Hello! Today's topic is on the Invisible Hand. I was meant to post this last week but it wasn't completely finished so I'm posting it this week. (This post will kind of be in a research paper format, but this is my first time writing a research paper, so it won't be the best paper.) Anyways, here it is!
The Invisible Hand.
Similar to the name, the invisible hand is a metaphor for the unseen forces that move the free market economy or, the government. While it may be seen as interference, it actually is bringing order.
The invisible hand is part of laissez-faire, meaning let us do it, approach to the market. Even though markets can succeed by themselves, they need to be nudged to work best. This nudge comes from none other than the Invisible Hand. Here’s an example: Let’s say a business was hiring. People would present themselves and say they would work for $10 an hour. Well, to get the job instead of that guy, another would say they would work for $8 an hour, and so on. Soon, the government steps in and says we shouldn’t be working for less. So, they put in a minimum wage. The minimum wage is the lowest amount a person can work for. It gives a limitation on how low wages can be, so people aren’t working for less, but for more. The Invisible Hand nudged people in the right direction so that they could work their best.
Not only that, the Invisible Hand protects us, consumers, through acts and policies. For example, antitrust laws. Antitrust laws are developed by the government to protect consumers from predatory business practices and ensure fair competition. The practices include predatory acts to achieve and maintain a monopoly or price-fixing conspiracies. A common example is United States v. AT&T. Alexander Graham Bell invented the telephone in 1876, which started the foundation of the company that would soon become AT&T, American Telephone, and Telegraph. As the company began establishing a network of subsidiaries in the United States and Canada, it held a phone service monopoly. Since it was the only phone service, it could raise prices and sales freely. After all, what other company could they turn to if they disagreed with AT&T? In 1982, U.S. regulators broke up the company into 7 individual Bell companies. Now, not one, but multiple companies can compete with each other, bringing orders to the market.
More examples of these acts and policies include the Equal Employment Opportunity ( EEO) or the Credit Card Protection (CCP). The EEO protects consumers/people from being discriminated against by race, color, religion, sex ( including pregnancy, transgender status, and sexual orientation), national origin, age, disability, or genetic info. This act applies to hiring, firing, promotions, harassment, training, wages, and benefits. So, consumers cannot be discriminated against during any work situation.
Let's use a real-world scenario to see how the Invisible Hand would protect consumers. Let's say there is a gay couple, and they want to get their marriage certificate. Let's say there's only one person who can issue these marriage certificates or is the only one there. What would happen if they decide not to because gay marriage is against their religion? The EEO says that employees cannot be discriminated against by religion during any work situation, so what would happen? They would get fired for not doing their job. They are working for the government to issue these marriage certificates. They aren't doing it, but are acting as the government. It is their job to do that. They can be fired because they are not doing their job.
The Invisible Hand doesn't just protect consumers. They also protect businesses through similar acts such as the Paycheck Protection Plan ( PPP) or T.A.R.P ( Troubled Asset Relief Program). The PPP is a loan designed to provide a "direct incentive for small businesses to keep their workers on the payroll."
Finally, the Invisible Hand helps make taxes fair and efficient. Consider the term, Equality Among Equals. The most favored tax system is the progressive tax. This system claims that higher salaries enable affluent people to pay higher taxes, and lessens the tax burden of the poor. How does this relate to Equality among Equals? Well, equals of the same salaries will pay equal tax. So, millionaires will pay the same tax as other millionaires and people with slightly less salaries will pay the same tax as people with the same salary range as them.
The Invisible Hand truly is what brings the market to order. It is everywhere and helps everyone, both businesses, and consumers in similar yet different ways.
I have to say, for my first research paper, it went pretty okay. The first time I tried it I stressed out and spent such a long time on it, but now, I had a slightly easier time. Anyway, see you in the next post. Bye!
