures exceeding other sectors across USA. Far being satisfied each measure taken merely fueled demands further prompting huge influxes requests since past decade wherein ex-steel executives along lawyers landed numerous high-ranking positions throughout federal agencies.
Now let’s talk about “Big Sugar,” functioning like textbook example legal cartel backed primarily due governmental price supports & quotas everyone knows remains financially disastrous despite knowledge within D. C yet growers remain concentrated among few electoral swing states forging alliances corn farmers benefiting derived sweeteners replacing sugar cane production altogether given previous context. Even former House Speaker John Boehner commented memorably expressing fellow congressmen quickly discover reality concerning terrible consequences behind sugar-policy combined succinctly stating not worth upsetting Big Sugar. These entities aren’t alone! Another case would be Big Dairy who lobbied effectively gaining tariff-rate quotas alongside marketing orders setting boundaries protecting local markets contributing towards crisis witnessed recently involving infant formula availability issue last year similarly coalition known collectively termed Big Ship-encompassing unions alongside shippers preventing significant reforms associated Jones Act perpetuating costs ballooning upwards four-five times compared world averages even whilst crude oil travels distances sourced Saudi Arabia/Nigeria rather than Texas directly thus exposing deeper inefficiencies brought forth regulatory practices observed currently.
The moment you scratch surface beneath virtually any product safeguarded through unique barriers imposed today-from textiles/apparel/shrimp/catfish/tomatoes/aluminum/lumber/kitchen cabinets-you’ll uncover organized interests actively pursuing agendas aligning precisely where observed originally by smith back way back then !
Even more ironically far remove concealing their conspiracies these organizations parade boldly flaunting intentions out there:
