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Quotation of the Day…

… is from page 41 of my former GMU colleague Vernon Smith‘s rich and wonderful 2004 talk “Markets, Capital Markets, and Globalization,” which is included in the 2005 World Bank publication Lessons of Experience:

Not only capital but also people move to where there is opportunity; and this is an essential part of creating new wealth and prosperity.  This was dramatically illustrated for me in 1978, during a taxicab trip from the Wellington, New Zealand, airport to my hotel.  The driver was friendly, and I asked, “Tell me about your country.”  He replied, “It’s really wonderful.  I don’t like paying half my small salary in taxes, but we receive so much that is free: health benefits, prescriptions, free education through college and advanced graduate study.  I am just a cab driver, but my son is going to be a medical doctor.  He has finished his medical degree and internship, and will begin practicing next year.”  In recognition of his obvious pride, I said, “How wonderful.  You have every right to be proud.  Is he going to practice in Wellington?”  He replied, “Oh no, he’s going to Australia.  You can’t make any money here.”  The New Zealand economic crisis hit about two years later.  New Zealand could not compete in world markets – and could no longer afford socialism.

Large countries with a history of relying upon markets, such as the U.S., can endure the folly of heavy taxation and other burdens of state interventionism longer than can small countries such as New Zealand.  But even behemoth economies like America’s are no more immune to economic laws and realities than are smaller economies.  The ill-consequences of government folly are simply better able, in large countries like the U.S., to be hidden longer – and, when discovered, better able to be falsely blamed on innocent forces or pretend villains – than in small countries.

But in the spirit of the holidays, it’s appropriate for me to off-set this previous paragraph’s rather dour-sounding note with this note of thankful wonder (which is from the Cafe on Jan. 1, 2005).

Vernon today celebrates his 86th birthday.  We at the Cafe wish this great and pioneering scholar many more!  We also wish Vernon, his wife Candace, and all of our readers an excellent 2013.