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Quotation of the Day…

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… is from pages 5-6 of economist Arthur Diamond, Jr.’s superb 2019 book, Openness to Creative Destruction: Sustaining Innovative Dynamism: The greatest breakthrough inventions and innovations are those that go against the dominant theories and opinions. These are the ones that teach us the most; these are the ones that bring us what we thought was impossible. The most binding constraint on the rate of our breakthrough inventions and innovations is the scarcity of those key moments when an individual sees what others do not see. Often the breakthroughs occur because an individual sees something that does not fit, and then has the courage and perseverance to pursue it. DBx: All enthusiasts for industrial policy as a means of energizing and ‘growing’ their nations’ economies should

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… is from pages 5-6 of economist Arthur Diamond, Jr.’s superb 2019 book, Openness to Creative Destruction: Sustaining Innovative Dynamism:

Quotation of the Day…The greatest breakthrough inventions and innovations are those that go against the dominant theories and opinions. These are the ones that teach us the most; these are the ones that bring us what we thought was impossible. The most binding constraint on the rate of our breakthrough inventions and innovations is the scarcity of those key moments when an individual sees what others do not see. Often the breakthroughs occur because an individual sees something that does not fit, and then has the courage and perseverance to pursue it.

DBx: All enthusiasts for industrial policy as a means of energizing and ‘growing’ their nations’ economies should ponder with special care the implications of the reality noted here by Diamond. Industrial policy by its nature gives government officials the power to prevent the use of ideas that those officials judge to lack merit. Industrial policy thus narrows the range of ideas that are actually tried – that, as Deirdre McCloskey says, are given “a go.”

Even if we disregard the many problems with industrial-policy’s politics-poisoned criteria for testing the merits of the ideas that are tried, because the number of ideas actually given a go under industrial policy is artificially restricted, it’s virtually certain that the ideas that prove themselves best under industrial policy are worse than are those that would have so proven themselves in a more open and competitive policy environment – in a policy environment, in short, of what my Mercatus Center colleague Adam Thierer calls “permissionless innovation.”

If you can look at the likes of Donald Trump, Bernie Sanders, Marco Rubio, Elizabeth Warren, Josh Hawley, Alexandria Ocasio-Cortez, Jeremy Corbyn, and Xi Jinping and conclude that these individuals are likely to be fonts of the best industrial and commercial ideas possible – if you truly believe that persons such as these are really the likes of Newcomen, Borden, Rockefeller, Westinghouse, Edison, Ford, Lauder, Walton, Jobs, and Bezos who’ve simply chosen careers in politics – then you might personally have a defensible reason for embracing industrial policy. But if you do hold such a belief about persons such as these, then ask yourself this question: why do each of these persons feel the need to force their ideas on others?

As for myself, I believe it to be ludicrous that any one person or select group of persons can be trusted to be an especially reliable font of good, innovative ideas. (Indeed, even persons who in a competitive market would prove themselves to be fonts of good ideas are almost certainly to not be so if the state gives to them tariffs, subsidies, and other special privileges.) It is for this reason, I’m sure, that the New Yorker allows anyone who wishes to do so – not just subscribers, and not just New Yorkers – to submit captions in its weekly caption context.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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