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Lee, Dwight R. --- "Government Regulation and Property Rights" [2004] ELECD 111; in Colombatto, Enrico (ed), "The Elgar Companion to the Economics of Property Rights" (Edward Elgar Publishing, 2004)

Book Title: The Elgar Companion to the Economics of Property Rights

Editor(s): Colombatto, Enrico

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781840649949

Section: Chapter 14

Section Title: Government Regulation and Property Rights

Author(s): Lee, Dwight R.

Number of pages: 18

Extract:

14 Government regulation and property rights
Dwight R. Lee


Introduction
I begin my comments on government regulation and property rights by em-
phasizing one of the least-noticed insights from one of the best-known
quotations in economics. Adam Smith ([1776] 1981, p. 56) famously states,
`[Every individual] generally, indeed, neither intends to promote the public
interest, nor knows how much he is promoting it. ... He intends only his own
gain, and he is in this, as in many other cases, led by an invisible hand to
promote an end which is no part his intention' (emphasis added).
Economists, and others, when discussing Adam Smith's invisible hand,
have emphasized how it renders good intentions unnecessary to achieving
socially beneficial results. No one denies the importance of this insight, or
faults the emphasis it has received. But to fully understand the implications
of the invisible hand for a wide range of issues, including `government
regulation and property rights', one must consider the part of the Smith
quotation I have italicized ­ when self-seeking people promote the public
interest under the guidance of the `invisible hand', they do not realize how
much they are promoting it.
On the other hand, one could describe the intentions and effects of govern-
ment regulators by paraphrasing Smith's famous statement as follows: `Each
government regulator generally, neither intends to harm the public interest,
nor knows how much he is harming it. ... He intends (more often, pretends
concern for) only the public interest, and he ...