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 The Invisible Hand 
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Joined: Thu Dec 23, 2010 11:41 pm
Posts: 118
Location: Glendale, CA, USA
Post The Invisible Hand
I posted this in another forum. Figured I'd share it here as well.

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As far as I know, there is only one list in the entire world that is ordered by the Invisible Hand... Favorite Books. The order of this list is determined by the aggregated valuations of the Classtopians, their teacher and myself.

When the Classtopians buy a donated item, they can choose which of their departments they give their money to. If they give their money to the Book Dept, they can use it to communicate their valuations of their favorite books. The Book Dept keeps track of everybody's book valuations on a Google sheet. This last weekend I taught their teacher how to embed the Google sheet in a page on their new blog.

For those of you who aren't familiar with the idea of the Invisible Hand...

Quote:
It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. — Adam Smith, Wealth of Nations

In a really small nutshell… the Invisible Hand is the decentralized process by which money is used to simultaneously identify and encourage beneficial behavior.

Adam Smith published his book when America was founded. Yet, as far as I know, this is the first time that a list has ever been ordered by the Invisible Hand. Which leads me to believe that very few people truly understand the Invisible Hand.

I figure that, with Donald Trump in the White House, now is an especially a good time to discuss the Invisible Hand. With Kennedy, the result of the Visible Hand was a man on the moon. But with other leaders the result of the Visible Hand was obviously and severely detrimental.

How many people should determine the order of things... and how should they determine it?

Here on this forum the order of the threads is chronological. It definitely makes sense to be able to see which threads have the most recent replies. But... can you imagine what the order of the threads would be like if it was determined by the Invisible Hand?

Personally, I've never donated any money to this forum. From my perspective, the free-rider problem is a real problem. But what if this forum implemented Classtopia's idea? Then, if I made a donation to this forum... I could use it to communicate my valuation of my favorite threads. Everybody's thread valuations could be kept track of in a Google sheet that would be embedded in a webpage that we would all have access to. The threads here in the forum would still be chronologically ordered... but we'd also be able to see the threads ordered by the Invisible Hand.

It would be the epitome of killing two birds with one stone. We'd all be able to easily determine, and see, the most valuable threads... and this forum would receive more donations.

Would it be worth it for the owner to update the list? Well... if the donations were large and frequent enough... then it would probably be worth it. Of course only he can know the minimum donation that it would be worth it for him to update the list. If there was enough demand though it would definitely make sense to automate the process.

The Bible gets a few things really right. For example, don't hide your light under a bushel. This forum definitely has a lot of buried treasure. However, since values are subjective, this forum's treasure can only identified and unearthed by the Invisible Hand.

_________________
Carlos - Epiphytes and Economics


Tue Feb 14, 2017 5:28 am
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