[Vision2020] Dispel the anti-growth myth

[Andreas Schou]

> Nice way of framing.
>
> Market participants are going to take advantage of market
> inefficiencies in capital and/or labor irregardless of whether I
> support it or not.  That is the nature of the invisible hand and the
> nature of the forces that drive a market to efficiency.  If the
> factors of production are underpriced, competition between
> capitalists will drive prices to their appropriate market
> values.  Similarly, overpriced resources will tend toward idle
> capacity hence lowered prices.  Relatively unfettered free markets
> tend toward equilibrium.

I'm trying to wrap my head around your argument that a market with a
universal 35% subsidy is somehow "free." The overvaluation of the yuan
is (1) damaging the buying power of everyone living in China, (2)
distorting markets worldwide, and (3) vacuuming manufacturing out of
the United States.

While this is good for many Americans, in terms of access to
manufactured consumer goods, the generalized effect cheap Chinese
goods have on "buying power" is a really insufficient measure of its
effects on the American economy. The Heritage Foundation, for
instance, just recently did a study that found that the American poor
have much more effective access to consumer goods (televisions,
refrigerators, DVD players, XBoxes, et cetera) than the poor did in
the 1970s. From this, then, they concluded that America did not have
any poor people.

This is nonsense. The problem is that, compared to the 1970s, consumer
goods are far cheaper and far better. Housing, however, is not. Food
is not. The cost of medical care has gone through the roof. Which is
to say: we now live in a society, largely due to the overseas movement
of consumer manufacturing, where the poor can afford a big-screen TV
but not decent housing.

> Am I a free market advocate?  Yes.
>
> Are you?

Free markets are the best known mechanism for generating wealth, and
wealth is the best known mechanism for generating social welfare.
Insofar as a market accomplishes those goals, I'm in favor of them. I
am not, however, in favor of markets where the well-informed "economic
man" with unlimited choice is a laughably poor substitute for the real
consumer (like medicine) or markets wholly composed of rent-seeking
(like military contractors).

-- ACS