Wednesday, June 28, 2017

On "lifting humanity from the miserable condition"

That's Peter Boettke's phrase, the quote in the title above. Except his exact words were "This is how wealth is created and humanity is lifted from the miserable condition of extreme poverty to one where human flourishing is even possible."

This is my fifth in a row on Boettke's paper.

Here's a graph from Max Roser:

GDP Growth Over the Very Long Run from Max Roser (2014)
That link no longer works. But you can find a whole set of related
graphs at Our World in Data: Economic Growth" from Max Roser (2017)
Max Roser's graph shows both "the miserable condition" (the flatline beginning at Year One) and the "lifting" from that condition (the increase beginning some time after 1653, and ending perhaps 400 years later).

As I asked before:

Which part of Max Roser's graph would you say shows "natural" output?

And my observation:

When a peak rises like that, it's not "natural". It's the result of economic management, coddling, encouragement, and stuff like that.

Thinking otherwise, Peter Boettke repeats the words of his teacher James Buchanan:

“I have often argued that there is only one ‘principle’ in economics that is worth stressing... I refer, of course, to the principle of the spontaneous order of the market, which was the great intellectual discovery of the eighteenth century”.

Here's my problem. If you leave things to "the spontaneous order of the market" you are likely to end up with the flatline. If you want to "lift humanity from the miserable condition" you have to do some lifting: economic management, coddling, and encouragement. At the very least you have to provide a pool of "safe assets" like the public debt of the UK in the 18th century and early 19th.

Many people today say that public debt is the source of our problems. I don't say that. But suppose those people are right about the source of today's problems. If they say the same thing about the economic troubles of the 18th and early 19th, they cannot possibly be right. They can (possibly) be right only if their story changes from one where public debt is beneficial to one where it is harmful, with the change occurring in the late 19th century or early 20th.

But that's a tad off topic. The topic is Boettke and Buchanan's assertion that "the spontaneous order of the market" is the source of all good things.

The assertion is wrong.

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