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How Does the Invisible Hand Work?

Do you understand how the invisible hand works?


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Xerographica

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How many of you truly understand how the invisible hand works? Here's a simple test to find out.

Should taxpayers have the option to directly give their taxes to the government organizations that they believe are underfunded?

Yes = you understand how the invisible hand works
No = you do not understand how the invisible hand works

This test is simple...but it's not perfect. If you answered "no" but believe that you do understand how the invisible hand works...then compare your justification to all the justifications of other people that also answered "no"...Unglamorous but Important Things. Just search that page for keywords to find a justification that closely matches your own.

What about fairness?

Perhaps you truly do understand how the invisible hand works but you don't believe that it would be fair for wealthy people to have more of a say than poor people. But if you argue for fairness of spending in the public sector...then do you also argue for fairness of spending in the private sector?

Do you think it's fair that your favorite sports athlete or favorite actor or favorite musician or favorite author has more money to spend then you do? If you don't think it's fair then why do you purchase tickets to their matches or purchase their DVDs or purchase their songs from iTunes or purchase their books? If you didn't think it was fair for wealthy people to pay more taxes in the public sector...then what would stop you from engaging in ethical consumerism by boycotting them in the private sector?

What about logistics?

Non-profits are able to plan their budgets despite the fact that donors can make donations whenever they want. So why wouldn’t government organizations be able to plan their budgets despite the fact that taxpayers would be able to pay their taxes whenever they wanted?
 

kenvin

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The thing the invisible hand is most efficient at is picking thw pocket of workers and consumers.
 

molten_dragon

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I've never even heard the term before, so I don't understand how it works in the slightest.
 

jambalaya

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No. But Google knows all. I'll ask them.
 

Matt Foley

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People who try to quit smoking know exactly how that invisible hand works: against them!
 

KevinKohler

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How does the invisible hand work????











Invisibly.


Har har.
 

KevinKohler

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Basic principle of the invisible hand : The market, IE, the consumers, the people of that market, create demand, and demand, in a loose sort of way, is necessity...which is the mother of invention. That's the simple...sorta correct def. The invisible hand is the collective actions of the consumers, and through that, businesses and producers rise and fall, based on their actions, and the perception they give, which influences the actions of the consumer.

As for taxation, my answer is NO. People are illogical. They tend only to see the things right in front of them, and lack vision. Someone with no license, for instance, will likely not want to put any of his money towards roads, only to realize down the timeline a bit that the pizza guy can't get to his house without that road...and in most cases, we don't miss something till it's gone...and in some of are tax cases, by the time something is gone, it's TOO LATE to fix it cheaply.
 

Real Korimyr #9

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Understanding how the invisible hand works is not at all the same thing as the blind, stupid belief that it works in all situations.
 

imagep

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Understanding how the invisible hand works is not at all the same thing as the blind, stupid belief that it works in all situations.


BEST ANSWER!!!!


I do believe very much that the invisible hand tends to work very well when the only factors are free market factors.

Unfortunately, government, crime, corruption and individual power and even highly motitvated special interest groups can distort the results of the invisible hand. And even when the invisable hand is working correctly, some of the end results may be less than desirable.
 

RadicalModerate

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The invisible hand is the idea that self interest, in a free market society, is a benefit to the society at large. It is the basis of free market capitalism, but it is often hijacked by ignorant people who heard David Kelley mention it once in an interview and think it's the main idea Adam Smith was trying to get across.
 

Xerographica

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KevinKohler, I added your response to my entry...Unglamorous but Important Things.

Regarding the guy with no licence...you see that he did not spend any of his taxes on roads...but what you didn't see was that he spent his taxes on government research for a cure for cancer. The economic term for this is "opportunity cost" and it's a fundamental part of the invisible hand concept.

How many potholes would you be willing to endure for a cure for cancer? Nobody can answer that question for you. Congress just guesses what all of our answers are...and it's the equivalent of somebody that's blindfolded trying to drive you across town. When the car crashes you just vote for another blindfolded person to try and get you to your destination. How many times now have the keys to the car been passed back and forth between Republicans and Democrats?

It has nothing to do with which party's in charge and everything to do with the simple fact that congress tries to guess what the invisible hand knows. In other words...taxpayers should be given the keys to the car. The challenge is that you'll only appreciate this if you truly understand how the invisible hand works.
 

Gary

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The Wealth of Nations today has an invisible hand with only one finger and you only need one guess which finger that is.
 

spud_meister

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Isn't the invisible hand when you cut off circulation to your arms prior to masturbation?
 

