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Bonus Quotation of the Day…

… is from page 199 of Deirdre McCloskey’s superb 2019 book, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All:

The original and sustaining causes of the modern world, I would argue contrary to Piketty’s lofty sneers at bourgeois virtues, were indeed ethical, not material, and were located especially in a liberal ideology by bourgeois and non-bourgeois alike supporting such virtues. The cause was the widening adoption of two mere ideas, the new and liberal economic idea of liberty for ordinary people and the new and democratic social idea of dignity for such people. The single word for them is “equality” of respect and before the law. The two linked ethical ideas, deemed preposterous before the eighteenth century, led after 1800 to a paroxysm of betterment.

DBx: I have not yet read Thomas Piketty’s forthcoming book, but I did read – carefully and completely – his 2014 volume, Capital In the 21st Century. To say that I was unimpressed is a vast understatement. For Piketty, economic growth is largely independent of human actions and institutions. If calamities such as world wars and great depressions are avoided, capital grows automatically. Therefore, in Piketty’s imaginary world, heavy taxation, regulation by the state, and ‘redistribution’ have no effect on the amount of capital in existence to help human beings create more prosperity. Ditto for cultural values: no effect on the amount of material prosperity in existence and to come.

Piketty’s ‘understanding’ of economic reality is the opposite of that of any true economist. After all, from Piketty’s perspective, what is there to understand about economic or market processes? Answer: absolutely nothing. The economy grows automatically. Capital expands automatically. Wealth is created automatically. For Piketty and like-minded people, government policy is overwhelmingly a matter of ensuring that the distribution of the material manna that falls mysteriously from the sky is fair – which means (because this manna falls independently of human agency) that this distribution is equal.

It’s impossible to imagine an ‘understanding’ of the economy that is as devoid of economic reasoning as that of Piketty and his pals.