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Quotation of the Day…

… is from page 47 of the 1948 printing of the second edition (1935) of Lionel Robbins’s classic 1932 tract, An Essay on the Nature & Significance of Economic Science:

[W]hen we think of productive power in the economic sense, we do not mean something absolute – something capable of physical computation. We mean power to satisfy given demands. If the given demands change, then productive power in this sense changes also.

DBx: Although it initially seems esoteric, this point is quite important and relevant to today’s debate over antitrust and trade policies. When Lina Khan and other “neo-Brandeisians” insist that antitrust should abandon exclusive reliance on the consumer-welfare standard in order to attend also to the welfare of producers, they miss the validity of the point made above by Robbins. Ditto when Oren Cass and other NatCons demand that trade be restricted in order to protect workers in their current, particular jobs.

To be a producer means to produce maximum possible value – meaning, output judged by people spending their own (and only their own) money to be worth paying for, and without being artificially obstructed from spending that money in possible other peaceful ways. If government taxes Smith in order to pay Jones to ‘produce’ some output, Jones is no producer in the economic sense of the term. Jones instead is a waster. Were in it not for this government intervention, his time would be better spent, and the resources he consumes in his ‘production’ would be better used.

Jones of course generates physical output, but because the generation of that output is made possible only by making impossible the production of other goods and services that consumers value more highly than what Jones ‘produces,’ Jones’s ‘productive’ activity is really wasteful. Again, Jones here is a waster, not a producer. And if dignity is found (as it indeed should be found) in contributing through one’s work to the betterment of humankind, while shame is found (as it indeed should be found) in actively depriving humanity of betterment, then Jones should feel ashamed of himself rather than experience a sense of dignity.

When antitrust enforcement is used to protect inefficient producers from the competition of more-efficient rivals, wasters such as Jones are protected and humanity is made poorer. When tariffs or other protectionist measures are imposed in order to protect Jones from losing his particular job as a result of consumers now preferring to spend their money differently, waste is protected and production is reduced.

To produce means more than rearranging materials into different forms. To produce is to successfully further maximum possible consumption of whatever outputs or arrangements – high or low, base or elevated – that people most desire. Neo-Brandeisian antitrust interventions, as well as protectionism, obstruct genuine production. These policies protect, not producers, but wasters.

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