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Quotation of the Day…

… is from page 57 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:

What made China better off was not glorious infrastructure. And it is certainly not the wretchedly managed Chinese government-owned enterprises, now busy under Xi Jinping buying up the private firms in order for the Party to control them better, for the benefit of Party members and their unemployable children. What made China better off was its massive experiment in commercially tested betterment left in private hands. The betterment was allowed by the Communist Party behaving itself moderately well (for a change), at any rate in private economic matters, by comparison with the wretched standard under Mao.

DBx: One of the many errors committed by protectionists is to assert that the more a foreign government intervenes into a foreign economy, the stronger will be that foreign economy and, hence, the weaker will be ‘our’ home economy. In reality, the reverse is true. China’s economy was in a shambles under Chairman Mao. As a result, Americans then had little to gain by having commerce with the Chinese people.

Maoism impoverished the Chinese people. Maoism also prevented we Americans from becoming as prosperous as we would have become had the Chinese economy under Mao been freer. American prosperity, of course, still increased during Mao’s reign in China, but our prosperity would have increased even more had we then had the opportunity, through trade, to tap into the resources, work effort, and entrepreneurial creativity of the Chinese people.

Only as the Chinese state stepped back, post-Mao, to allow free markets to emerge did the Chinese economy really begin to grow and many ordinary Chinese people really begin to prosper. And it was only then that extensive American trade with China became worthwhile for Americans. This trade contributed to the enrichment both of the Chinese people and of the American people.

Behind American protectionists’ harangues and fear-mongering about the Chinese economy there stands this fact: The people who suffer, by far, the most from a heavy-handed Chinese state are not us Americans but, instead, the Chinese people. For us to respond to Beijing’s return to a more centralized and mandarin-controlled Chinese economy with our own centralization and American mandarins would inflict grievous harm on us Americans. We should all unconditionally oppose any such idiotic move by the U.S. government.

Do not listen to Marco Rubio or Josh Hawley or Bernie Sanders or Elizabeth Warren or Robert Reich or Daniel McCarthy or Oren Cass. However well-intentioned these individuals are and however impressively they performed in law school or as mayors of quaint New England college towns, none has the slightest understanding of economics in general or of trade in particular. These people are no more qualified to offer advice about economic policy than is a lifelong teetotaler from the piney woods qualified to offer advice about which fine wine to have with your vegan Moussaka.