The dangers of having fixed spending and fiscal rules

With the current talk from Germany and France about imposing new, tougher, rules on the spending and debt levels allowed to be incurred by Euro countries I thought I would point out what Adam Smith said about theorists ‘who reduced their doctrines into a…technical system of artificial definitions, divisions, and subdivisions’.

Smith said that this is ‘one of the most effectual expedients, perhaps, for extinguishing whatever degree of good sense there may be in any moral or metaphysical doctrine’.

This is from Smith’s book ‘The Theory of Moral Sentiment’, and thanks for P J O’Rourke for pointing it out in his book ‘On The Wealth of Nations’.

Any set of fixed rules, to be applied automatically without thought to the circumstances, is asking for trouble.

 

 

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