Thursday, September 15, 2011

Screwed By A Weiner

As you may recall, New York Congressman Anthony Weiner resigned from office in disgrace after it had come to light that he had a habit of sending pictures of his junk to women he liked. I've never tried this move, but I imagine it's not especially effective. Anyway, despite being one of the few Democratic congressmen with any energy, this scandal derailed his career, and his seat was recently up for re-election. It should be mentioned that his district has not elected a Republican representative since 1923. So the Democratic candidate can't lose, right? Wrong. Republican representative Bob Turner won the race. This is intensely disturbing. If Democratic strongholds like New York's 9th are going red, despite constant coverage of the crazytown frolics that have been the Republican presidential debates, how do Democrats have a chance in 2012? But maybe this isn't a sign of the national mood. Maybe this is just what happens when a Democrat who actually has balls feels the need to show them to everyone he meets.

Sunday, September 11, 2011

The Truth Behind the "Invisible Hand"

So, have you ever heard a Republican talk about government being too big and getting in the way of businesses?

Okay, that's an obvious one, but in their explanation did they talk about the "invisible hand" of the marketplace? Politicians, journalists and economists really seem to love this phrase, but the problem is that none of them appear to have read the phrase in its original context.

See way back in 1776, a guy named Adam Smith wrote this book called The Wealth of Nations and its been generally been considered the foundation of modern economics. But for some reason no one ever actually reads it. I'm guessing the 1200 pages, and specifically the 100 pages digression on silver might have scared some people off. But recently I was fortunate enough to read it for a class, and I was very surprised but what I discovered.

Now, before I drop my list of quotes you never would have expected, I want to emphasize that this is a very complex and long book and just as the phrase "invisible hand" leaves much to be desired, so too will my quotes fall short of explaining the full depths of Adam Smith. But maybe the next time you hear someone talk about the "invisible hand" you can remind them of these other lines from that brilliant work that stand as a direct counterpoint to their interpretations. Here goes nothing.

On the struggle over wages, "The workermen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number can combine much more easily... But whoever imagines, upon this account, that masters rarely combine is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit but constant and uniform combination, not to raise the wages of labour above their actual rate."

On the concept of a living wage (that would be HIGHER than the minimum wage) "There is however a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour. A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more."

An explanation of why high wages can never be bad, "Servants, labourers and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed, and lodged."

Smith's actual problems with big government, "Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters."

On the dangers of profit makers, "But the rate of profit does not, like rent and wages, rise with prosperity, and fall with the declension, of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in countries which are going fastest to ruin. The interest of this third order, therefore, has not the same connexion with the general interest of the society as that of the other two... Their superiority over the country gentlemen is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public from a very simple but honest conviction, that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, on many occasions, both deceived and oppressed it."

I know that was long, especially that last one, but doesn't that last line respond directly to the Republican claim that millionaires and billionaires are "job-creators".

Anyways, you've now read more of The Wealth of Nations than 90% of people quoting the "invisible hand". So next time you hear the phrase and you don't like the usage, quote this stuff back at them and leave them gasping for air.