Everything is Relative

by Don Boudreaux on July 24, 2006

in Politics, The Economy, Trade

Jagdish Bhagwati believes that the invisible hand of the market is feebler and less dextrous than I believe it to be.  Nevertheless, he recognizes the important point that the relevant comparison is not of the invisible-hand’s actual performance to some imaginary ideal performance.  Instead, the relevant comparison is of the invisible-hand’s actual performance to the actual performance of the visible hand of government.  As Bhagwati observes, "the invisible hand may be frail, but the visible hand is crippled."

[This quotation is found of page 31 of Bhagwati's book Free Trade Today (Princeton University Press, 2002).]

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mvpy July 24, 2006 at 5:35 pm

"the invisible hand may be frail, but the visible hand is crippled."

Relating to the previous post, with government theres also an invisible handshake. And therein lies many, many more government failures and duplicities.

Swimmy July 25, 2006 at 1:38 pm

"As Adam Smith wrote over 200 years ago, in the economic market people who intend to serve only their own private interests are led by an invisible hand to serve public interests where there was no part of their intention to promote. In the political market, there is an invisible hand operating as well. But unfortunately it operates in the opposite direction. People who intend only to serve the public interest are led by an invisible hand to serve private interests that was not part of their intention to promote."

-Milton Friedman, of course.

Bruce Hall July 26, 2006 at 10:54 am

I continue to be amazed the those free-market economists fail to even mention how government interference with free markets really screws things up.

The government that raises interest rates to "protect" us from inflation is the same government that adds injury to injury by taxing gasoline which is priced so high that the economy is faltering… and by the way the same government that cripples oil exploration and new refinery development… which by the way adds to the price of gasoline… which by the way accelerates inflation… which by the way costs us jobs. OOOOOOOOHHH! I love it when a plan comes together (from the "A-Team").

You should trust your economic future to government bureaucrats. After all, look how well they did in New Orleans.

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