I do not share all the principles classical liberalism defend. It is probably because I do not believe in a perfect man, nor in a road to perfection. Imperfection is in our genome. However, in the think tanks environment there are very intelligent people who passionately promote the free market policies. Where they work in small institutes, only funded by  individual donations, usually they are very clear-thinking persons. It is worth to follow their proposals because the analysis of the economic and political keys is so well focused.

The Adam Smith Institute is probably the best model of this kind of think tank. It has limited resources and unlimited enthusiasm for promoting freedom in society. I cannot agree with the diagnostics they offer of many topics in public policy, but I recognize that this think tank is lead by very smart analysts. In fact, I had the opportunity to pay a visit and meet Dr Eamonn Butler and I was fascinated by his commitment with the think tank and the classical liberalism. They had scarce resources but as it is known, they are followed by thousands of people all over the world. It shows that you do not need to be a millionare with a philanthropic complex to set up a think tank, or an ambitious will-be politician who uses an alternative way to enter in professional politics.

Like other free-market organisations, members of the Adam Smith Institute are worried about the hard criticism classical liberal policies are receiving  from different political and social agents. Everybody knows that the free market is not guilty of all of the economic problems we suffer from, but political parties prefer to use this argument because they feel very comfortable in their rescuer position: “Don’t worry! Father State will save you from the evil free-market”.

Therefore, think tanks as ASI have to reinvent the free-market thinking and persuade people that it is a decent public policy philosophy. In How to promote the free market in 2009, they offer several interesting arguments to promote the free market ideas in a hostile environment. A  first reflection I have liked is that

“The idea that government should do less and spend less is, sadly, viewed with suspicion at the best of times, but in an economic downturn it is seen almost as heresy. Every politician feels compelled to ‘do something’ regardless of its consequences. This tendency is reinforced by the 24-hour news media, with its insatiable thirst for new initiatives and dramatic announcements. And so the free market – perhaps for the first time in decades – is on the back foot”.

Media and politicians are creating a cynical discourse in which journalists and political parties appear as the good guys that are going to save the world distroyed by the wicked ‘neocons’ and the pletora of free-market think tanks. This is not true and is unfair. Many people have made  mistakes before this crisis, but media and politicians have also eaten a big piece of the cake. The bridge politics-business-media is not a fairy tale. I believe people from the Adam Smith Institute does very well in highlighting several falacies. Here are three of them:

1. Government is a creator of wealth

“We need to make people realize that government spending cannot boost the economy, for the simple reason that every pound it ‘injects’ must first be taxed or borrowed from somewhere else. The government cannot create purchasing power out of thin air. Tax takes money out of the private sector economy. Borrowing does the same. And if the government resorts to printing money, they will succeed only in reducing the value of that already in circulation”.

2. Government is smarter than any free market

“The fact that government cannot create new purchasing power, means that the case for government stimuli rests on the idea that politicians can allocate money better than the market can – an idea that has surely been tested to destruction. We already know that ‘priming the pump’ simply creates temporary and artificially high demand in certain sectors (generally inefficient ones), at the expense of others (typically ones that actually create wealth)”.

3. Deficit is a desirable aim of any Government

“Borrowing enormous sums to prop up an economy that has been thrown into crisis by too much debt and too much credit is widely and correctly seen as absurd – not to mention deeply unfair on future generations. It is also unclear that this is really what Keynes advocated”.

A conclusion: Politicians, do not joke with us because we are still alive and we can think.