Monday, February 13, 2012

Dubiously Blind

I think this chapter rocked. It outright pisses on the invisible hand as being the model humans should prescribe too while also supporting its sound theoretical value. Most the posts I have read so far denounce him and funnel a lot of “ no this is totally wrong” backlash, but I think they are trying to apply his insights to a Adam Smith perfect society in which people will always end up at the best possible solutions through pure unbridled markets. Adam Smith’s ideas flat don’t work in the real world. I feel Frank touches on a lot of good points that individual utility functions are not always best for the community as a whole and I think many who read this missed that. They only seemed to read “ The invisible hand is wrong” and “ Individual wants and needs are below the needs of the group” which I think would piss off any pure economist. I mean , what economist would dare say that pure competition and the invisible hand are incorrect statements? It shatter the belief of economic heaven where all suppliers meet consumers demand at the most efficient level possible, in an ethical and timely manner, and that barriers to entry and exit are nonexistent. I don’t believe in economic heaven, call me an agnostic. I don’t think it will ever happen for the same reason I feel no market will ever be at true equilibrium. Why? Because humans are imperfect and so are the systems we create. Frank does a wonderful job showing that individuals want things that ultimately have no benefit, due to willful insanity. He doesn’t say peoples utility functions are nessicarily wrong, but he does say that they can logically unsound and have a habit of not always being for the greater good. Personally I am a greater good guy, I think if more individuals got together and promoted the general welfare ( Constitutional Reference) mabey it would create a society in which economic priciples are harnessed to generate superior utility on an aggregate level. That is why I believe our nation is the best in the world, and quite frankly it is. With the worlds largest economy, military, and sphere of political influence it is no wonder why even the countries that despise us still envy our success and regaurd our nation as the land of opportunity. I am amused , for the reaction to this chapter is as expected. I feel like Democritus when he affirmed Pythagoras’s theory that the earth was round, not flat, and that to be flat was simply illogical and dubiously blind.

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9 comments:

  1. I think most people are responding to what Frank has to say with legitimate arguments not simply reacting to what Frank has to say about Adam Smith. Frank also isn't saying that Smith's ideas "flat don't work in the real world." In fact, we can see that they do. But Smith didn't make the market, he attempted to observe it as it is. That is the beauty of the market, it isn't any one person's creation. It is the emergent behavior of individuals pursuing their rational self interest. No, it isn't perfect always. But what is the alternative? A planned economy, even in moderation, cannot possibly account for everyone's needs and allocate resources appropriately.

    I see some conflicting ideas in what you are saying. You say Frank points out flaws in the invisible hand "while also supporting its sound theoretical value" but then you say it flat out doesnt work. Do you believe in those economic principles or not? To what degree? Also, what is this "general welfare?" How can I get some?

    Just some things I noticed.

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  2. Well to get general welfare , you need it. Any federal school funding you see people get , early childhood education provided to those who cannot afford it , food stamps for t hose who cannot practically afford to eat every month, ect.

    In pertinence to your quoting of me. Show me how if the invisible hand worked so well why people in developing countries have so little economic opportunity? simply because their motives and aspirations were not enough? many of these nations have defunct governments and have completely unregulated markets yet they cant seem to provide basic human needs to millions. The reason is people tend to focus on their own personal welfare even if it is not in the interest of the population at large. And of course i believe in those principals, just how i believe if people followed the ten commandments strictly then the world would be better. But then i realized , wait , a really old book explaining perfect scenarios usually is usually full of insights but also severely lacking in an understanding of the human condition. The unbridled invisible hand accounts for the holocaust, the assassination of MLK and Abraham Lincoln, as well as shootings at Penn state. All of these were market decisions made by individuals in their own self interest and were able to severely impact those around them in a very negative way. The theoretical value of the invisible hand is that is how it would work if everything was awesome and perfect, but it is not so that is obviously not a perfect model. Just as we cannot use the Bohr model to make distinct evaluations of an atom, we cannot use Adam Smith's invisible hand to evaluate markets.

    Furthermore, i never said they didnt have legitimate arguments. I only said there is alot of negative spin against this book and chapter spanning alot of blog posts, which is undeniable. Many people stated their disapproval of Frank in favor of the Adam Smith model.

    Also you in your post made very few pokes into a failed logic in his thinking, you only made many personal attacks on his character and credibility, such as
    "We get it that Frank doesn't like Libertarians (not that he seems to really understand them)."

    and

    "So what if people buy expensive suits? Frank clearly doesn't have a problem buying expensive cars."

    Your only problem is that his metephor doesnt make sense to you. To be honest i do think you are a wildlife expert. I am not disputing your claim that the metephor may not make practical sense, but neither does an invisible hand. The broken window never happened, and you will probably never be able to ask an elk about its utility function, but this does not take away from his argument that peoples individual interests often conflict with the aggregate welfare of the group in question, thus to prevent catastrophe and from individuals misallocating resources people have to create boundaries and limits to the power an individual can wield.

    this does not seem erroneous nor outlandish.

    just some things i noticed . . . .

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  3. TELL ME THOSE HORNS ARE NOT REDUNDANTLY LARGE. THEY COULD EASILY BE HALF THE SIZE AND STILL SERVE THE SAME PURPOSE WITH EASE

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  4. "The unbridled invisible hand accounts for the holocaust, the assassination of MLK and Abraham Lincoln, as well as shootings at Penn state. All of these were market decisions made by individuals in their own self interest and were able to severely impact those around them in a very negative way."

    I would challenge this claim. The Invisible Hand is much narrower in scope than you are crediting it. This simile is not referring to all human nature but tendencies in a market setting.

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  6. "The unbridled invisible hand accounts for the holocaust, the assassination of MLK and Abraham Lincoln, as well as shootings at Penn state. All of these were market decisions made by individuals in their own self interest and were able to severely impact those around them in a very negative way."

    1. When economists say "free markets" my assumption is they are referring to catallactics, not interpersonal violence. (What Garrett said.)

    2. The "free" part of "free market" usually refers to the absence of coercion which makes your example of violence as a free market action definitionally incorrect.

    3. Wouldn't elk with redundantly large horns be more likely to get eaten and therefore less likely to pass on their genes? It seems to me like the current size of elk horns is the evolutionary optimum.

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  7. . . .that being said, Jack, I appreciate you breaking up the echo chamber. Keep at it. :)

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  8. P.S. Paragraph breaks. They are sexy, so use them. Trust me. ;-)

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