Many cite an invisible hand as regulating the economy. Adam Smith (The Wealth of Nations, 1776) never said such a thing. On the contrary, what he said was that when we labor domestically for our own material security, it acts as an invisible hand strengthening our commonwealth. He was not a believer of free and reckless trade. In fact, he was writing in favor of tariffs. He was arguing against importing goods because it disrupted the commonwealth. It is unfortunate that people have misinterpreted his writing.
Adam Smith was correct regarding the importance of commonwealth, but incorrect about tariffs. Foreign trade is not a threat to a commonwealth, as long as it is done fairly. Any action can have either a good or bad effect. His cognitive dissonance was to suggest that selfishness within the commonwealth was acceptable. He evidently recognized that foreign goods might be acquired more cheaply. He should have asked, "Why?' The discrepancies in value between national currencies creates the discrepancy in worker conditions, not vice-versa. Smith's attitude is a combination of might equals right with the ends will justify the means. It is a very narrow vision of society, and claims that good results can come from bad choices. This is the root of fascist indifference. The math, and history, prove him wrong. His entire line of thought is to flatter the merchant.
The invisible hand claim has devolved into an attitude that "Whatever happens, is best." This claim of amoral detachment was characterized by the foolish and bumbling Professor Pangloss in Voltaire's novel Candide (1759). Of course things will work themselves out, no matter how stupid we are. The end is pre-determined. We are all going to die eventually. The choice is in regard to how we want to live.
In general, there are three political factions in economics. The party of indifference is actually the largest party. Anything, by virtue of its existence, can be described as part of a natural balance, but that does not constitute scientific analysis of cause and effect or apply moral reasoning. At the time Adam Smith wrote his book, the economy was already off the rails. That was why political-economic discussions were regarded as important. The rise of the merchant-class was in full bloom; monarchy and the landed estates were waning.
The application of percentages had destroyed the economy. People were desperate, which was why rebellion was in the air. The same circumstances led to the writing of this book. The merchants of those days were convinced that they were wisest about economics because they handled money the most frequently. In fact, they were handling the money most improperly. Blaming the King is no longer a convenient excuse. Blaming the government is to repeat the original false claim. We the people have to confront our own dissonance.
Because we are all bound to the government, we are all bound to one another by proxy. We cannot escape the economy. We cannot escape commonwealth. The question is only, "How well do we manage the resources of land and people?' The answer is, "Not very well, at present.' We are all bound to the math, the progress and the trouble, equally. The word commonwealth recognizes that we are bound together.
How do we share the bounty?
A competitive system drives man to want to be a master, rather than a slave. As master he can decide what to keep and what to share. In a world of extreme inequality (9:1), trusting equality is a radical idea. Those with an advantage fear that equality will become 1:9, not 5:5. The rich do not want to move down or trade places with anyone in the commonwealth. Rather, they would prefer that the poor move up. The rich often suggest following their own example: work hard, use variable percentages to your advantage, repeat. In other words, always take more than you give. Infomercials repeat the formula constantly. It is the foundation of buy-low sell-high.
Because we have created a numerical ladder, the only way to move up is for someone else to move down. This is broadly accomplished by someone's death or birth. A death adds free wealth into the system, a birth adds free labor. Somebody will benefit from every change. When the government issues more money, the entire ladder moves. People's relative inequality, however, remains the same.
We have few troubles with production and consumption. The challenge is that we need to be more skilled in both giving and receiving. It is our own hands that creates the desperation and volatility.
The issue is, "How should we conduct ourselves in business and politics?' It is difficult to separate the wheat from the chaff when we spend all our early years being brainwashed into the errors of history. We create heroes too quickly and let go of them too slowly. Slave-masters were the heroes of the American Revolution and the villains of the Civil War. Both battles were about merchants wanting to protect their variable percentages. All the wars, including the war of terrorism, have the same root.
The Democrats and Republicans are both claiming that 2+2=5. They differ on when and where a variable percentage should be applied. Neither taxes, nor profits, can resolve the numerical disparities. Taxes cannot create equality and profits cannot lift up the poor. Inflation is the problem, not the solution.
What we are experiencing is broken logic and a failed experiment. We need goods to survive. We must consume food, education, energy, and other things. As goods and services are consumed, their mathematical footprint remains. The mathematical percentage of taxes and profit, once created, can never expire. These percentages live on as debt and inflation. We are all chained to the past and each others' current transactions through the mutual currency. A peaceful coexistence with a mathematical absurdity is not possible.
It is easy to blame the rich for taking too much, or to blame the poor for not working hard enough, or to blame the government for incompetence or corruption, but none of those claims are wholly true. Percentages drive the inequality. We are all behaving the same way. There is plenty of blame to go around.
It is important to follow the math, not just the totals. Most discussion, debate and disagreements are over totals, rather than analyzing the math being used. Percentages reveal both the problem and the solution. The problem is tiny. The challenge is that the wrong behavior is widespread.
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