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Listen to the invisible hand

Posted: November 16, 2011 - 1:01am

During the past few weeks the Empire has headlined a lot of good news about our state and local economy. We’re being told by economists that we’ve been spared much of the pain experienced by people down south during the three year long recession. And they’re forecasting growth in employment opportunities, housing starts and most retail sales in the months to come. But for all the analyzing they’ve done, its people, not numbers, who hold the stories we need to hear.

But let’s start with some numbers anyway. In the October edition of Alaska Economic Trends, economist Neal Fried examined the makeup of the state’s $49 billion gross domestic product (GDP). It shouldn’t surprise anyone that oil and government services buoyed our economy during the global financial storm. They account for almost half of our GDP. The remainder falls into categories too numerous to list or too convoluted to accurately describe.

Fish products fit into the latter group. Processed Alaska seafood may be our second leading export, but its value is hidden under the label of food product manufacturing, a subpart of the manufactured goods category which registers as a meager 4 percent of our total economy. As a percentage of GDP, only Hawaii manufactures less. Alaskans simply don’t produce many goods to be sold on the free market.

We do sell stories though. “The Deadliest Catch” has been a regular television program for seven years. “Coast Guard Alaska” just made its debut on Weather Channel. It will highlight heroic tales of lives being saved in the nasty extremes of Alaska’s weather. And let’s not leave out “Sarah Palin’s Alaska,” the reality show that averaged 3 million viewers in the only year it aired on the Discovery Channel.

Like seafood, the value of these programs is hidden inside another category of our GDP. But here’s where I want to briefly leave economics to discuss the value of stories. Because the kind of show produced for mass consumption is all about entertainment. These may appear to be stories about the hardships of living in Alaska, but they aren’t intended to help us appreciate the difficulties endured by the people living in our communities.

I may be taking a lot of liberty with a few random economic statistics to advocate for a socialist agenda. But the truth is I arrived here courtesy of economist Adam Smith’s “invisible hand”. The origin of this oft used term wasn’t an argument against government intervention in the free market as is commonly claimed by many economists. Smith used it first in The Theory of Moral Sentiments. He referred to the wealthy as having naturally selfish intentions, but postulated that they are led by an “invisible hand” to “divide with the poor the produce of all their improvement,” and thus “without knowing it, advance the interest of the society.”

Smith believed that most people gain nothing from their charitable acts aside from the joy of seeing the results firsthand. Similarly, he wrote “we often derive sorrow from the sorrow of others” when we directly witness their pain and suffering. It’s quite possible then that Smith’s “invisible hand” is a reference to the stirring of one’s moral conscience.

But it’s important to consider the fact the economy was almost entirely a local affair when Smith theorized about the invisible hand in 1759. It was hard, if not impossible, to ignore the plight of the poorer people living nearby. Interstate commerce and global trade have changed this. Out of sight and out of mind, the saying goes, and it’s well suited for the global capitalist who wants to keep his moral conscience from interfering with his selfish tendencies.

As Smith pointed out, care for the poor benefits all of society. But few supply side economists will ever advocate restoring morality of this nature to the free market. Nor will government intervention ever be able to compensate for the market’s shortcomings. It’s up to us to improve the way we interact with the people in our neighborhoods. To make the global marketplace and our elected leaders work for everyone, we need to reimagine the way we listen to the stories of people who are less fortunate than ourselves.

• Moniak is a Juneau resident.

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