Smith observed that significant economic inequalities arise not from voluntary exchange but from distortions that restrict competition, channel resources toward favored interests, and limit economic mobility.
But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance.It does this chiefly in the three following ways. First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, thirdly, by obstructing the free circulation of labor and stock, both from employment to employment and from place to place.
Sabotaging the Invisible Hand: Adam Smith Predicted Modern Policy Failures