The Invisible Hand - 60 Second Adventures in Economics

60 seconds adventures in economics Number one. The invisible hand An economy is tricky in the control and governments are always trying to figure out how to do it Back in 1776 economist Adam Smith shocked everyone by saying that what government should actually do is just leave people alone to buy and sell freely among themselves. He suggested that if they just leave self interested traders to compete with one another markets are guided to positive outcomes as if by an "invisible hand". If someone charges less than you customers will by from them instead You have to lower the price or offer something better. Whenever enough people demand something, they will be supplied by the market, like spoiled children. Only in this case everyone is happy The freemarketeers like Austrian economist Friederich Hayek argued that this "hands off" approach actually works better than any kind of central planning But the problem is economies can take a long time to reach their equilibrium and may even stall along the way. And in the meantime you can get a little frustrated. Which is why governments usually end up taking things into their own more visible hands instead. Subtitled by https://vk.com/make_ideas_not_war