Is Market Love Blind?

Many market lovers hate what their love needs to work. An incomplete logic has them in its spell, blinding them to the fact that “invisible hand” cuts both ways.


Many market lovers are so bewitched, they’re blind to their beloved’s faults. Worse, they hate what their love needs to work. Seen clearly, “invisible hand” logic is incomplete and cuts both ways.

1. Adam Smith wasn’t market smitten: “He who intends only his own gain ... is ... led by an invisible hand ... [and] frequently promotes” society’s interests. That’s “frequently promotes” — not always ensures.

2. The “invisible hand” metaphor predates Smith (he got it from William Shakespeare, Saint Augustine used it). Economists mostly ignored it until Paul Samuelson’s 1948 textbook preached to millions that it ensured “the best good of all.”

3. If selfishness in markets has unintended benefits, aren’t unintended harms logically possible? Perhaps inevitable?

4. Markets, as complex wholes, risk “fallacies of composition”: The properties of parts needn’t apply to wholes. Silly example: All atoms in an apple are invisible; therefore, the apple is invisible. Likewise markets composed of voluntary, desirable, and locally "rational" transactions don’t always combine for rational and desirable outcomes overall. Unsilly example: Few buy products intending to pollute; yet producers pollute.

5. Pollution shows why free markets have built-in incentives to obstruct voluntary fixes. Manufacturers gain by avoiding cleanup costs; buyers by the resulting lower prices. What’s collectively bad “benefits” voluntary sellers and buyers.

6. Such “costs that people impose on others ... yet have no individual incentive to” fix are called“negative externalities.” They’re not always safely ignorable or small (e.g. $200 burger). Markets, without accurate prices, are like doctors without reliable tests. They can’t dependably decide what’s best.

7. Two cures are known: Either regulate, or tax to adjust incentives. Yet many market-lovers resist both, often for non-market ideological reasons (believing governments are unavoidably bad).

8. Markets could collectively optimize if prudently avoiding collective harm reliably trumped profit, or if prices perfectly included full costs (no externalities). But neither condition applies in any real market.

9. Only a non-market entity can police and manage real markets. Otherwise markets coordinate mindlessly (see “Markets Dumb as Trees”).

10. Joseph Stiglitz says the “invisible hand often seems invisible” because “it is not there." Better to say it’s not reliably benign. The claimed automatic alchemy of solo greed becoming social good is love-struck, logically incomplete, and impractical. Real lovers of real markets must deal with their real disorders. Without the medicine of regulation and taxation, however bitter, our beloved markets can’t thrive. Let’s be market realists.  

Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar Inventions.

 

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The study's senior author and Integrative Physiology Professor Christopher Lowry described this fat as "one of the main ingredients" in the "special sauce" that causes the beneficial effects of the bacterium.

The finding goes hand in hand with the "hygiene hypothesis," initially proposed in 1989 by the British scientist David Strachan. He maintained that our generally sterile modern world prevents children from being exposed to certain microorganisms, resulting in compromised immune systems and greater incidences of asthma and allergies.

Contemporary research fine-tuned the hypothesis, finding that not interacting with so-called "old friends" or helpful microbes in the soil and the environment, rather than the ones that cause illnesses, is what's detrimental. In particular, our mental health could be at stake.

"The idea is that as humans have moved away from farms and an agricultural or hunter-gatherer existence into cities, we have lost contact with organisms that served to regulate our immune system and suppress inappropriate inflammation," explained Lowry. "That has put us at higher risk for inflammatory disease and stress-related psychiatric disorders."

University of Colorado Boulder

Christopher Lowry

This is not the first study on the subject from Lowry, who published previous work showing the connection between being exposed to healthy bacteria and mental health. He found that being raised with animals and dust in a rural environment helps children develop more stress-proof immune systems. Such kids were also likely to be less at risk for mental illnesses than people living in the city without pets.

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Lowry thinks this understanding can lead to creating a "stress vaccine" that can be given to people in high-stress jobs, like first responders or soldiers. The vaccine can prevent the psychological effects of stress.

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"This is just one strain of one species of one type of bacterium that is found in the soil but there are millions of other strains in soils," said Lowry. "We are just beginning to see the tip of the iceberg in terms of identifying the mechanisms through which they have evolved to keep us healthy. It should inspire awe in all of us."

Check out the study published in the journal Psychopharmacology.