In science, falsifiability is the ability to run an experiment or make an observation to prove or disprove a hypothesis; you generally can't do that in economics, because economics is not a science, and it's certainly not an art…so let's just call it a hobby. Indeed, in economics, you often can't effectively define what your hypothesis even means. Say we have a hundred people, three of whom are rich beyond the dreams of Croesus, twenty of whom are starving, sick or dead of starvation or treatable disease, and the other 77 of whom are somewhere in between. Are those hundred people happier than a hundred people who all have more or less the same amount of stuff and are all moderately miserable? Who knows? How do you even measure happiness? Even if you define happiness so ridiculously rigidly as to be meaningless--as "everyone having the most money possible in the circumstances," for example--no one has ever been able to prove that free markets achieve even that degree of happiness.

Somewhere around this point in the argument, free marketeers (who are not as much fun as Mouseketeers, though they might be if they had hats with ears, and if Annette Funicello were one of them, which she might be for all I know) (Frankie Avalon's a total fucking commie, though) generally point to Sweden's suicide rate as proof that socialists (also known as people who learned to share in kindergarten) are bummed out by all their comfort and equality. Even if this pseudo-argument proved that free markets create more happiness than socialism, even if it proved that socialism caused suicide (which…huh?), this argument fails on the facts: Sweden's suicide rate is actually only a tiny bit above that of the U.S. (20 per 100,000 population, compared to 19.3 for the U.S.) and way below that of Russia (72.9 per 100,000)--and also below Alaska's rate of 24.9 per 100,000. From this we learn that, whatever your economic system, living in the same place as Sarah Palin makes you off yourself. I totally get that.

Free marketeers--those that Bernie Madoff or CDOs haven't bankrupted--believe that the self-interest of each buyer and seller interact to produce the most happiness for the largest number of people. (Before reading Smith, I thought that was what drugs, liquor and sex with park statues did.) (And, actually, after too.) "Believe" is the key word there; that unregulated free markets lead to the best possible arrangement of our economic affairs is a cornerstone of the free-market temple, and has been more or less unquestioned economic dogma for the past 30 years or so (since Reagan came and Reason fled). Cheer up, homeless guy! There's an invisible hand! Turn that frown upside-down, dude who just lost his house: invisible hand! Aw, little kid who just died in the emergency room of asthma: what can we do? Invisible hand! (Sorry about feeling your ass on the El, lady; my hand: not so invisible.) And those are just some of free markets' recent triumphs. In the past, the invisible hand has given us too-numerous-to-bother-naming (though economists do, those crazy hobbyists) bubbles, busts, economic panics, recessions, depressions and intercessions. (Oh, wait, that last was just my family and friends. In their defense, I'd been hitting the yogurt peanuts way hard.) After a couple of hundred years of observing the invisible hand's effects, one would have to infer that it is most of the time invisibly flipping most of us off.

            This quasi-mystical veneration of markets is what free-marketeers call hard-headed realism; in contrast, my spitting three times for good luck before I get off the bus in the morning is mere superstition. (Well, okay, fair enough, and also: my apologies to all those people sitting near me.) Left to themselves, markets achieve the goal of all mankind forever (apart from being able to fellate yourself) (I've got to tell you: I'd never leave the house): the greatest happiness of the greatest number. In fact, markets do produce the greatest happiness, though mostly for those free marketeers, who tend to be rich, and generally assholes. (I'm not saying the two things go together…oh, wait, yes I am.) Markets reward speculation, monopoly (and other less-fun board games), oligopoly and monopsony, rapacious behavior that benefits the few at the expense of all the rest of us. If I corner the wheat market (and I plan to, by buying every box of Wheaties at the Jewel), you pay monopoly rents (which means: whatever I want to charge) for your morning breakfast cereal and for bread for your kids' sandwiches. (And bagels! Oh, man, I must control the bagel market. Bwahahahaha!) (Once I own the bagel market, the lox and cream cheese markets will just fall into line.) I win; you lose; this is called a zero-sum game. Smith's idea that markets are a positive-sum game, in which everyone benefits, intersects with reality far less frequently than he, or his latter-day Smithettes, would have you believe.

(The other Smiths, however, especially Morrissey, tend to have a less sanguine view of laissez faire capitalism, "laissez faire" being a French phrase, and therefore untranslatable into English, except by people who speak French and English.) (And Elliot Smith thought Adam was a total fuckwit.)

             When the worm turns, even free marketeers don't believe in the invisible hand; did Goldman Sachs turn down the TARP bailout and its extra-socialist-y goodness? Of course they did...in Not-land. (It's only socialism if it's for someone else. If it's for me, it's sound economic policy). So, do markets ever work? Sure, and when they do...shhh...it's because of government regulation.

