How Did Adam Smith Influence The Economy

Smith’s Influence in the Post-Smith Period
One need not have perused this chapter to realize how great Smith’s influence on economics has remained in the two centuries after his death. But let us stop for a moment to consider how he affected some important scholars; we pause briefly to consider Edmond Burke (1729-1797), Irish statesman, political theorist and philosopher. His Reflections on the Revolution in France (1790) is viewed by Muller as the “single most influential work of conservative thought published from his day to ours.” A friend of Adam Smith, he advocated for markets, but also for the Irish under England’s absentee landlord system in his country. When in 1783 he became the honorary rector of the University of Glasgow and was
Toward the end of his life, Burke made his most notable defense of the free market as the most effective way to solve problems of resource allocation. After poor harvests in 1794 and 1795, a rise in food prices inspired a series of proposals for government intervention – the government should either force food prices back down or raise wages. In Parliament, a bill was proposed to establish by law a minimum wage employers would be required to pay. Burke wrote the prime minister, William Pitt, suggesting what sensible policy must dictate. That would be to allow wages and prices to be determined by market
It impacts only the lower end of the unskilled labor market and in President Obama’s era only around five percent of the work force. But when the price of labor is raised, the cost of any product produced by that labor will go up. Higher prices will result in lower sales and possibly profits as well. So producers will quite naturally hire less labor. This doesn’t apply to the number of entry-level managers, highly educated chemists, physicists, or engineers, or to any workers who are already paid more than the new minimum. It applies only to entry-level workers without skills or experience. Those workers will not be hired, so they will not gain the experience to move to higher wages and better jobs after a year or two at the entry level. They will simply not be hired. The reader might check to see what happened to the employment of young urban workers after the imposition of the latest minimum wage increase. Unemployment among those workers is at distressingly high