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Quotation of the Day…

… is from page 362 of the final (2016) volume – Bourgeois Equality – of Deirdre McCloskey’s brilliant trilogy on the essence of bourgeois values, on their transmission, and on their essential role in modern life (link added; emphases and ellipses original to McCloskey):

Betterments require disobedience, creative destruction, an overturning or remaking or redirecting of what already exists, Steve Jobs and Bill Gates challenging Big Blue, autos replacing horses – not a bigger centralized computer or a faster horse.  Unpredictability is characteristic of the major betterments.

Therefore, betterments, I have said, depend on liberty.  As the engineer and historian of technology John Lienhard puts it, “Inventing means violating some status quo….  All the great inventive epochs … have been marked by climates of increased personal liberty.”

Despite being championed not only by genuine conservatives but also by many people who are called “Progressives,” trade restrictions and other mercantilist policies (such as those that are manifest in that great geyser of cronyism, the U.S. Export-Import Bank) aim to protect existing, politically influential producers from competition.  Protective tariffs, import restrictions, and export subsidies are special state favors granted to established firms, to practitioners of established ways of producing, to those carrying out established methods of supplying markets with goods and services.  Therefore, these mercantilist policies thwart progress by obstructing what McCloskey calls “market-tested betterment” – betterment that requires that consumers be free to spend their (and only their) money as they choose, and that businesses – established and upstart, domestic and foreign – be free to use their (and only their) funds to compete against each other for these consumer expenditures.

When someone who calls herself or himself “conservative” endorses trade restrictions and other mercantilist interventions, that person (whether knowingly or not) endorses economic policies that in fact conserve – for a time, at least.  Such policies protect the present from the future – or, rather, better ensure that the future will look much more like the present than otherwise.   (Read Russ Roberts’s The Choice.)  By thwarting or slowing or narrowing market competition, mercantilist policies conserve existing capital values and fortunes more surely than these are conserved in an economy unsullied by mercantilist barriers and extractions.  The same is true for the existing ‘distribution’ of income and wealth: by making the economy more static, income and wealth distributions become more static.

But static turns into stagnant.  At the end of the day, or the decade, or the half-century, a conserved economic landscape of protected incumbent producers loses momentum and crashes, just as an airplane in flight crashes if it is ordered to stop and conserve its current location in the sky.

The effort to conserve the economy’s current details – to conserve current producers, products, and patterns of spending and methods of production and distribution – is doomed.  Tariffs and other interventions can conserve these details for a few years, but eventually the conservation effort fails.  And when it does, nothing of much good or value replaces the crashed, lifeless economy, for the economy was destroyed destructively, not creatively.  The economy died of stagnation; it deteriorated; it was not revitalized.  Unlike an open, competitive, and dynamic economy, a protected mercantilist economy is not replaced by producers and products that are more vigorous and better.  It is replaced only by the rubble that are the ruins of its past self.