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Quotation of the Day…

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… is from page 34 of the May 9th, 2020, draft of the forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato (link added):

The statists do not appear fully to appreciate in particular the astounding scale of little, bottom-up innovations. They tend to think of innovation as big, dramatic items such as the Manhattan Project, and to overlook the myriad of small improvements, and often enough pretty big ones (containerization [2] is one), coming to the market daily. They do not realize that almost every object they buy, for example, is designed by someone under the guidance of profit.

DBx: Everyone who calls for “industrial policy” – conservatives such as Oren Cass and Marco Rubio no less than “Progressives” such as Robert Reich and Elizabeth Warren – base their case on a foundation that features ignorance of economics and of history. These industrial-policy proponents simply haven’t studied economics or history with sufficient care. (Most of them are lawyers. This distinction is unobjectionable, but it is also one that explains these pundits’ and politicians’ frequent failure to understand the economics about which they write – and about which they write in such lawyerly fashion.)

Among the most basic historical realities to which these industrial-policy proponents are blind is the source of so very much of what they take for granted in their everyday lives. Deirdre and Alberto above point to containerization – an astonishingly revolutionary if hardly mind-blowingly high-tech innovation that dramatically reduces the costs of transporting goods to market. (If Malcolm McLean [3] had taken his idea for “the box [4]” to a U.S. industrial-policy directorate, it’s almost certain that he would have been tossed out summarily. Not only is his idea wholly unsexy, its adoption would have been correctly seen as the destroyer of countless jobs for longshoremen.)

Our daily lives are filled with unnoticed marvels that are the results of innovators even less heralded that Malcolm McLean. Go into your kitchen. Look in the pantry. Who is responsible for the soup and cola cans being so light weight? Who designed their ingenious tops? Who invented the little packets of preservatives that keep your peanuts fresher longer?

Look at and into your refrigerator. Who are the many individuals who creatively came up with the stream of ideas that result in today’s bottom-of-the-line new refrigerator being a monument of marvels compared to a top-of-the-line new refrigerator of 1960? Who invented self-defrosting freezers? Who figured out how to enable a home freezer to dispense ice? (Would you prefer crushed or cubed?)

What’s in your fridge? Did you just this morning buy fresh blueberries at the supermarket? (How did that happen, by the way – “that” being a reliable supply of fresh blueberries year-round?) Look at the plastic container. Notice at the corners the notches that allow you easily yet surely to close the package to avoid spillage. Whose idea is that? And what about that brilliantly designed plastic bottle that securely holds a full gallon of milk yet enables you to pour its contents with ease. Whose idea is that? Or, rather, whose complex set of ideas are those?

Oh, look there, in a meat drawer in your fridge. You’ve got some chicken and tarragon sausages. When you grill them this evening they’ll be yummy! Whose idea was it to make that particular kind of sausage, and to enable it to be produced you-know-not-where and shipped safely to your favorite supermarket (you’ve got a choice of several!) in a package that doesn’t leak yet allows you to visually inspect what you’re buying?

You – you modern person you! – used the self-checkout lane and scanned your sausages, along with the other items in your particular selection of groceries that you chose from the tens-of-thousands of items that sit on the supermarket’s shelves. Who invented the scanner? Who designed the ingenious metal arms that hold the amazingly lightweight but equally amazingly strong plastic bags into which you’ll put your groceries – bags that you’ll discard the moment you tote your grocery haul into your kitchen?

Hey, the temperature outside is getting higher. Summer is finally on its way! Let’s turn on the air-conditioner. A flick of your finger et voila!: chilled air streams into your home. (Hmmm. 71 degrees f. is a bit too cool. Let’s raise the temperature to 71.5 degrees f. That’s better!) Who designed the thermostat – the very modern thermostat that you take for granted but that would have blown Howard Hughes’s mind in 1970 had he been rich enough to own one? Who figured out how to make the ductwork through which the chilled air flows into every room in your home?

For answers to these questions, you flip open your laptop – or maybe call to life your iPad. Or perhaps your smartphone. Or maybe, instead, you ask your Google smart speaker. Who figured out how to make wi-fi affordable to ordinary people? Who designed the search engines? Who enabled Google or Alexa to recognize your voice?

Who? Who?? Who???! How? How?? How???!

Each of us, every day, is the beneficiary of the creative and innovative efforts of millions of people whose efforts are coordinated – not perfectly (duh), but nevertheless with amazing effectiveness – by the prices, profits, and losses of market processes.

Industrial-policy advocates somehow miss all of this awesomeness. They see only ‘imperfections,’ heedless of the significance of these deviations from a divinely imagined ideal relative to the significance of what the market daily, actually achieves. Even worse, though, is the sorry fact that these advocates of industrial policy see unavoidable features of market processes and economic growth – I speak here of creative destruction and job churn – and mistakenly imagine that the state can eliminate these features without simultaneously destroying the economy.

Industrial-policy advocates are blind to the everyday marvels of market processes yet believers in the ability of the state to work impossible miracles.

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