In this reading, a concept that I found interesting
was the “invisible hand.” The concept of the invisible hand is heling me understand
the basics of economics. It is a force that regulates the market economy. The “invisible
hand” can applaud us if our individual decision in the market economy will benefit
the economy as a whole. Sometimes self-interest may seem good for a while, but in
the end it will hurt us, unless we know how to use it.
The invisible hand forces us to think
about other people. Smith mentioned two ways of ginning the help of other
people. First, was to appeal to the goodwill of others and to appeal to other’s
self-interest. Adam Smith talked a lot about how self-interest was the
motivator for economic activity. Smith describes the “invisible hand” as self-interest
and competition in a market economy. We make so many choices in our lifetime. From
school choice, choosing a major, to going to work, or dropping out of high
school, but we mostly doing things because of self-interest. We put our own
personal gain first. Most of the stuff we see around us is because of self-interest.
As long as we know how to use it, it can benefit us. Buchholz used the example
of when Adam Smith made the vulture sculptures. This made me think of some examples
to help me better understand this concept. For example, every morning you buy donuts
and apple cider. The decision of buying this will make the seller and production
market better off. This will benefit everyone because the firms and markets
that produce are better off. Knowing how society can benefit from our self-interest
can help us succeed.
Competition plays an important role in this
concept. Self-interest can lead to corruption and increase in prices; however,
competition keeps this in check. My customers can leave if I treat them rudely
or increase my prices because my competitors are better at something that I lack.
I want to apply this in my life as I
am choosing a major. I want to choose something that I’m going to enjoy but will
also be able to help society. Having an understanding of how and why the economy
works can go a long way in whatever field I end up in.