Let's take an example a friend of mine brought up the other day: airline safety. An airline's managers can save money by cutting back on maintenance and safety checks on their fleet, by firing their flight attendants and overworking their pilots. They're rolling the dice; if they lose, if their planes start falling out of the air like gnats when you blow pot smoke at them (try it; it's fun for the whole family), they lose business, but they have decided that that bet is a good business risk. But you, without even knowing it, are risking death on their bet. (And while I am in favor of napping, I'm opposed to doing so outdoors and underground.) Now, if you knew they were gaming safety, you could make a rational decision--but they won't tell you. This awesome-for-them-sucks-to-be-you situation is called information asymmetry: I know shit you don't, so I win. You? Don't even know you're playing.

            So what stops an airline from making this bet? In a word (well, two words, actually), government regulation. In exchange for allowing that airline to fly its planes, the government requires them to maintain their planes on a regular schedule, to upgrade safety equipment, to put that flight attendant up front to make those hand gestures we all ignore. Yes, free marketeers, the government keeps the airlines from risking your life every time you fly to Vegas to snort cocaine off a hooker's heinie. Speaking for the FAA (and also for the hooker), you're welcome.

(Heavier-than-air-flight, by the way, is completely impossible; airlines hypnotize and drug you, then ship you via a system of underground pneumatic tubes to your destination.) (True story.)

Or take financial markets. What keeps large traders--who also know shit you don't know--from colluding to strip down to the bare bones every new investor who buys a stock or a futures contract? Regulation by the SEC and the CFTC, that's what. There wouldn't even be financial markets without regulation. Who would trade knowing that the inevitable outcome would be their winding up penniless in a gutter? (Or even penniful, and in, like, a sidewalk or parkway.) I can hear my trader friends--of which I have none--howling at that assertion, but that just goes to prove the point: they want to strip those naifs and newbies like piranhas stripping a cow, because it's in their own individual best interest. But it's in the common best interest--and even in the best interest of the market--to prevent that kind of rapacious behavior. The invisible hand apparently belongs to a civil servant.  And is not on your ass, lady, for fuck's sake. That was several paragraphs ago.

            Here's one final example, one where private enterprise clearly did not achieve the greatest happiness for the greatest number, thanks to information asymmetry. Up until last year, the City of Chicago owned its parking meters and took the revenue from the meters and the fines. But someone got a little greedy (his name was, and is, Richie Daley) and because private industry can do everything better than government bureaucrats (hence the U.S. military outsourcing the Iraq War to Blackwater, corporate slogan: "Can We Have One Killed For You?"), Chicago leased the parking meters to Chicago Parking Meters, LLC, a subsidiary of Morgan Stanley, for 75 years, for $1.16 billion--much of that money presumably paid out of the $10 billion in TARP funds Morgan Stanley got. Man, isn't $1.16 billion a lot of money? Chicago must be rich now, huh?

            Yes, yes, we are. Our about-to-fall-in-the-River bridges and potholed streets are paved (insofar as they are paved) with gold. Because then everything worked out great. If you're Morgan Stanley, as one is. Within days, Chicago Parking Meters LLC raised parking rates, didn't bother repairing any meters but wrote tickets to cars parked at busted meters, replaced meters with annoying and inconveniently-placed parking kiosks (here's a description of the baroque--and broke--process of kiosk parking), and then raised parking rates some more again. (And also extended the times and days during which you had to pay for parking--almost caught me on that one, Chicago Parking Meters, LLC; invisible hand off my ass, 'k?) Chicagoans, and even the city council, knew next to nothing about this deal; the details only came out months after it was done. And oh yeah: that $1.16 billion the city got for leasing the meters? Turns out it's about a quarter of the potential revenue the city would have gotten had it kept them. (From "FAIL, Part One: Chicago's Parking Meter Lease Deal," and "FAIL, Part Two: One BILLION Dollars! ," by the awesome Ben Joravsky and Mick Dumke in the Chicago Reader.) Woo-hoo! There's the invisible hand finger-banging my city! That's hawt. It's like free-market porn, for rich guys. Of course.

            So private enterprise not only doesn't work without regulation, it's often not as efficient as the government. (Even, god help us, Richie Daley's City of Chicago.) When an opponent of Obama's healthcare plan argues that that plan is socialism, I can but think: first, you have no idea what socialism is, and second, fine, sign me up for some socialism; it's got to work better than our current unregulated disaster. I don't want Morgan Stanley telling me when and where to park, and I really don't want Blue Cross/Blue Shield deciding how I get my colonoscopy, because I'm afraid--no, actually, I'm quite certain--it will be that very invisible hand shoving that long plastic tube  up my ass. It's not like it hasn't happened before.