Thursday, March 30, 2006

Invisible Hands no 33

Letter: Littleton Independent (Concorde, Massachusetts, USA) 30 March:

Economic woes can’t be fixed at local level’

“The collapse of the boom of 2000, facilitated a recession, that hurt the technology sector upon which much of the businesses that filled up those buildings were based. This is a regional problem. The same dynamics that filled those buildings in the first place, are the same forces that are keeping those buildings empty today. Adam Smith's invisible hand guides the market, not well-intentioned local public policy.”

Richard J. Dennis, Jr.
Beach Drive

Shakespeare’s ‘bloody and invisible hand’ does not ‘guide the market’ and Adam Smith did not claim or assert that it did. There is nothing invisible about the way Smithian markets work, nor how modern markets work.

In fact, I have long doubted if there is such a thing as ‘the’ market; there are as many markets as there instances, people and places engaged in transactions.

Read Adam Smith’s only instance in ‘Wealth of Nations’ in which he used the lonely metaphor at WN IV.ii.9: pages 455-56.

By the way:

Richard Dennis, Jr. rants about business rates v residents’ rates. He argues that lowering business rates raises residential rates – a zero sum outcome. Yet empty office buildings do not pay taxes from tenants because absent businesses suffering from hard times raise no income to local authorities – a zero-zero sum.

That local taxes amount to (by his assessment) ‘only’ 1 per cent of the costs of doing business (see his letter) may not be as important as the percentage that such taxes are of business profits – and whether such calculations mean anything to Richard or not is besides the point. If it deters or causes hesitation in the mind of potential tenants about renting empty buildings it has the effect of keeping the buildings empty.

Read Richard's letter at:


Post a Comment

<< Home