WHAT'S IN THE POT?

Mark Anderson posts (29 April) on Stirring the Pot (different perspectives on public policy) HERE

http://markanderson.bangordailynews.com/2017/04/29/opinion/call-me-a-luddite/

“The concept is simple.  Markets, through the magic of the “invisible hand,” will serve society well because markets invariably weed out all kinds of bad behavior and reward good behavior.  We do not need to worry about worker safety or consumer product safety because markets will punish firms that behave badly.  If a company has too many worker accidents or causes too many illnesses the market will punish it by forcing the firm to have to pay higher wages to attract workers.  So firms will protect workers to keep wage rates lower.  Likewise, firms selling unsafe or defective products are punished in the market because buyers will learn to buy from other firms.  One of the candidates for the job of Food and Drug Administration Administrator in the new administration has argued that the FDA should not require firms to prove that new pharmaceuticals are actually effective in treating disease.  The drug market will sort that out, penalizing firms with ineffective products and rewarding firms whose products actually do what they are supposed to do.  (Thankfully, he did not get the FDA appointment.)”

COMMENT

Put the extreme case for something and you can prove anything. Of course, you can tell what’s coming with the assertion: 

‘Markets though  the magic of the “invisible hand,” will serve society well because markets invariably weed out all kinds of bad behavior and reward good behavior.’

The real problem is that there there is no ‘invisible hand’. 

Adam Smith has been misread and the fantasy world that passes for modern economics among modern economists does not exist and Adam Smith never said it did.

And that is the real problem. Using a misread sentence to justify all kinds of behaviour is bound to lead to tragedy or farce, or both.