Mr. Cooley is Associate Professor of Economics,
Twenty years before Frederic Bastiat wrote his parable of the broken window, Thomas Cooper was saying to his students at
"Suppose a tailor to get into a law suit and to pay a lawyer fifty dollars for successfully conducting his cause—or to break his leg and pay a surgeon fifty dollars for setting it; these payments are prudent, and the services rendered fully justify them; but is he the richer for these misfortunes? Even though the lawyer and the surgeon should lay out the fifty dollars with him for a suit of cloaths, it is no compensation, for he furnishes the cloaths after having furnished also the money that pays for them. It is melancholy to think that these positions should require to be gravely argued, but the present state of public opinion requires it."
Cooper practiced law in
Champion of Free Trade
While head of
For the most part, Cooper took his economics straight from Adam Smith. The private enterpriser knows best—far better than any government official—how to use his resources. Let self-interest reign. "If every man in the country trades beneficially for himself, he trades beneficially for the community, which does not exist independently of the individuals who compose it."’
Governments should be kept small. "The dreadful evil of all governments (I wish I could except our own) is the evil of governing too much."
All laws, suggested Cooper, should be reconsidered every ten years and, if found unnecessary, repealed. This recalls
Cooper warned especially of the "general welfare" clause of the Constitution: "There is no tyranny that it will not authorize."
But it is against government strictures on foreign trade that he waxed most eloquent. "Shallow politicians have… acted on the shop-keeping maxim that what one nation gains by commerce, some other loses. The fact is otherwise; each gets its wants supplied and both are gainers."
He attacked the "infant industry" argument for protective tariffs, saying that this theory seeks to justify injuring consumers in the present for the hypothetical benefit of producers that might be employed by the protected industry in future.
Friedrich List, then sojourning in
Champion of Foreign Trade
Cooper felt that even Adam Smith had conceded too much to the protectionists. Smith had held that it might be advisable to protect an industry whose product promised to be of strategic importance in war. Cooper held that such products would not be wanting for they would be stockpiled by a provident government, and in any case, wars seldom if ever completely isolated a country from foreign sources of strategic goods.
The great service of the science of Political Economy, he said, was to teach the importance of free world trade. The following are hardly the words of an anarchist:
"If Political Economy had rendered no other service to mankind than to make them just and reasonable in this respect (in respect to foreign trade), it would be of incalculable benefit. It has taught us that human improvement and national prosperity are not promoted in any particular nation by depressing every other but by aiding, encouraging, and promoting the welfare of every nation around us; that we are all in turn customers to each other, and that no man or nation can become wealthy by impoverishing his customers; (that) the richer other nations are, the more they are enabled to purchase, the cheaper they can afford to sell, the more improved they become in all the arts of living, in all intellectual acquirement, in everything desirable for other nations to imitate or improve upon; that if other nations become powerful by our assistance, we also of necessity become wealthy and powerful by our intercourse with them; and that peace and good neighborhoods are the means of mutual happiness among nations as among individuals…."
In the Lectures Cooper ranged over the whole area of economic theory. On many facets of the subject, he was far ahead of his time. For example, cost of production, he said, does not determine value of a product. It must be in demand. "No purchaser cares a cent what the prime cost of an article is; that is not his lookout. His only enquiry can be, is it worth to me the price asked for it?"
He admitted that the introduction of machines might create unemployment but it would be temporary. (He was, of course, assuming a free labor market). When printing presses were first put into operation in
He attacked the policy of endowing corporations with limited liability, holding that since the stockholders are allowed to enjoy unlimited profit, they should also endure whatever losses may be incurred.
Champion of Private Spending Rather Than Government Spending
There were rudiments of a welfare state even then, but Cooper would have none of it. "All relief to persons in this country able to work is absolutely indefensible and wrong," he said. "Even cases of disability should be left to private charity…." To combat poverty, he urged the "modern remedy of Savings Banks," and suggested that the clergy teach people to save and accumulate deposits in such banks. He was, perhaps, aware that the first savings bank in the British Isles had been established by a Scottish dominion and that the first such banks in the United States were founded, not for profit, but for a charitable purpose.
He condemned Sir Robert Peel’s suggestion that a national debt might be a "national blessing" (Alexander Hamilton had averred as much) and argued that there was no merit in government spending as compared with private spending. To the extent that spending benefited the spender, it benefited society.
However, he was not averse to all public works. Whether government should undertake a public work or not, he held, depends on how great a public benefit it is and whether it is too costly for individuals. Then follows a statement which showed that he was quite familiar with the principle of cost-benefit analysis. "The guiding rule ought to be that an undertaking which is not likely at an early period of its completion to insure at least legal interest upon the capital expended after all deduction is not deserving of public encouragement. I think many of our canal schemes liable to this objection. Money can be laid out so as to produce this return. It is therefore misapplied when it does not. Wait until it will."
Lawyer, chemist, political philosopher, the versatile Cooper was pre-eminently an economist. He saw the importance of "political economy" in determining the course of this country’s history. Written at a time when texts in that subject were few, his Lectures must have made considerable impress on American thinking.
John Adams described him as "a learned, ingenious, scientific and talented madcap." Certainly he was outspoken. Unorthodox utterances regarding religion are said to have brought about an end to his career at
The percentage of correct decisions which individuals make is very high when they are risking their own money and their own future. The percentage of correct decisions is very low when made by politicians, so-called intellectuals, and others, regardless of their intelligence, who are not faced with the discipline of having to pay for their own mistakes with their own earnings.
This is a major reason for the success of free enterprise and the free market. The percentage of correct decisions made by individuals directly increases and is higher as they directly participate in the results of those decisions, whether good or bad. Individuals participating in this way quickly learn from their mistakes, and although they will make others, they will usually not make the same mistakes twice. This is common sense at work and only under the free enterprise system does common sense prevail.
A. W. STEWART
From the "President’s Column" of the Southern States Industrial Council Bulletin,
1. This and all other quotations in this article are from the Lectures (1826).