".
. . our production is our demand . . . ."
Hat tip to Bob Wenzel:
Monday, June 30th, 2014
Forbes’
columnist John Tamny executes an inspired and wonderfully savage critique of GMU economist Tyler Cowen’s dotty blog post touting the
positive effects of war on economic growth. Tamny takes his cue from
Henry Hazlitt and writes in plain and muscular language. Here is a juicy
sampler that should whet your appetite for the full meal:
[T]o
clarify Cowen’s views to readers, he writes that “the very possibility of war
focuses the attention of governments on getting some basic decisions right –
whether investing in science or simply liberalizing the economy.” His first
example is laughable, and his second easily disprovable.
Government
spending on science presumes that politicians can better allocate capital than
can private actors operating under market discipline. To believe what Cowen is
offering up, the lack of a war threat today is depriving Harry Reid, Mitch
McConnell, Nancy Pelosi and John Boehner of the opportunity to expertly
invest the money of others in the killing machines of the future; the knowledge
gained from those investments eventually migrating to commercial ideas that
would boost growth. You can’t make this up. Cowen is serious.
As
for the notion that countries somehow need the threat of war to achieve great
scientific advances, or better yet, liberalize their economies, apparently
Switzerland, Hong Kong, and New Zealand (among many others) didn’t get Cowen’s
comical memo. With all three, no credible voice in modern times has argued that
either faced war or imminent attack that would have “focused” the attention of
their politicians on the way to economy-boosting liberalization, or, if Cowen is
to be believed, political advancement of “technological invention” and greater
“internal social order” supposedly needed for major expansion.
Indeed,
what all three remind us, and it’s something seemingly lost on Cowen, is that
economic growth is really very simple. We all have myriad wants and needs, our
production is our demand, so when governments remove the barriers to
production, the individuals who comprise any economy tend to thrive. Thinking
about the U.S. economy with the latter in mind, our economy is presently limp
not because we lack some national, war-mongering purpose (apparently Cowen
forgot all the national initiatives of the 20th century that robbed the world
of well over 100 million people), but precisely because our political class has
violated the four basics (taxes, regulation, trade, and money) to economic
growth.
