Friday, June 03, 2005

A Tale of Two Cities a continent apart

Adam Smith’s lowly en passant metaphor, an “invisible hand”, is out of control. It is applied to everything and anything, including the two examples below, one written by a Republican construction worker in an attack on the Democratic Party and the other by a sub-editor, casting around for a headline, and in a supplementary one its economics are hopelessly wrong.


San Francisco Chronicle
TWO CENTS Ever bitten the hand that fed you?
Friday, June 3, 2005

As a middle-class construction worker who votes Republican, I get accused of this by Democrats all the time. I prefer to believe it is the "invisible hand" of Adam Smith that Democrats are biting when they vote for higher taxes and increased public welfare..
Glenn Munlawin, Vallejo

A More Visible Hand
New York Sun Staff EditorialJune 3, 2005

In a testament to the durability of bad ideas, the landscape is littered with monuments to discredited "economist" Karl Marx. His well-kept London grave is a pilgrimage site of sorts. Yet Adam Smith, the 18th-century expounder of an economic system that actually works, lacks a memorial worthy of his place in the economic pantheon. London's Adam Smith Institute is finally trying to change that.

Meanwhile, from another continent….

Meanwhile, on another continent, from Bangladesh, we have another version of the invisible hand, this time used incorrectly in its misapplication to economic equilibrium. The invisible hand had nothing to do with the balancing of ‘supply and demand’, as suggested by Masihur Rahman in The Independent (internet edition) 2 June 2005.

This is is the second time in a week I have seen it used this way, also from Bangladesh (someone must be teaching it thus and his students are spreading the error around) :

“Division of labour increases output [productivity] and entails exchange; the competitive market facilitates exchange to the mutual benefits of all the parties to the exchange. Adam Smith famously called it the invisible hand which balances the supply of and demand for goods [market equilibrium].”

I should add that Mashir Rahman's article, from which the extract refers, gives an excellent account of the economics of corruption and is well worth reading (it can be found via Google).

2 Comments:

Blogger TatDude said...

just so you all know I did not leave that comment - Glenn Munlawin - I believe he meant to put another commenter's name not myself :)

10:07 pm  
Blogger TatDude said...

Adam, I did not make this comment:

San Francisco Chronicle
TWO CENTS Ever bitten the hand that fed you?
Friday, June 3, 2005

As a middle-class construction worker who votes Republican, I get accused of this by Democrats all the time. I prefer to believe it is the "invisible hand" of Adam Smith that Democrats are biting when they vote for higher taxes and increased public welfare..
Glenn Munlawin, Vallejo

I believe you meant to pick up Kevin Hangman, Napa. I a talk about my cat (see comment below his)! See link: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/06/03/NBG2PD088F1.DTL&hw=munlawin&sn=003&sc=869

10:16 pm  

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