A thought struck me about the credit crunch when we were discussing Smith's distinction between a rich and a thriving country and his advocacy of high wages:
No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.Amongst all the guff about irresponsible lending, sub-prime mortgages, all the technicalities of the financial markets and the failure of regulation, I have seen little comment apportioning blame to a fundamental cause of the crisis - that the American working class is too poorly paid to buy a house, something that, in a rich country like the USA, they should expect to be able to do. Low wages rendered them vulnerable and open to exploitation by unscrupulous lenders. Low wages meant that the bubble burst and they lost their homes. Adam Smith was right; America is no longer thriving.