One of the reasons the invisible hand often seems invisible is that it’s not there.
Click play to listen. Recorded on November 8, 2003.
Joseph Stiglitz talks about his 2003 book The Roaring Nineties and expands on his critique of that decade’s dysfunctional system of incentives that catered to corporate greed and contributed to a widespread recession. He explains that regulatory frameworks must be carefully applied, rather than accepted or vetoed across the board.
Stiglitz explains that knowledgeable parties were fully culpable in assisting this financial bubble. Physicists’ law of conservation of matter applies to economics, too: when corporations increase the compensation of their CEOs, someone has to foot the bill. The public was fooled into paying for CEOs’ increased stock options via deceptive accounting in this financially turbulent decade. The Fed falsely reassured the public that this was a “new economy” with nothing amiss, all while contradicting textbook economic theory with its advice.