If the U.S. government, either through law or presidential threats, forbids U.S. companies from eliminating certain jobs, it will make it more difficult and costly to create jobs. The dynamism of the U.S. economy will be diminished, reducing our long-term prospects for growth in productivity, output, and employment.
So, this is the new conservatism’s recipe for restored greatness: Political coercion shall supplant economic calculation in shaping decisions by companies in what is called, with diminishing accuracy, the private sector. This will be done partly as conservatism’s challenge to liberalism’s supremacy in the victimhood sweepstakes, telling aggrieved groups that they are helpless victims of vast, impersonal forces, against which they can be protected only by government interventions.
Responding to political threats larded with the money of other people, Carrier has somewhat modified its planned transfers of some manufacturing to Mexico. This represents the dawn of bipartisanship: The Republican Party now shares one of progressivism’s defining aspirations — government industrial policy, with the political class picking winners and losers within, and between, economic sectors. This always involves the essence of socialism — capital allocation, whereby government overrides market signals about the efficient allocation of scarce resources. Therefore it inevitably subtracts from economic vitality and job creation.
Of course, investing in the United States already is a very attractive proposition, which is — almost everybody gets this wrong – the main reason why we have trade deficits. Trade deficits are partly a question of consumer preference — American consumers really do like Hondas more than Japanese consumers like Buicks — but they are not mainly a question of consumer preference. They are mainly a question of investor preference — and investors prefer the United States, which is why there is almost twice as much foreign direct investment in the United States as in China, even though China’s economy has grown at a much faster rate over the past 20 years.
“As the Federal Register climbed above 87,000 pages for the first time in its 81-year history, agencies issued new rules ranging from landfills to movie theaters.” – So reads the opening line of Ryan Young’s latest blog post at CEI.
I believe that a disdain for wealth creation, and for the role of the entrepreneurs in society, is an affront to human dignity. This can be seen most readily in the income inequality and mobility debate. By focusing on redistribution and class warfare, policymakers and elites demonstrate how they lack understanding of the practical value that entrepreneurship provides as an alternative to an ever-changing economic and social landscape.
The great economist Deirdre McCloskey provides a thorough explanation of the role of entrepreneurs in her book Bourgeois Dignity: Why Economics Can’t Explain the Modern World, and summarizes her perspective in a more recent essay, “Liberty and Dignity Explain the Modern World,” as well as in her contribution the book The Morality of Capitalism: What Your Professors Won’t Tell You, edited by Tom G. Palmer.
Russ Roberts’s latest EconTalk is with Princeton’s Thomas Leonard, author of the splendid Illiberal Reformers. (By the way, Leonard’s book should cause all of today’s proponents of the minimum wage to hide their faces in their palms with embarrassment and shame, not only for the contortions these minimum-wage proponents perform in order to deny the application of the law of demand to the market for low-skilled workers – and not only for carelessly and selfishly endorsing a policy that denies economic opportunity to people who are most in need of such opportunity – but also for the ugly, racist, and cruel history of minimum-wage legislation. See also, for example, Emily Skarbek.)