The Irony of “The Wealth of Nations” Or Obamacare’s Transparency Or Adam Smith’s Invisible Hand

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In recent weeks we’ve all been witness to the roll out of Obamacare or the Affordable Care Act as it is more correctly referred. Yes, it’s stumbling, bumbling and fumbling. It’s all those things. It’s Washington’s version of a Kabuki tragedy. However, my intention here is not an opinion piece or a forum for political ideologues, rather a reminder of your Econ 101 class and what’s come to be called in the Information Age as – transparency.

Who is Adam Smith?

Adam Smith is a Scotsman of the 18th century who is often cited as the father of modern economics. He is best known for his works: “The Theory of Moral Sentiments” and “The Wealth of Nations.” The latter often attributed to introducing the concept of “the “Invisible Hand” to the rigors of modern economic debate.

This “hand” – while discounted by critics as likely non-existent, Smith himself describes as the self-regulating force behind free markets:

“That individuals’ efforts to maximize their own gains in a free market benefits society, even if the ambitious have no benevolent intentions.”
His detractors would cite the ruin and hurt caused by Bernie Madoff’s Ponzii scheme. In truth, Smith did not endorse a pure laissez-faire or a free-for-all unregulated market. Yet he leaves little doubt his concern over intrusive government intervention. His reliance was on the ability of the “Invisible Hand” to weave an intricate balance between ‘market value’ and ‘moral greed’, between supply and demand, shortage versus surplus, and the abundance of labor and capital. In other words: Markets will seek equilibrium.

No One Read the Bill or “The Wealth of Nations”

While Smith’s theories laid the groundwork for the economics of free markets, it should have also sent up red flags to the Obama policy team of the unintended consequences inherent in fooling with complex markets. Smith clearly indicates that markets arise spontaneously when conditions are appropriate and called for.

No doubt the current insurance industry is in need of improvement – badly needed. And those improvements could have been rolled out in an orderly and organic fashion with the help of the “Invisible Hand.”

All This Done Under the Utmost Transparency of any Administration

Definition: Transparency – generally implies openness, communication, and accountability. In other words, a clear view of the internal machinations that results in the outcome of a process. It’s where the sausage is made. When not apparent, it is often referred to as a “Black Box,” the input is known but the process can’t be viewed as opposed to a “White Box.” Nancy Pelosi’s famous quote of, “Well we’ll have to pass it to know what’s in it” is a classic Black Box.

The Lessons Learned and the Irony Applied

The “Invisible Hand” does not equate to transparent intervention. While the final outcome of this grand social experiment called Obamacare is yet to play out, it is not too late to feel the biting irony provided by the publication date of “The Wealth of Nations” — The year 1776. How appropriate is that?