Quotation of the Day…

(Don Boudreaux)

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… is from page xviii of my emerita colleague Karen Vaughn’s “Introduction” to Liberty Fund’s 1981 edition of Trygve J.B. Hoff’s 1949 study, Economic Calculation in the Socialist Society (typo corrected):

Economic activity is the process of discovering alternatives which improve profitability and, hence, resource efficiency. It is part of entrepreneurship to identify superior resources and to combine them in more imaginative ways to produce a product, and it is this activity which adds to the information available in the market place. Furthermore, even if the information available to economic actors were objectively determinable apart from their actions it is also decentralized. It is through the process of buying and selling in markets that all the decentralized bits of knowledge can coalesce into a coordinated whole.

DBx: Yes. And so artificial obstacles and stimulants to trade – most notably, tariffs and subsidies – obstruct and distort the coalescing of economic knowledge. Protectionists and other proponents of industrial policy propose to obstruct and distort the competitive process that forms prices – that is, that convey economic knowledge. Protectionists and other proponents of industrial policy propose, in other words, to make the economy stupider.