Saturday, December 29, 2012

Meaningless Tosh

J Jasper, a finance and economic double major from Samford University, writes “The Invisible Hand Still Exists” Blog HERE
Finally, the reason for the title of my blog is because of how much more meaning it has as the world gets older, richer, poorer, and middle-classier. People seem to act in a way that they deem to suit their best interest. They are guided by an invisible hand to help their families, to buy a Lamborghini, and to make an A on their tests. They function in such a way that they minimize costs and increase their own economic revenue and profit. They seek advantages like college degrees so that they have a stronger ability to compete for a job. The invisible hand is present when they decide to eat at Taco Bell for the cheaper costs, and it’s present when they decide to treat the president to the finest cuisine in town.
Judging by the content, J. Jasper, writes his economics well within the content of modern economics textbooks, but manages to do so well outside of Adam Smith’s works, of which he displays a passing acquaintance with a collection of the usual out-of-context quotations from Adam Smith that bear little relevance to Smiths thinking.
He shows no familiarity with Adam Smith’s “Lectures on Rhetoric and Belles Lettres" (1762-3), or of his definition of the role of metaphors, nor indeed the grammar of the English language, as found in the Oxford English Dictionary, and specifically its definitions and examples of the role of metaphors.
From this veil of ignorance, Jasper proclaims a new role for Smith’s use of invisible hand metaphor that guides all individuals to do whatever they do, for whatever reasons, with whatever consequences, in the sure knowledge that it creates the ‘best of all possible worlds’.  This nonsense includes all outcomes from self-interested actions be they supporting legislation to curb imports with tariffs and protections, or evading costs of extraction or production methods using unsafe, unclean, or fouling processes, all monopolistic practices, and legislative protections, special privileges, and conspiracies against consumers.
All this is a far cry from Adam Smith and ”an invisible hand” in the two only occasions in which he used it. Smith had no illusions that “merchants and manufacturers” were led by an omnipresent invisible hand to “to help their families” in a cartoon-like, wonderland of good, clean, fun. Smith did not trust them to act in such a public-spirited manner if they could get away with rigging their markets and raising prices against consumers. Evidence since 1776 shows that Smith’s reservations about their conduct were well founded.  Smith’s views on the incompetence of governments to direct economies have likewise been confirmed, has Hayek also predicted in is critique of socialism.
There is no invisible hand.  It was used by Smith as a metaphor.  It had and has no existence beyond its metaphoric role in “describing in a more striking and interesting manner” it object. In Moral Sentiments it described the absolute necessity for the rich landowners to feed their serfs, slaves, and servants upon whose labour the landlord depended, for without food these people could not survive to work the landlord’s fields (nor would their children form the next generation).   In Wealth Of Nations it described why some, but not all merchants, invested their capital domestically rather than risk it abroad, which thereby arithmetically added to “domestic revenue and employment”.  Of course, many merchants sent their capital abroad, thus arithmetically reducing domestic revenue and employment.  In both case, there were unintended consequences from the landlords’ and the merchants’ actions.   Whether there were net benefits to society depended on specific cases.
The rest that Jasper writes, unhappily, is meaningless tosh.


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