Behold, The Invisible Hand

[Billy Britt]

...every individual necessarily labours 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. Nor is it always the worse for the society that it was no part of it. 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.This is a passage, from the 1776 book by Adam Smith entitled, An Inquiry into the Nature and Causes of the Wealth of Nations.Many credit Smith with being the father of capitalist economics, and his writings are still influential today.His basic principle is that as each individual works to become wealthy “intending only his own gain.” However, because he must exchange what he owns or produces with others who see value what he has to offer; in this way, by division of labor and a free market, the public interest is advanced. This mechanism Smith referred to as “the invisible hand.”In the United States Declaration of Independence, Jefferson wrote, “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”The “pursuit of happiness” was intended to mean the right to economic freedom.In Butchers' Union Co. v. Crescent City Co., 111 U.S. 746 (1883), the U.S. Supreme Court considered Jefferson’s phrase in the Declaration of Independence to refer to one’s economic vocation of choice rather than the search for emotional fulfillment.U.S. Supreme Court Associate Justice Stephen Johnson Field, in his concurring opinion to Associate Justice Samuel Freeman Miller’s opinion, wrote:“Among these inalienable rights, as proclaimed in that great document, is the right of men to pursue their happiness, by which is meant the right to pursue any lawful business or vocation, in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give to them their highest enjoyment.”It is believed that Jefferson based his words on the writings John Locke, who expressed that “no one ought to harm another in his life, health, liberty, or possessions,” in his Two Treatises of Government, 1689.Smith, a devoutly religious man, believed the “invisible hand” was the method by which God ordered the world so that human happiness was increased.Of course this assumes that moral norms by way of rule of law are in place for the system to work properly.For example, property rights must be strong, as well as contract law; there also must ample punishment for cheating and theft.The public must also have good access to information about the products and services available.As of late, all of the above necessities for the invisible hand to work have been lacking from the system.Enforcement, punishment and even truthful information have all been stripped from Wall Street and the body politic. The rule of law must hold for there to be widespread prosperity.Contrary to this rule of shared prosperity through ability and labor, our government has embarked on a grand plan of wealth redistribution under the guise of leveling the playing field.A redistribution of wealth by means of taxation is unlawful and is the antithesis of the invisible hand process.History has shown that vast income redistribution creates a dependency culture and a society that is not a based on talent and work.Economist Milton Friedman argued that the Marxist slogan “From each according to his ability, to each according to his need” turns ability into a liability, and need into an asset.The Founding Fathers warned against the dangers of redistribution of wealth. Samuel Adams stated: “The utopian schemes of leveling [redistribution of wealth], and a community of goods, are as visionary and impracticable as those which vest all property in the Crown. [These ideas] are arbitrary, despotic, and, in our government, unconstitutional.”I will leave the last word to a president who is often memorialized as a champion of the poor.“Property is the fruit of labor. Property is desirable, is a positive good in the world. That someone should be rich shows that others may become rich and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another, but let him work diligently to build one for himself, thus by example assuring that his own shall be safe from violence. . . . I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don't believe in a law to prevent a man from getting rich; it would do more harm than good.” A. Lincoln.

[George M. Hendrix]

Once again Billy...great stuff...my sentiments exactly.

George

[John Richeson]

Good money in sheetrock, Kevin. Heck I found a few bucks in washing windows.

Part of Abe's quote:

"I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don't believe in a law to prevent a man from getting rich; it would do more harm than good.” A. Lincoln."

Those words may be true again right now for the very brave and risk takers. You can cherry pick from among the rubble of the bubble at less than 50 cents on the dollar right now. At the very least it is a good time to buy for a young couple just purchaisng their first home that they will livein for years. Bargains aplenty. Take your pick.

But I am not sure Abe was talking about investment property back then or a mortgage. I believe they paid cash. Good for them. I believe in spite of our governments actions it is still possible to make a good living in this country. For example, if all hell is gonna break loose inflation-wise as a result of the "money printing presses" in Washington, buy Gold. It is what......$900 right now? Some experts believe it will head to owell over $2,000 in the next few years. But in the past it has proven to be a poor investment in the long haul.

[Kevin Nye]

I loved the "A. Lincoln" quote, and the entire what, article? "Blog"? Whatever you call it, nicely done Billy, and thanks. Would comment more, but I am nearly out the door for a vigorous day of hanging sheetrock and keeping my American Dream well financed! Hah! So thankful to be able to work and acquire...

[John and Janet Ruiz]

"...nearly everyone acts in his own self interest nearly all the time. "

I agree wholeheartedly, Ken. And I think that one measure of our own national social confusion (past and present) is the degree that we don't recognize that and understand it for what it is - the natural tendency of any living organism to self-preservation, instinctively to pursue whatever promotes continuance.

For the purpose of your discussion topic Billy, I'd present this - the "Reasonable Person" model that's frequently applied to legal determinations. This WIKIPEDIA article covers it for anyone not familiar with it. Generally it applies a fictional model of how a "reasonable person" might act under certain circumstances. It attempts to establish a standard of behavior where a duty for that behavior can be established.

Where this goes in mind in relation to this topic is that as Ken stated - every person for the most part is concerned with their own self-preservation and indeed has an obligation to be so. In the execution of that any person may also have an obligation to act on that self-interest in a way that would take into account the self-interest(s) of those around them, for two reasons in my opinion. !. would be where duty would require that action take another's interest into acccount (do no harm) and 2. would be where one's one own self-interests are served by acting in a manner that protects or promotes another's.

I can think of all sorts of examples of both that come up all the time in day to day life and dealings we have with one another, on both small and large scale.

