Tuesday, November 2, 2010
I don't buy it
As I have said on numerous occasions, I am not an economist, but I do understand social circumstances, and this idea of the invisible hand is completely flawed. One quote should be mentioned by the great proponent of the invisible hand, Adam Smith, who argues in the "Wealth of Nations" that "it is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." This suggests that some laissez faire system will prevent any problems with dinner served by the baker or the butcher. This reminds me of when I was abroad and I knew there was very little, sometimes no, regulation in terms of cuisine that was being sold either in the restaurants or on the streets. These people knew I was a foreigner and that I probably would never see them again. They were trying to make as much as possible by selling me refilled soda bottles with God knows what kind of water in addition to assuring me that everything they were doing was sanitary. I went in to the situation knowing that none of this was true. Nevertheless, this is why we have health inspectors and the FDA in the United States. We have them because we know people who handle our food will always have their best interest in mind, which can often mean that we will pay the price if that best interest means unsafe food. In these cases, I think it is safe to say that the free market is not the solution to the problem. The free market is the problem.