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Quotation of the Day…

… is from pages 92-93 of the late Stanford University economic historian Nathan Rosenberg’s insightful 1992 paper “Economic Experiments,” as this paper is reprinted in Rosenberg’s 1994 book, Exploring the Black Box: Technology, Economics, and History:

What were the additional features of capitalism that have rendered it such a powerful instrument for technological innovation? The general answer that has already been advanced is that capitalism has offered the freedom to engage in experiments of all sorts. But to see why that freedom has been so critical, it is necessary to examine with greater care certain aspects of technological innovation.

The essential feature of technological innovation is that it is an activity that is fraught with many uncertainties. This uncertainty, by which we mean an inability to predict the outcome of the search process, or to predetermine the most efficient path to some particular goal, has a very important implication: the activity cannot be planned. No person, or group of persons, is clever enough to plan the outcome of the search process, in the sense of identifying a particular innovation target and moving in a predetermined way to its realization – as one might read a road map and plan the most efficient route to a historical monument.

DBx: Indeed so, and so: All proposals to “bring back critical supply chains” or to use industrial policy to “achieve [fill in the blank with your pet aspiration for the economy]” are destined either to fail outright or to ‘succeed’ at a cost far greater than the value of the achievement.

People are far too easily misled by fine-sounding words. “We must not be dependent on foreigners for [fill in the blank with a list of things that you believe we shouldn’t import]!” “We must bring back [fill in the blank with the names of jobs that you have somehow divined more of your fellow citizens should perform]!” “We must support the industries of the future!” “We must blah, blah, blah!”

Nothing is easier than expressing such desires. But the ability to express a desire does not imply an ability to achieve that desire. Nor does the ability to imagine what the desire’s achievement would look like superficially imply an ability to achieve that desire.

Those who express such desires – and they are many in number – have a religious faith that all that is necessary to achieve what they desire is to express that desire to government and to give to government the authority and responsibility for achieving that desire. Voilà! The desire will be achieved if only skeptics, nonbelievers, and heretics are prevented from obstructing the efforts of our noble public servants.

No advocates of repatriating supply chains networks and no advocates of industrial policy understand the depth of the complexity of the economic relationships that they propose be engineered and altered to suit their fancies. They write and speak about the economy with no more knowledge, understanding, and wisdom than is had by two-year-olds using crayons and childish babble to express their notions about the cosmos or about where babies come from.


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