Invisible Hand

It is interesting that the day taxes are due often falls on a beautiful spring day. Now, it always amazes me how many procrastinators wait until the last minute to file their taxes. What is probably even more surprising is how many of them are due refunds. From a financial viewpoint, paying the IRS money should be done at the latest possible moment since you have the use of those funds. But letting the IRS hold onto your money is clearly not in your best interest and it just goes to show how many people fail to act in their own best interest.
This observation makes you wonder about the invisible hand of economics (heart of the free market theory). If you accept the premise that it is best if everyone acts in their own best interests, that is obviously only true if one knows what that is. I guess it also requires a certain degree of equality. If, for example, one group’s best interests is the total destruction of another group, and they are large enough to accomplish it, it certainly doesn’t seem like the best possible outcome.
In a world of individuals of about equal power, the premise has some merit. However, if two powerful financial giants make a deal that profits a few with tremendous bonuses, but ultimately risks the wealth of millions, how can a system of free markets stop them? We know from history that market manipulation is certainly possible. The only way to actually prevent it is to keep any one group from becoming large enough to dominate a particular market.
Of course even in a simpler world the concept has issues. Consider all the areas of the world that have been over farmed, over fished, and now are non-productive wastelands. Have we achieved the greater good by polluting the air? What about the widespread use of dangerous pesticides? It is easy to argue that each of the individuals came to a proper decision about what was best for them individually, but it certainly wasn’t what was best for society.