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Here's how it works: the prices
we're willing to pay send key
signals and Smith used a baker as
an example. Hi, this all looks
delicious... Could I have a cup of
coffee? Yeah, of course. And a
scone, please? Thank you.
But let's say we all want scones, and
the baker keeps running out, well
then... she can charge a bit more.
Seeing the demand and money to be
made, other bakers will start
offering scones. All throughout the
supply line, people spring into
action. Farmers see that bakers are
buying wheat so they plant their
fields, and up production. Truckers
see money to be made in delivering
wheat to bakers, so they buy trucks
and hire drivers. Thank you.
So...we vote with our wallets, and
all around the world, people spring
into action, to satisfy our
demands. No one orders them to do
this, but every purchase sends a
message. As the supply increases,
competition forces prices down.
Fewer bakers bake scones and things
stabilize as supply meets demand
dynamically and automatically.
This all happens without government
intervention, without any trade
commissar dictating quotas. This is
Smith's invisible hand at work; it
guides large businesses and even a
small baker.