Recommended reading: Marc Levinson's "An Extraordinary Time - The End of the Postwar Boom and the Return of the Ordinary Economy" or my title: Why leaders try variations of the same thing and wonder why it fails every time. Link to Barnes and Nobel book store.

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Adam Smith

Adam Smith Trade in Modern Times - Bk. IV Ch. II

As "The Wealth of Nations" was published 1788 the importance of this book are the categories Smith observed. Many of the issues of his time are still relevant although technology and wealth distribution changes their affect on many of the definitions of his words. 

Adam Smith, in writing about international trade, lacked a computer with spelling and grammar checkers. Additionally, steam powered ships were in the futeure, too. The internet communications and the ease of international shipping would alter several of the definitions I found in Book IV, Chapter II.

The first word needing update clarification is "LOCAL" and the attachment of the investor to his local area. Smith divides trade into three areas: local, national, and international. Local areas were, in that time, were defined by physical/geographic conditions. For instance, he talks about Irish cattle could not be easily taken to English consumers. Since the implementation of steam power England has gladly consumed New Zealand lamb and American wheat. Smith feels the local investment is the most powerful as the investor can see his wealth and understand the legal tenants surrounding his investment. This remains fairly true, just the definition of what is local can depend on internet communications.

In the past 20 years the concept of LOCAL is now different to the asset-owners/intellectuals of globalization and, as we see in recent elections, very different to the factory workers of the world. Smith states the first choice of reinvestment would be geographically local, many people in the big cities think anywhere in the world is local, which is not the thought pattern of someone born in the mid-west and has never travelled more than a couple of hundred miles and whose family lives nearby. Having overseas as "local" is a betrayal to the geographically local people.

In 20 years the "local" people have felt neglected and voted their displeasure in Brexit and Trump. Smith did understand how important local and national were in the 1700's and remains important today in many of the same ways. We just have to update Smith's concepts to include modern globalization methods. Most likely "globalization" will mean localization. Ask Ikea and GE about being able to sell in India. Smith looks to offsetting trade (free trade without interference of people) to cure localization political issues which, of course, never happens. The next 20 years is about requiring local manufacturing to precede globalization.  

Taxation changes follow the rise of the middle class. In fact, the rise of the middle class changed the meaning of regulation and the purpose of law-making. Political power before the 20th century lay in the feudal ownership of property. Smith mentions the restrictions on importing food - the Corn Laws beginnings started well before the 1815 passage of the Corn Act - as a means of the feudal land-owners to stay in power. The same thing for non-law regulations, which today are mostly to protect the interests of the middle-class, were structured to support he aristocrats. Rules such as India could grow cotton but had to buy finished goods from England. The rule limiting Americans ability to make metal shovels which restricted the wealth of the middle class - was a major reason for the American Revolution. The middle class cannot exist without the ability to manufacture and tax the manufacturing wages and profits, something that only became defined after Smith. 

Again, changes in technology and therefore the distribution of wealth changes Smith definitions of regulations, laws and their intent to the concept investors/owners should be completely unaware of any interest in promoting the public good or local good, "he intends only his own security;" What is that security changes often, especially in a tech age. 

It should be noted the Bean Laws of 1815 - 1846 kept agriculture prices high, which restricted the buying power of the middle class, protected the feudal estate during that time, and finally led to the fall after repeal of the great estates as their agricultural methods could not compete with the new technologies of cultivation and shipping. 

What is perceived as LOCAL, NATIONAL, AND INTERNATIONAL today makes all the difference in moral responsibility and what can be accepted as politically palatable.

The Manufacturing Village Project is very concerned with the geographically local being less costly to manufacturer than global manufacture. Moreover, providing a way to invest locally and, as Smith mentions: be able to see where the money is invested and protect the investment by understanding local ways. No local manufacturing, no taxes, but lots of trade deficit. According to Smith: trade deficit is bad.