N. Gregory Mankiw writes (15 April) in the New York Times HERE
"Competition is healthy for Governments too"
“Most everyone agrees that competition is vital to a well-functioning market economy. Since the days of Adam Smith, economists have understood that the invisible hand of the marketplace works only if producers of goods and services vie with one another. Competition keeps prices low and provides an incentive to improve and innovate.”
Mankiw teaches undergraduates their economics.
Yet he makes a major error in his piece for the readers of the New York Times.
Adam Smith never said anything about “the invisible hand of the marketplace works only if producers of goods and services vie with one another.”
In fact he never said anything about “an invisible hand” in connection with the “market place” nor with “competition”.
Graduates from his university – and those who read his textbooks – go on to prestigious jobs in the US economy, politics and academe.
If this is all that they know about Adam Smith’s use of the metaphor of “an invisible hand”, I think we should worry about what they, and their predecessors, advise on economics, and what he tells the Presidential candidate, Mitt Romney, if it includes a belief that “an invisible hand” operates in the economy to make everything alright.