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Quotation of the Day…

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… is from page 288 of Deirdre McCloskey’s powerful 2019 book, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All [2]:

When you get worried by some business-school type wailing about how we need to arm ourselves to compete in the deadly war for exports, take down your battered old Econ 101 text and slowly re-read the chapter on foreign trade. You’ll never again believe the business-school types, or their siblings among historians and journalists and Trump advisors who didn’t trouble to read the chapter in the first place.

DBx: Yes. And read also the chapter on price formation. This material will help you to understand that prices set in markets not only communicate far and wide information about market conditions, but simultaneously also give to producers and consumers incentives to act on that information in ways that reduce as much as possible the constraints of scarcity.

Once you understand even the elementary economics of price formation and function, you’ll be forever skeptical of – and perhaps even completely immune to – assertions that politicians and their hirelings are capable of knowing enough to improve upon market processes by overriding these processes with their commands and controls and subsidies and punitive taxes. The promises of politicians and pundits to improve upon the operation of markets with tariffs set here, subsidies doled out there, and industrial policy implemented ‘strategically’ throughout will ring hollow. You will understand these promises to be even worse than would be the promise of someone to bring rain or to end a blizzard by doing a special dance – worse because, while like the government interventions the shaman’s dance has no hope of achieving the promised outcome, the dance will not, unlike the government interventions, make matters worse.

…..

Be sure, by the way, to use a good Econ 101 text – such as this one [3] or this one [4] or this one [5] or this one [6].

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