Here’s a quick question for anyone who takes seriously politicians’ pronouncements about what particular industries are “vital” or are “of the future” or are “crucial to meeting consumers’ needs”:
Why do virtually none of these politicians, when they leave office, found their own non-political firms? Why do virtually none of these politicians, when they leave office, found their own non-political firms – firms that specialize neither in granting clients access to incumbent politicians nor in projects that depend upon getting subsidies or other favors from those same politicians?
This question occurred to me a few days ago upon hearing that former president Bill Clinton was off somewhere talking about something to some group concerned about some issue. His career now is to make lots of money as a sort of high-brow social healer – to emit platitudes, attend state funerals, and (pardon my switch of imagery) be a show-pony for politically correct causes. The post-Oval Office careers of every other recent president – to the extent that they haven’t simply retired to the golf course or the study – have been largely the same, with the groups and causes served by their attentions differing only as one former president’s political affiliations differ from those of another former president.
But surely if, say, President Jimmy Carter was as smart and as full of correct foresight as he would have had to be in order for sensible people to take seriously his late-1970s pronouncements on the future of America’s energy economy, he could have made a personal fortune, starting at 12:01pm on 20 January 1981, launching and running an energy company (or, more precisely, a synthetic-energy company). Yet he didn’t even try. He selfishly denied to Americans – indeed, to the world – the blessings of synfuels.
Sure, he did other things. Built houses for poor people. Visited foreign leaders. But does the value that Mr. Carter supplied to the world through these deeds come close to the value that Mr. Carter would have supplied had he actually founded and successfully run a company producing ‘alternative’ energy? Doubtful.
And what of Pres. Obama? Even if he wins a second term in the White House, he’ll be only 55 years old when he leaves office. Will he found and run a health-insurance company? How about a ‘green’ energy firm? Or will he, perhaps, found and run a firm specializing in offering middle- and low-income Americans better and more fully disclosed access to consumer credit? Will he create a successful automobile firm?
I’ll bet (seriously) a good deal of money that he’ll do none of these things. He’ll not even try. And for good reason: not only does he know nothing about these matters, he knows nothing about finding investors willing to stake their own funds, or about finding skilled workers and managers willing to cooperate together in such upstart enterprises, so that such enterprises become realities with real prospects for success.
He knows no more about the economic matters upon which he pronounces than does a soap-opera actor portraying a physician know about cardiology or obstetrics.
His comparative advantage is as a talking show-pony, to trot out onto the public stage to mouth platitudes, to declaim the splendid ideas of his party, to decry the squalid ideas of the opposing party, and, after he is relieved of the burdens of office, to make millions so that people destitute of critical faculties can get cheap thrills – for which they’ll pay big bucks – by sitting for a few minutes in the same room as a former president of the executive branch of the United States government.
And it will never dawn on any of these people who Oooo! and Ahhh! in the presence of a former president that if that mortal, who once sat at the big desk in the Oval Office, were really as magnificent and wonderful and smart and wise and productively creative as he and his handlers and party apologists made him out to be while he was in office, he is now nothing but a bum wasting his remarkable talents that could be used to found and operate a private firm (or multiple firms!) that actually puts to a genuine market test the ‘big’ ideas in which he expressed such assurance while spending other people’s money.
My GMU Econ colleague – and EJW‘s – Dan Klein sent me by e-mail his thoughts on the movie Moneyball. I share Dan’s thoughts with you here:
I [Dan Klein] confess that I’m a sucker for Brad Pitt (esp. Troy and Legends of the Fall). I enjoyed Moneyball.
It’s got a remarkable amount of econ/pro-commerce stuff in it, as well as Smithian themes about moral sentiments in commercial society.
They throw in a lot, and it often felt clumsy. Sometimes the dialogue even speechifies. But many of the topics touched are topics usually far beyond the reach of a movie, so it strikes as very original. The whole is remarkably bold.
There is no love interest, which was good.
Here’s a quick list of some of the topics it touches (and always in a good, if clumsy, way):
• Radical innovation, especially as born of extreme adversity (see Reuven Brenner).
• The hostility to radical innovation, especially at a deep level of selfhood and of the cultural ecology (Schumpeter 1911/1934).
• Some speechifying by the Red Sox owner about how the resistance problem also applies to government.
• Honest profit (which is in part based on prices) as a validation of personal worth.
• But also honest profit as less than paramount. In the end Brad Pitt got the validation but declined the offer.
• The destructive element in creation, but moreover the destructive impulse, as he was, as it were, getting back at baseball (Schumpeter again).
• Thus, also, success in rivalrous competition as one avenue to personal redemption.
• A general sense that the system is ineluctably vast and anonymous, that each person is situated within a vast and mysterious set of forces. That people don’t really know what will happen, or why, and must stoically accept constraints.
