Wednesday, May 07, 2008

More Birthdays and Delusions

Today is Tuesday, 6 May 2008.

The text upon which today’s sermon is based may be found in the comment by RtR on yesterday’s column, in which I disparaged supply-side economics in passing. The comment recounts an excellent example of the folly of supply-side, which latter I like to compare to the line from Field of Dreams (“Build it and they will come.”): Produce it and they will buy and consume, to the profit of all.

Few lines in the history of economics (as it is misleadingly called here in the States; the accurate and original term is “political economy”) have led to as much nonsense and folly as the following by Adam Smith:

“Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally indeed neither intends to promote the public interest, nor knows how much he is promoting it … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention … By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” (An inquiry into the Nature and Causes of the Wealth of Nations [1776], Vol. 1, Bk. 4, Ch. 2)

O, the awesome power of the invisible hand which guides The Free Market, which can operate only when the latter is set at liberty from burdensome regulation, and each is free to attempt to beggar the others. Piffle! “The Free Market”, in this sense, does not exist, and even if it did, would be mindless.

The Market is simply a mechanism (and not the only one available) by which prices are fixed, at particular places and times, at which particular goods and services are exchanged. That such prices are properly fixed by this mechanism is an assumption, an article of “faith”, which has never been proved, nor can it be.

Besides, only fools and the evil believe in a market completely free of regulation, for otherwise there would be a free market (a willing seller and a willing buyer) in crack, nuclear bomb technology, weapons-grade plutonium, and children for purposes of prostitution.

Notable birthdays:

Maximilien Robespierre (1758), leader in the French Revolution of 1789

Sigmund Freud (1856), fouder of psychoanalysis

Orson Welles (1915), great actor, director, and writer

Notable deaths:

Henry David Thoreau (1862)


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