A point to consider is that in our society it can be determined that inaction can find a person at fault if by their inaction they cause of allow another harm. The classic modern fictional example is the famous "Seinfeld" episode where the characters stood by and watched a car jacking and did nothing but make fun of the victim and film it. They're arrested and convicted of breaking the local "Good Samaritan Law". In fact the final episodes misinterpret the "reasonable person" model, presumably deliberately for the sake of humor but do illustrate the callousness of the characters in being able to witness a violent crime being committed and have no sense of the crime being committed. (Seinfeld's aim for an episodic TV comedy where there would be "no learning", fully realized I guess).

But not to digress - I'm just throwing this out as food for thought. I see a case for a "shared self-interest" where the good of all those in a system is served by the individual participation of the members and an expectation for what is "reasonable" in duty and behavior is clearly established. This could include an area like national health care.

[John Richeson]

Pat - nice talking to ya again today. Sometimes a phone call is better than written form. It was nice to discuss our views and see how much we agree on. It was great going throught the 7th Corps experience with you. I look forward to seeing you again in person some day. Love to your family.

John R.

[Ken & Sue Brown]

Hey Billy,
I just read your article (and the above comments). Nice work. Since it didn't show up on the home page, I didn't see it until late last night when I chose the "view all" option. Now that I know to do so, I'll check from time to time to see if you have published anything else. I have appreciated reading your posts.
Regarding government run "health care," I certainly understand the emotional pull and the very well-meaning perspective Hope expressed above. I am self employed with a pitifully small business. I don't have health insurance (or even business liability insurance). But if that is a problem, then it is my problem, not my neighbor's. If you or anyone else wanted to buy health insurance for me and give it to me as a gift, I would accept it (not that I need it). But I could never vote for someone promising to force you to do so. That to me is immoral and I believe unconstitutional. I do not believe that not forcing others to pay for my health insurance denies me of my pursuit of happiness. "Health insurance" is such a euphemistic misnomer. It is really only about paying bills. I don't want to pay the bills for people who put no trust in God and run to the doctor every time they think they might be getting a cold. I don't live that way and shouldn't be forced to pay for others who do.
Regarding the "invisible hand"-- As much as some might like to think otherwise, apart from a real dedication to God and His Word (which very few people have), nearly everyone acts in his own self interest nearly all the time. The entrepreneur freely admits it. The politician tries to convince others that he is acting only in their interest. Yeah, right. They are both self centered. I'll take the effects of the entrepreneur's self interests over the effects of the politician's self interests any day.
Anyway, for what it is worth, that's my perspective.
Thanks for taking the time to write your stuff. Please keep the articles coming.
Bless.
Ken

[Billy Britt]

Hope you make my heart feel good and less cynical.
As my pappy used to say...wait, no, he didn't say that.
Love
B

[Billy Britt]

Brother John,
Knowing your heart and humor I did not take offence at your afore mentioned comments. But I do understand that communicating our, wit and wisdom can be difficult to express in this forum.
Like many, the tech bubble burst, the events of 9/11 and this latest contraction has sufficiently redistributed my wealth.
It is my concern that the Federal Government always has designs on our wallets.
History has shown that in times of crisis, socialism, fascism and other isisms rise to feed the desperation of the masses.
Americans I believe hold greater values but we all need to be reminded from time to time that all we have is not a given, and that a government that is big enough to meet all our needs is big enough to take all we have.
You are so right that we should practice and teach thrift it is the way to sound finance.
Only the Lord is too big to fail, and he needs no government bailout. You are a great man!
B

[Billy Britt]

Pat,
Thank you for your kind words and insightful admonition.
As I have little else to share on this site I put into words the issues that seem to be ringing in my ears. This of course is not meant —to solely—to be an indictment of any individual or even administration but to summon thought on foundational principles.
This site is a great inspiration to me in many ways and I am thankful to John for facilitating it.
My blogs are now private to all but those who have asked to be friends. I did this because I did not want to cause enmity among the brethren.
My goal is always to inform, educate and at time alarm. However, above all I wish to fellowship with the greatest people I have ever known.
Pat you have always been a dear man, full of love and compassion, we are all better off for your life.
Thanks

[John Richeson]

Billy, I an not very well qualified to speak to your discussion. But I am not sure we are seeing a redistribution of wealth are we? I have a feeling the rich will always manage to continue to find ways to get richer, even in this poor economy. For example, the great GE was as low as $6 a share a few weeks ago. Can you believe that! Nothing fundamentally wrong with the company, just their finance division. Great company. Well their stock has doubled in one week. You could have doubled your investment in one week. I am sure plenty of people did just that.

Still, this unchartered territory we are in is scary. When I hear those bail out numbers I cringe. We the American people own 80% of AIG now. WIll we ever see a return on our investment? Maybe, maybe not. I think "too big to fail" is kinda scary. Nothing should be too big to fail. I say let it fail. But it is quite more complicated than that I think.

I am from the old school. I believe the basic problem in America is we have not been taught to save, live within our means and abhor debt. Neither has our government,. But now I believe we are at the crest of a revisiting of those old fashioned principles. When honest Abe said the aquisition of property and houses is a good thing I believe they mostly paid cash back then. I doubt there were ARM's nothing downs, 50 year mortgages, 2nd mortgages, etc, etc. Even in the 50's and 60's the idea of a mortgage was to pay it off as fast as you could. Most did. They did not use their house or property as a giant credit card. No wonder we are in the mess we are in. Greed.

I believe the best we can all do is simplify, take care of our own and set examples for future generations. And pray a lot!