Here’s a letter to the Wall Street Journal:
In “A Nobel Economics Prize for the Long Run ” (Oct. 9) David Henderson does his usual excellent job of explaining the core contributions of the newly minted Nobel-laureate economists, who this year are Yale’s William Nordhaus and NYU’s Paul Romer.
Yet, undoubtedly because of space constraints, Mr. Henderson did not mention one of Prof. Nordhaus’s most remarkable and important findings, namely, that nearly all – about 98 percent – of the benefits of technological innovation are captured, not by the entrepreneurs and businesses who introduce them, but by the general public. In his 2004 paper “Schumpeterian Profits in the American Economy: Theory and Measurement ,” Prof. Nordhaus wrote that “only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.”
With so many young people today swallowing the myth that socialism is necessary to oblige businesses to serve the general public, Prof. Nordhaus’s finding ought to be trumpeted far and wide.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030