Stiglitz's view on the "invisible hand"
Summary:
Why the invisible hand does not work:
Stock system provides incentives for businesses to offer bad information.
There is a lack of incentives that would improve the society.
The invisible hand only works when both the social and private costs or returns are the same.
How to improve:
We must try to understand why markets on their own are not likely to succeed and how governments can effectively intervene.
The government should regulate the transparency of the market and decrease incentives that lead to excessive risk taking.
*For more detailed information, please view the ppt below:
2010.07.28.farewellinvisiblehand.pptx |