Adam Smith knew what ails us—and he prescribed the cure
The Cure for Our Economy’s Stationary State
by Niall Ferguson
The answer is that much of the developed world, including the United States, is stagnating. The founder of economics, Adam Smith, had a term for this. He called it “the stationary state.” In his day it was China that looked stationary: a once “opulent” country that had simply ceased to grow. Smith blamed China’s unfavorable institutions—including its bureaucracy—for the stasis. He also noticed how the stationary state favored the super-rich and civil servants, leaving poor laborers to slide toward subsistence wages.
........ Question: if you want to open a lemonade stand in New York City, how long does it take to jump through the necessary bureaucratic hoops?
The answer is 65 days (including a wait of up to five weeks for your Food Protection Certificate). That’s the kind of crazy red tape that development economists like Hernando de Soto used to blame for Third World poverty.
.......It is time to shake off the “mood disorder” caused not just by excessive debt but also by excessive bureaucracy. Only entrepreneurial optimism can get us out of the stationary state—and moving again.
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