Thursday, May 01, 2014


‘Anon’, 30 April, posts on “Law and More (‘Deconstructing What Happens in Law’)” HERE 
“WalMarting of Auto Insurance: Can Invisible Hand Trump Regulatory Approach to Fair Deal for Consumers?”
"How consumers hate and distrust insurance companies.  Federal and state regulators have been kept busy trying to bring a fair deal to those who, by law, have to purchase insurance. One instance of that, of course, is insurance for their car in many states.
Well, regulators might have less to do if the invisible hand or the machinations of the marketplace take over the insurance game.  Disruptor WalMart has entered that niche. It noticed how much a burden auto insurance has been to Everyman, ranging from agita in purchasing to ponying up the big bucks in paying.
So, as The Washington Post (great placement for this story) reports, WalMart has partnered with to give online access to affordable insurance.  The shopper clicks on and gets a price which is likely lower than going the agent route. And the price given is the final. There is no bait and switch.” 
What is “invisible” in this transaction that requires an metaphoric “invisible hand” when the potential customer clicks on the WalMart’s site and sees a very VISIBLE price quoted for her car insurance?  
What “machinations of the market place” are at work when all markets, everywhere and since time immemorial have worked, and cannot work without, VISIBLE prices?

How is that very intelligent economists, including Nobel Prize-winners, continue to misread Adam Smith on his use of ‘an invisible hand’ metaphor and thereby help justify and spread the nonsense of the so-called invisible hand?
Is it the madness of crowds of economists?  Fortunately, Adam Smith is Innocent!

Moreover, the 'Regulatory Approach' is an expensive alternative to markets - in fact, WalMart exploits the failings of regulatory bureaucracy to produce lower prices by benchmarking regulated, non-competitive prices with its VISIBLE lower competitive prices!


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