Thursday, February 16, 2017

Why is economic dynamism such an unpopular message right now?

One of my all-time favorite podcast Q&As is a recent one I did with Virginia Postrel. We chatted about her newly relevant 1998 book, “The Future and its Enemies”, in which she describes a world riven by clash between “dynamism” and “stasism.” Right now, it seems the latter way of thinking — stagnation and security over growth and risky change — is on the rise in the Age of Trump.
Let me highlight one exchange that touches on this issue:
Pethokoukis: Why have the dynamists done such a poor job arguing their case?
Postrel: Well, I think, first of all, the Republican candidates who might have done so; notably, Jeb Bush, who I know is a fan of this book, sort of crashed and burned early on and they never got traction. So that was a problem. And I think political savants felt that this was not the year to be talking, to be preaching that message.

But it’s a difficult message. It’s difficult to say to people the better world lies in leaving things alone, in saying let people conduct experiments, let them try things, let other people, the market critics, respond to those experiments and we’ll see what shakes out. And this is how we learn and this is how we go forward, whether you’re talking about science or whether you’re talking about markets or talking about living arrangements, all of this sort of thing.
That’s a hard message because people like a sense of stability in their lives. Now, they don’t really want some of the things that come along with a lot of stability. They don’t want the lack of progress, lack of growth. In fact, that makes for a lot of unhappiness. And they also don’t want the sort of brittleness that is created when you try to hold everything still.
And then, just to bring up something that has to do with the Trump administration, we’re going to see this more and more. There are inherent contradictions. So let’s take Donald Trump. Donald Trump loves the auto industry. He wants lots of auto jobs in the U.S. Michigan is a big part of his base. He really cares about the auto industry.
But he also likes the steel industry. He wants steel to be expensive and made in the U.S. Well, wait a minute. Who buys steel? Automobile companies buy steel. What happens if the price of steel goes up? Oh, it becomes harder to make it in the automobile industry.
When we talk about picking winners, that’s what we’re talking about. If you don’t let the marketplace, the decentralized deciders, set prices, if you’re going to have Donald Trump deciding who the winner is, he’s going to have to decide even between the automobile industry and the steel industry, never mind any newfangled things like Google or Amazon. So there’s that issue.
And then, of course, as much as he wants to do everything himself, ultimately you’re going to have some 35-year-old lawyer in the anti-trust division or the commerce department or somebody who went to some Ivy League school who’s going to be deciding these things actually. So the whole populist, anti-elitist thing goes away because inherently you end up with technocrats running things. You get France in the best case scenario

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