LOONY TUNES 145

1

Tom Orlik posts (27 June) HERE 

No, Graft Isn't Good for Growth

“The case for graft, as it were, is superficially plausible. Like a light-fingered version of Adam Smith’s invisible hand, thieving officials have an incentive to spur economic activity.”

2

Lawrence Davidson Posts (27 June) on MWV News HERE 

What the House Speaker apparently wants to do is resurrect the so-called Gilded Age. That was the period of American history following the Civil War when the economy grew rapidly but in an unregulated fashion. If you will, the “Gilded Age” economy operated apart from the rule of law, unless of course you believe in the ideologically posited “laws” of capitalism and the mystical notion of Adam Smith’s “invisible hand” guiding the marketplace.”

3 

Louis van der Merwe (South Africa) an “IRR Policy Fellow, educator, scenario-based strategist and capacity-builder” posts (28 June) HERE on Biz News: 

“Lessons from Singapore? Wisdom of invisible markets – Social transformation at work”

“It’s known as the ‘invisible economy’ that no one is really talking about, but it’s keeping a large part of South Africa afloat.

A great irony for South African policy-makers that prefer a philosophy of centralised decision-making and control is that these invisible markets in South Africa already represent a very substantial part of the South Africa economy. They exist in plain sight, for all who care to see them. All of them populated by successful African entrepreneurs and start-ups. These markets have already transformed a significant portion of the economy with quintessentially African products and services.

Adam Smith’s seminal ideas in his now famous protest against monopoly capital “Wealth of Nations” published in 1776 is summarised as follows; If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. The core of Adam Smith’s thesis is, that man’s natural tendency towards self-interest results in prosperity for all without much effort from government. This mechanism became known as ‘the invisible hand’. All of these so-called invisible free enterprise initiatives are based on Adam Smith’s model for economic wealth creation and the invisible hand in it.”

Comment

Louis van der Merwe’s conclusion - whatever one thinks of its premiss - that all voluntary transactions result in “prosperity for all without much effort from government” is a bit too cavalier. Drug pushers and drug users engage in voluntary transactions which do not add to prosperity - except perhaps for criminals and expenditures by law enfrocement agencies oaid for by taxation of other consumers.