martes, 16 de agosto de 2016

An attack on those who venture to oppose government programs

The Fallacy of the 'Third Way'

by David Gordon

American Amnesia: How the War on Government Led Us to Forget What Made America Prosper by [Hacker, Jacob S., Pierson, Paul]

The authors of American Amnesia, well-known political scientists from Yale and Berkeley, argue that supporters of the free market have forgotten a fundamental truth. Defenders of the market often point to the “Great Fact,” as the distinguished economic historian Deirdre McCloskey terms it, i.e., the amazing increase in human well-being and wealth that began about two hundred years ago, when trade and production in parts of Europe and America became freer than ever before. Does this not make manifest the virtues of the free market? Our authors do not think so. It is the “mixed economy” of government and business that has accomplished the real economic miracle.

They explain in this way what they have in mind: “The political economist Charles Lindblom once described markets as being like fingers: nimble and dexterous. Governments, with their capacity to exercise authority, are like thumbs: powerful but lacking subtlety and flexibility. … Of course one wouldn’t want to be all thumbs. But one wouldn’t want to be all fingers, either. Thumbs provide countervailing power, constraint, and adjustment to get the best out of those nimble fingers.” (Lindblom, by the way, was so long ago as 1951 a target of William Buckley’s God and Man at Yale: Lindblom used some of the same anti-market arguments that our authors deploy here.)

Such is their thesis: what is the evidence for it? “An American born in the late nineteenth century had an average life expectancy of around forty-five years, with a large share never making it past their first birthdays. Then something remarkable happened. In countries on the frontier of economic development, human health began to improve rapidly, education levels shot up, and standards of living began to grow and grow. … With the United States leading the way, the rich world crossed a Great Divide — a divide separating centuries of slow growth, poor health, and anemic technical progress from one of hitherto undreamed of material comfort and seemingly limitless economic potential. … Public health measures made cities engines of innovation rather than incubators of illness. … Investments in science, higher education, and defense spearheaded breakthroughs in medicine, transportation, infrastructure, and technology.”

The authors’ argument has moved rather too quickly. From the fact that government built something, it hardly follows that the unhindered market could not have achieved the same task, and perhaps better as well. A parallel “argument” will make clear the problem with the “mixed-economy” thesis. Much of the rise of America to industrial supremacy occurred during periods of high protective tariffs. Does this not show that the free market ought to be combined with protection for American industry?


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