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Bonus Quotation of the Day…

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… is from page 188 of Deirdre N. McCloskey’s and Alberto Mingardi’s superb 2020 book, The Myth of the Entrepreneurial State [2] (footnotes deleted; link added; original emphases):

The premise of superior foresightedness in the State, and the premise of the harmlessness of imposing its will coercively, is as we have noted in orthodox economics about a century old. Before 1920 or so, English and Austrian and Swedish economists in particular were modest in their suggestions, and mainly advocated a prudent laissez faire, with carefully designed exceptions to help the poor. Laissez faire was and is reasonably prudent. It was and is not “market fundamentalism,” as George Soros calls it [3] (so unlike a sweet and good State fundamentalism), based on “the theory of perfect competition – of the natural equilibrium of supply and demand—assumed perfect knowledge, homogeneous and easily divisible products, and a large enough number of market participants that no single participant could influence the market price.” His is a common misunderstanding of innovism, pinning a crazy utopianism onto it. The characterization arose from the unhappy choice a century ago of the phrase “perfect competition,” a priori impossible in this vale of tears, to characterize markets with merely reasonably free entry. It led to a mathematical formalization by economists in the 1950s such as Kenneth Arrow and Frank Hahn of implausible assumptions sufficient for utter perfection – “ in order to contradict Margaret Thatcher,” as Hahn once expressed it. Utter perfection was never the goal of those who thought the State ought to have humility, and stay out of things it has no plausible claim to understand, such as spontaneous markets and creative innovation. Markets are pretty good. That is all.

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