• Technology and nerd smarts; “skill-biased technology” issues.
• How better methods discover value and help those otherwise less valued.
• Family as naturally cardinal and often challenged by the forces of modern/commercial society.
Now I really want to see this movie!
As anyone familiar with supermarket items can tell you – and now Mark Bittman of the New York Times does so – meals from fast-food restaurants are not cheaper than many healthier options available to nearly every American. (HT Peter Minowitz)
… is from a January 1846 (O blessed year!) speech by the great champion of free trade Richard Cobden of the Anti-Corn Law League (HT David Hart):
But I have been accused of looking too much to material interests. Nevertheless I can say that I have taken as large and great a view of the effects of this mighty principle as ever did any man who dreamt over it in his own study. I believe that the physical gain will be the smallest gain to humanity from the success of this principle. I look farther; I see in the Free-trade principle that which shall act on the moral world as the principle of gravitation in the universe,—drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace. I have looked even farther. I have speculated, and probably dreamt, in the dim future—ay, a thousand years hence—I have speculated on what the effect of the triumph of this principle may be. I believe that the effect will be to change the face of the world, so as to introduce a system of government entirely distinct from that which now prevails. I believe that the desire and the motive for large and mighty empires; for gigantic armies and great navies—for those materials which are used for the destruction of life and the desolation of the rewards of labour—will die away; I believe that such things will cease to be necessary, or to be used, when man becomes one family, and freely exchanges the fruits of his labour with his brother man. I believe that, if we could be allowed to reappear on this sublunary scene, we should see, at a far distant period, the governing system of this world revert to something like the municipal system; and I believe that the speculative philosopher of a thousand years hence will date the greatest revolution that ever happened in the world’s history from the triumph of the principle which we have met here to advocate. I believe these things: but, whatever may have been my dreams and speculations, I have never obtruded them upon others. I have never acted upon personal or interested motives in this question; I seek no alliance with parties or favour from parties, and I will take none—but, having the feeling I have of the sacredness of the principle, I say that I can never agree to tamper with it. I, at least, will never be suspected of doing otherwise than pursuing it disinterestedly, honestly, and resolutely.
Dear Mr./Ms. “Proudly”:
Thanks for your e-mail response to my post explaining why Pat Buchanan is mistaken when he insists that “You cannot have a rising standard of living when your highest-paid production jobs are being exported overseas.”
You write that, unlike me, “Pat lives in the real world.” You imply that economics is sophistry used to conceal truths that to persons such as Mr. Buchanan and yourself are plain enough in the absence of any serious pondering.
So let me make my point from a direction opposite the one I took in my post. That point, you’ll recall, is that scarcity isn’t wealth, and (hence) government efforts to prevent goods and services from becoming less scarce retard, rather than promote, economic growth.
Suppose Dr. Evil Genius engineers, and unleashes on America, swarms of insects that extract oxygen from the air. These insects attack randomly, killing a hundred or so Americans every hour.
The horror of these suffocations prompts American scientists and entrepreneurs to develop a device that, worn around the neck, protects each of its wearers from the insects. This device, alas, is costly. Yet to avoid suffocation Americans willingly buy these pricey devices. And many Americans find high-wage jobs in factories producing these devices.
Evil Dr. Genius made breathable air scarce. Producers responded to this situation by making it less scarce. And they’re paid handsomely for their successful efforts.
Should we therefore conclude that Dr. Evil Genius has bestowed on Americans a benefit? After all, he caused the creation of plenty of high-paid production jobs. And should we lament it if foreigners eventually find ways to produce and sell this life-saving device to Americans at a fraction of the cost at which this device can be produced in the U.S.?
If you agree with Pat Buchanan, you must also agree that Dr. Evil Genius would be a genuine boon to America’s economy – and that anyone who devises a low-cost means of eradicating once and for all Dr. Genius’s swarming insects would be an economic curse that Congress should well and truly tax into inactivity before he or she succeeds in killing off the suffocating, but economically blessed, bugs.
Donald J. Boudreaux
… is from page 253 of Sir Henry Sumner Maine’s brilliant 1861 book Ancient Law:
It is certain that the science of Political Economy, the only department of moral inquiry which has made any considerable progress in our day, would fail to correspond with the facts of life if it were not true that Imperative Law had abandoned the largest part of the field which it once occupied, and had left men to settle rules of conduct for themselves with a liberty never allowed to them til recently. The bias indeed of most persons trained in political economy is to consider the general truth on which their science reposes as entitled to become universal, and, when they apply it as an art, their efforts are ordinarily directed to enlarging the province of Contract and to curtailing that of Imperative Law, except so far as law is necessary to enforce the performance of Contracts.