Centinel

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Should taxpayers have the option to directly give their taxes to the government organizations that they believe are underfunded?
I don't know about the invisible hand, but I definitely believe that people should have the option to directly give money (or not) to the organizations they believe are underfunded.
 

rathi

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You seem to think that bad food analogies are actually some kind of valid argument, but I am willing to play your game.

Lets suppose that its time to grill the burgers at your barbecue. Using your "pragmatarian" system, we get 150 million people all over the country to vote on whether to add or taken away one piece of charcoal to the fire. As an alternative, we use the representative democracy model and assign one guy to cook the meat. Which do you think will result in a tastier outcome?
 

Xerographica

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Understanding how the invisible hand works is not at all the same thing as the blind, stupid belief that it works in all situations.

Why wouldn't the invisible hand work in the public sector?
 

OneMale

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The invisible hand is faith. You must believe one is there to buy ideas that intelligence is given, not a result. It is from this one must prove they believe at all costs of ever learning what is real in reality of their chosen ideology. Not necessarily of their own free will but that of handed down traditions of routinely practicing self deception real is just imaginary and reality is all life offers to a citizen of society.
1-10 is literal truths, and 0-9 are figurative values of numerical digits but when combined the first digit left of a decimal point is a single unit, the first digit right is tenths of one and nothing exists without being 1 first literally.
So in relativity 1 and 0 are the same value but compared to literal and figurative translations they aren't. That is the invisible hand in the cookie jar of economics. Like taxation compounds per transaction and investments are broken down over periods of time. The yield rates are astronomically in favor of taxes wiping out the value of the currency while everyone using it doesn't have a clue where the money went.
Again faith in symbolic values over understanding the substance they represent is planned obsolescence and plausible tenability wrapped into the same governance of ideology by any franchise name of civilizing sole results into collective souls seeking character's rights.
The cost in that trade, never allowed to form your own opinions socially by law.
 

Xerographica

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rathi, first off...gotta give you props for at least having read some portion of the blog entry. That shows at least some willingness to try and understand my argument...even if for no other reason than to try and defeat it.

Regarding your argument...would you ever purchase more charcoal if there was already enough charcoal? That's all the invisible hand addresses...the efficient allocation of resources. If you purchase charcoal when we already have enough charcoal then that would be an inefficient allocation of resources.

In other words...would you allocate your taxes to the department of education if the department of education already had sufficient funding? Do we see people making donations to non-profit organizations that already have sufficient funding?

People's spending decisions are generally based on shortages of the things they value. You value numerous things that the government does. If all but one of those government organizations has sufficient funding...then you don't have a very hard spending decision to make. But if two or more are underfunded then you're going to have to make some hard decisions. Of course...nothing would stop you from paying more than your fair share of taxes.

With the current system...liberals try and get as big a tax refund as conservatives. But if people could directly allocate their taxes then I highly doubt that people would really try and get refunds from the government organizations that they value. On the contrary...I wouldn't be surprised if people were more willing to pay more than their fair share of taxes.
 

rathi

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There is a department is the U.S. government called the Pipeline and Hazardous Materials Safety Administration. You and 99.999% of the American populace have never even of heard of it. If they don't get funding, a natural gas line will explode and kill a lot of people. How does your proposal handle that?
 

Xerographica

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rathi, ever heard of Maslow's hierarchy of needs?
 

rathi

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rathi, ever heard of Maslow's hierarchy of needs?

Indeed. Survival is at the very bottom and you haven't answered how your plan wouldn't result in people dying. How can people allocate tax dollars to organizations they have never heard off when those organizations are vital to keeping people alive?
 

Xerographica

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rathi, I don't understand what your point is. Is your point that you would keep this information to yourself? Or is your point that you would share this information with others but they wouldn't do anything about it?

Let's review...

Did you just tell me about it? Yes
Would I allocate my taxes to it if my life depended on it? Yes

Where's the problem?
 

rathi

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rathi, I don't understand what your point is. Is your point that you would keep this information to yourself? Or is your point that you would share this information with others but they wouldn't do anything about it?

Let's review...

Did you just tell me about it? Yes
Would I allocate my taxes to it if my life depended on it? Yes

Where's the problem?

The problem I just demonstrated is that you have no clue what the federal government actually does. You don't know how many federal departments there are, what they do, or how much funding they need. If you read any economic textbook, you would know that the most basic requirement for the free market is making an INFORMED choice. You can't make such a choice when you lack even the most basic knowledge.
 
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