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Quotation of the Day…

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… is from page 21 of Michael Porter’s 2000 essay “Attitudes, Values, Beliefs, and the Microeconomics of Prosperity,” which is chapter 2 in Culture Matters [2], Lawrence E. Harrison and Samuel P. Huntington, eds. (2000):

Another basic belief that supports prosperity is that the potential for wealth is limitless because it is based on ideas and insights, not fixed because of scarce resources.

DBx: Yep.

Resources, let’s be clear, are indeed scarce and always will be. Or, rather, materials (such as land, iron ore, petroleum, and lumber), labor services, and time are scarce and always will be. These materials, labor services, and time are transformed into resources by that which, while also scarce, can multiply with astonishing quickness: creative and productive ideas. It is the cascade of these ideas that is the crucial input in creating massive prosperity for the masses. Slow the cascade even just somewhat and economic growth slows. Slow economic growth even more, and economic growth does worse than slows: it reverses. The reason is that a minimum flow of creative ideas is necessary even to maintain existing standards of living.

Changes “exogenous” to economies – demographic changes, many consumer-taste changes, natural disasters, ever-present government follies – these and other such changes must be dealt with creatively. If too few creative ideas arise to deal with the consequences of these changes, absolute standards of living fall.

One cannot overstate the important role of creative ideas – of “ideas having sex,” as Matt Ridley describes the process [3] of ideas meeting, co-mingling, competing for mates, and creating new ideas for transforming raw materials, services, existing capital goods, and time eventually into new and improved consumer goods and services. This process is at the foundation of modern society.

Note further that for the sex life of ideas, we want promiscuity – as much promiscuity as possible. Monogamous ideas produce too few offspring. Ditto for coy ideas. Celibate ideas are utterly worthless. Much more valuable to humanity are ideas that seek out and mate with as many partners as possible, as frequently as possible, with as few as possible inhibitions, and in as many different groupings as possible.

Opponents of free markets don’t understand this reality. These opponents differ amongst themselves in the particular myths and fallacies they embrace, but all of them miss the reality of the central role of ideas and of the great service to humanity performed by idea promiscuity.

Proponents of industrial policy and other protectionists – people such as Oren Cass, Julius Krein, Daniel McCarthy, Marco Rubio, Sherrod Brown, Donald Trump, Peter Navarro, and Bernie Sanders (to name only a handful of Americans) – want to restrict the use and mating of ideas. These people want government to prevent ideas that don’t originate in the minds of state officials from operating and from mating.

These people demand that the economy use only the tiny number of ideas ejaculated from the minds of mandarins and politicians, many of which are impotent. Cass, Rubio, et al., do not realize that because such ideas are prevented from mating with ideas other than themselves, their offspring are much fewer in number than are the offspring of the free-market’s wild and unending orgy of lusty ideas. As bad, or even worse, is the fact that the off-spring of officially approved ideas, because these ideas mate only with each other, are just as deformed, as sickly, as weak, and as infertile as are the offspring of all incestuous matings.

To the extent that we embrace the restrictionist policies proposed by the likes of Oren Cass, Henry Olsen, and Marco Rubio we will, in effect, support state prohibition of ideas other than those of state officials from being used and of mating with other ideas.

If you believe that people such as these, or the politicians and bureaucrats who would actually carry out industrial policy, have within them the godlike capacity to asexually create streams of vigorous, productive ideas – ideas better in every dimension than those produced on free markets – then cast your lot with these people who wish to control the sex lives of all ideas other than their own. But if you’re someone who actually has good ideas, reject the poisonous ones offered by protectionists and other proponents of industrial policy.

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