The Holy Invisible Hand

From time to time a religious zealot will see the image of Jesus, the BVM, or Ganesh in a loaf of bread or a desiccated gourd. Word quickly passes, and soon there is a pilgrimage of zealots to see this holy item. They get all excited about it, but most people just keep on walking – and try to avoid eye contact.

Zealots of another variety see an ‘invisible hand’ in places where it could not possibly be present—in the banking, insurance, energy and pharmaceutical industries—places where the concentrated market power would crush any such hand beneath its steel boot. Still, the zealots gather to protect this holy industry from anything which would interfere with the workings of this phantom deity.

Paradox of Thrift

The paradox of thrift is a perfect example of a fallacy of composition (‘what’s good for one is good for all’). One family responding to economic uncertainty by squirreling away money makes sense … for that family. But if everybody does it, the result is that people spend less overall, causing a deeper and longer-lasting downturn.

Government expenditures comprise a huge portion of our economic activity. While it may seem prudent to do a little ‘belt-tightening’ there, the belt is already snug – around the neck of our already-fragile economic recovery. It’s not just state and Federal workers, and aid recipients who would lose out; so would grocers, landlords, car dealers, and on up the line. The deepening and lengthening of a second dip would be a foregone conclusion.