Thursday, February 21, 2008

Ceramics, cappuccino, and Social Capital

[The Challenge is to Create, Not Jobs, but Wealth from Cafe Hayek by Don Boudreaux
Today I sent this letter to the Washington Times:
Like economic alchemists, Senators Clinton and Obama peddle plans to spend billions of taxpayer dollars on various government projects that will create millions of jobs ("
Obama's economic plan," February 20).
Creating jobs - creating demand for workers - is no challenge. Vandals and arsonists do so routinely. What is a challenge is to create opportunities for workers to earn good incomes while producing real value for others, where value is confidently measured by the amounts that buyers voluntarily pay for what is produced. As far as I know, Sens. Clinton and Obama (and, for that matter, McCain) have never created a business whose success relied upon producing outputs efficiently and then selling these outputs at prices attractive to consumers.
So why suppose that any of their "plans" to create innovative industries and jobs are anything more than the cheap-to-dream-up fantasies of self-important politicians accustomed to spending other people's money?
Sincerely, Donald J. Boudreaux]
8:14 AM 7:59 AM

[Boudreaux makes what might seem difficult sound easy, and it begins with his definition of globalization: the advance of human cooperation across national boundaries. Boudreaux could have stopped right there, but goes on to explain that every “man-made thing you see is something no one person could possibly make alone.” That being the case, the shirts we wear and the food we eat are the happy result of millions of people around the world engaging in their narrow economic specialties such that we’re clothed and fed.
The above helps the reader to understand the unimaginable poverty that would result from a life of economic isolation. -- A Review of Don Boudreaux's Globalization By John Tamny February 21, 2008 11:23 AM ]

[The division of labor is utterly fundamental to the wealth we enjoy in modern economies. Complicated products, such as the computer on which I am typing this paragraph, are unimaginable without the combined and cumulated efforts of the countless specialists who worked out how to manufacture integrated circuits or how to control a computer using a mouse and a pointer on the screen. Most of those specialists couldn't boil an egg, let alone survive alone on a desert island. They are dependent on other people's expertise, if only the expertise of the cooks at the local Chinese take-out, and computer users the world over are dependent on theirs. Even simple products like the short cappuccino I have beside me would be impossible without the division of labor. Is there anyone in the world who has mastered ceramics, dairy farming and the art of the perfect espresso roast? -- excerpts from Tim Harford's new book, The Logic of Life]

Don Boudreaux, for once, is caught off-guard. Creating a business is the prerogative of a Vaishya temperament, which those run a Kshatriya or Brahmin preponderance may legitimately choose to avoid. They “produce” Social Capital, nevertheless. [TNM] 9:33 AM

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