Is the school choice movement historically tainted by racism? American Federation of Teachers boss Randi Weingarten described vouchers in 2017 as “slightly more polite cousins of segregation.” Historian Nancy MacLean recently depicted vouchers as a product of an unholy alliance between economist Milton Friedman and segregationists after Brown v. Board of Education.
According to this narrative, vouchers came out of the “Massive Resistance” program of Sen. Harry F. Byrd Sr., who sought to circumvent Brown by rerouting education funding to private schools in 1950s Virginia. Friedman, the story goes, opportunistically assisted the segregationists in creating a voucherlike tuition-grant system that allowed white parents to transfer children out of integrated schools and into private “segregation academies.”
These critics have their history backward. As early as 1955, economists such as Friedman began touting vouchers as a strategy to expedite integration. Virginia’s segregationist hard-liners recognized the likely outcomes and began attacking school choice as an existential threat to their white-supremacist order.
My intrepid Mercatus Center colleague Veronique de Rugy, blogging at EconLog, is understandably flabbergasted by Comptroller of the Currency nominee Soule Omarova’s favorable comparison of the condition of workers under Soviet communism to that of workers under American capitalism . Here’s Vero’s conclusion:
Finally, I don’t need to explain to readers of EconLog what’s wrong with the statement that “markets don’t know best.” While markets aren’t perfect, they are a far superior to central planning and bureaucratic interventions at gather and using relevant knowledge.
The bottom line is that while this candidate would certainly bring a different perspective to the position of Comptroller of the Currency, in part because of her background, her affinity for making statements praising the USSR and her economic ignorance are pretty worrisome.
Whenever I inform students of Smith and Friedman’s unflattering opinions of the business community, they are invariably shocked. But their eyes start opening when I point out that large established businesses don’t actually like competition, aren’t wildly excited about other people’s new ideas and products threatening “their” market share, and are quite happy to hop into bed with complaisant legislators to use state power to make life difficult for new and potential competitors. At this point, students begin realizing that to be pro-market is not the same as being pro-business. The two are at odds in some very important ways.
This is one way of understanding the phenomenon of “woke capitalism,” and it features in Vivek Ramaswamy’s Woke, Inc: Inside Corporate America’s Social Justice Scam . For if there is anything that characterizes woke capitalism, it is the desire—like the mercantilists of old—to exclude (ironically, in the name of tolerance, diversity, equality, etc.) particular individuals and groups from “their” markets and corporate America in general. In the case of woke capitalists, the excluded is anyone who doesn’t embrace all the usual progressive orthodoxies or who won’t play the woke game to go along to get along.
Monopolies are jacking up prices!” Economists Jan De Loecker, Jan Eeckhout, and Gabriel Unger asserted in 2020  that the prices companies charged above their costs of production tripled between 1980 and 2016. Their analysis is regularly cited  as evidence we have a monopoly problem. But it is just not true . If markups tripled, then why didn’t profits increase ? And why did markups increase faster in smaller firms and in industries with lots of competition? The reality is that they mismeasured firms’ costs, ignoring growth in spending on marketing, software and R&D.
Demonstrably wrong though these myths may be, they have had a very real impact on policy: Birch’s job-creation myth led policymakers to favor less efficient small firms over more efficient larger ones, showering them with tax preferences and other benefits. Frey and Osborne’s job-destruction myth has led policymakers to entertain anti-growth schemes such as taxing automation equipment . Piketty and Saez’s inequality myth has led many policymakers to abandon their faith in growth in favor of only redistribution. And De Loecker, Eeckhout and Unger’s price-markup myth has fueled the “anti-monopoly” fire, which holds the potential to distort U.S. antitrust laws in ways that will damage growth and innovation.