{"id":296,"date":"2010-12-12T00:53:28","date_gmt":"2010-12-12T04:53:28","guid":{"rendered":"https:\/\/flatlandrescue.com\/?p=296"},"modified":"2010-12-12T00:53:28","modified_gmt":"2010-12-12T04:53:28","slug":"adam-smith-the-invisible-hand","status":"publish","type":"post","link":"https:\/\/flatlandrescue.com\/?p=296","title":{"rendered":"Adam Smith – the Invisible Hand"},"content":{"rendered":"

Introduction
\n<\/strong>Adam Smith lived from 1723 to 1790 and is widely regarded as the father of economics.\u00a0 He was a Scottish moral philosopher and taught at the University of Glasgow.\u00a0 His masterpiece, An Inquiry into the Nature and Causes of the Wealth of Nations was first published in 1776.\u00a0 This book is considered a seminal work in the field of Economics.<\/p>\n

The Invisible Hand
\n<\/strong>No discussion about Adam Smith would be complete without a reference to his famous phrase, \u201cthe invisible hand\u201d.\u00a0\u00a0 I was surprised that the term did not figure more prominently in the book.\u00a0 I only found it once:<\/p>\n

\u00a0As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value: 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. By preferring the support of domestic to that of foreign industry, he intends only his own security: and by directing that industry in such a manner as its produce may be of the greatest value, 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. (Smith, 1776, p. 572)<\/p><\/blockquote>\n

To me, this concept makes sense, but there is plenty of evidence to the contrary in recent history.\u00a0\u00a0\u00a0 I would like to think that, despite the seemingly irrational behavior of people, their general tendency to look out for their own best interest will work for the best in society at large.\u00a0 Then I see an event like the sub-prime loan disaster that almost takes down the country\u2019s economy.\u00a0 The people who took out those loans knew that they could not pay the bills.\u00a0 The lenders who made the loans knew that the default rate would be sky high.\u00a0 Somehow, actions taken in self-interest did not benefit the society at large.\u00a0 Perhaps it is a case of the old adage, \u201cIf something sounds too good to be true, it probably isn\u2019t.\u201d\u00a0 Adam Smith was a professor of moral philosophy and a Scotsman.\u00a0 As such, he was likely accustomed to ordinary folk with the sense to know what was in their best interest.<\/p>\n

I did most of my reading in The Wealth of Nations using a free audio book<\/a> from LearnOutLoud.com. The free audio edition by Michael Edwards is very well done and made the book much more approachable.<\/p>\n

Smith, A. (1776). The wealth of nations. New York, NY. Random House<\/p>\n","protected":false},"excerpt":{"rendered":"

Introduction Adam Smith lived from 1723 to 1790 and is widely regarded as the father of economics.\u00a0 He was a Scottish moral philosopher and taught at the University of Glasgow.\u00a0 His masterpiece, An Inquiry into the Nature and Causes of …<\/span> Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,1],"tags":[],"_links":{"self":[{"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=\/wp\/v2\/posts\/296"}],"collection":[{"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=296"}],"version-history":[{"count":0,"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=\/wp\/v2\/posts\/296\/revisions"}],"wp:attachment":[{"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flatlandrescue.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}