Of the Expenses of the Sovereign or Commonwealth
- Book V is called "Of the Revenue of the Sovereign or Commonwealth."
- The first thing a government needs money for is to pay the military to protect the country from foreign invasion. But different countries have very different spending habits when it comes to maintaining the military.
- In some countries, every full-grown man is considered a soldier who has to spring into action whenever there's trouble.
- For Smith, you can't have a society with agriculture unless you have some way of protecting the farms from foreign invaders.
- In a modern civilized society, only a small percentage of a population goes off to fight a war. So these people are paid out of the taxes of civilians. Thus the expense of maintaining an army gets higher as the country gets more advanced.
- If you're going to have justice within a society, you have to have a court system and a police force to enforce laws.
- And you can't make these things private because then a select group of people would control them for private gain. Smith is still willing to admit that, even in a public system, rich people tend to get an easier ride than poor ones.
- For the final part of this chapter, Smith turns to a discussion about institutions of the public good. Now this is important because you'll get a lot of Adam Smith fans nowadays saying that we should privatize all the public institutions (like water, sewage, garbage, you name it). But Smith believes that these institutions should be kept open with taxpayers' money because they'll never serve the public good if they're run for private profit.
- One public institution that Smith firmly believes in is the public school. He doesn't want to see schools become private establishments because he wants to make sure that every single child in a country has the opportunity to receive a good education.
- That said, Smith believes that teachers might do a better job if their salaries came directly from the students. He fears that people receiving government paychecks won't be as motivated to work hard.
- Smith fears that schools are built for the needs of instructors rather than students, and he thinks this relationship should be reversed. Maybe that's why so many schools now have students complete teacher evaluations.
- Smith thinks that education should meet the demands of the public, meaning that teachers should teach whatever people want to learn about. If a bunch of people want to learn how to fix cars, then teachers shouldn't spend five months teaching them how to read Latin.
- Even though different people have different needs, Smith thinks that every neighborhood should have a school where children can learn to read, write, and add. They need to know these things in life to keep other people from cheating them.
- For Smith, one of the biggest advantages to public education is the way it promotes social stability. In his mind, people who are educated in the ways of the world are less likely to rebel against the upper classes because they will understand how pointless it is to do so.
- Finally, Smith talks about how the country needs to set aside a portion of tax dollars for its ruler. In order to be respected by the people, the ruler needs to look rich and powerful. So the country needs to spend taxes to keep his palace looking spiffy. It's not clear whether Smith believes this or if he's just saying it to get on the king's good side.
- Smith also believes that rich people should be taxed at a higher rate than poorer people. He says this because one dollar can't possibly mean as much to a wealthy person as it does to a poor person.