01-10-2016, 05:48 PM
(01-10-2016, 01:56 PM)fredtoast Wrote: I am no expert in economics, but as I understand it Smith's "invisible hand" is a reference to the claim that a free market works best for society without regulation, and history has proven this is not true.
That's because people aren't that smart/rational and lack perfect information. Otherwise regulating out the "bad" wouldn't be necessary because those companies don't make any money and quickly fail. Most good regulation is about removing barriers to transparency and disclosure of information. I can't actually audit a companies financials I'm considering for a stock purchase, and that's why we need the SEC to establish standards and police it.
But Adam Smith's point stands that you don't regulate what the free market is able to do effectively. Central planning almost always proves suboptimal to the market allocating resources.
