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Quotation of the Day…

Thursday, September 22, 2016 5:41
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(Before It's News)

(Don Boudreaux)

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… is from pages 512-513 of the final (2016) volume – Bourgeois Equality – of Deirdre McCloskey’s pioneering trilogy on the essence of bourgeois values, on their transmission, and on their essential role in modern life (footnotes deleted; original emphasis):

Business schools, which focus naturally on the fortunes of the individual firm, teach that “competitiveness” is all.  They believe it follows that government, not price signals from the world economy, should choose winners.  The economists in the business schools have had hard time persuading their colleagues that the pattern of trade and specialization is determined, on the contrary, by “comparative advantage,” which has nothing to do with absolute advantage, and which professors of management and of history regularly mistake it for.  Pakistan exports clothing to the United States, the economists preach (without much effect on editorial boards and politicians), not because it is better per hour at making socks and sweaters but because it is comparatively better at them than at making jet airplanes and farm tractors.

Politicians, pundits, professors, and other people who lament that Americans produce too few goods of the likes of t-shirts, socks, sneakers, and bed linens thereby also lament that Americans produce too many goods and services of the likes of jumbo jets, gasoline, software engineering, and highly specialized medical care.  Of course, those who do this lamenting are unaware of the full extent of what they lament.  They are economically uninformed.  To be economically uninformed is, among other curses, to fail to understand that using trade restrictions to artificially shift more domestic workers and other resources into protected domestic industries is to artificially shift more domestic workers and other resources out of unprotected domestic industries – unprotected domestic industries in which those workers and resources would be more productive than they are in the protected industries into which those workers and resources are directed by the trade restrictions.

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