… is from page 200 of Johan Norberg’s excellent 2023 book, The Capitalist Manifesto:
If we suspect that an initially very costly technology or business idea would be a success that pays off many times over in the future, we have access to a time machine that allows us to use that future revenue instantly. It is called financial markets. Bank savers, equity investors and venture capitalists will refrain from consumption today in exchange for a substantial part of the income tomorrow.
DBx: Yep.
And financial markets work as such a time machine more reliably than do pretend time machines. The most notable pretend time machine is government. Politicians and bureaucrats spend other people’s money in pursuit of the politicians’ and bureaucrats’ – or the electoral-majority’s or special-interest groups’ – fancies. Free of many of the market forces – prompts, constraints, and guidance – that keep financial markets energized, prudent, and flexible – government industrial policies, in practical reality, inevitably wastes resources. Rather than taking us into the future, they either keep us moored in the present or push us back to the past.
Why in the world would anyone suppose that the likes of politicians, such as Donald Trump or Elizabeth Warren – or scribblers such as Oren Cass or Robert Reich (or Don Boudreaux) – have better insight into the future, and greater incentives and discipline to profitably reallocate resources, than market specialists with skin in the game, always in competition with each other, and denied the ability to compel others to do their bidding?
