As we enter into the endgame of COVID-19 let’s write about something interesting. Capitalism, and in particular us capitalistic orphans as we find ourselves very interesting, is a great topic. We use the term capitalistic orphans because there are few of us and we have little influence. The two fellow orphans are Richard M. Reinsch II at National Affairs and Deirdre Nansan McCloskey at the National Review. Even amongst us orphans it is hard for our small group to agree. Deirdre is writing about coercion and COVID-19 while Richard is pointing out the lack of wisdom in industrial policy with particular emphasis on the type proposed on the right by folks like Oren Cass and Josh Hawley. You should, of course, read them both in their entirety. You might read Richard twice.
The lack of influence of capitalism seems particularly strange at a time of COVID-19 when it is obvious what what a blunt tool government intervention is and what joy we have lost by restricting capitalism. Richard gives us the general explanation on why this is true yet makes it hard for folks to accept:
Perfect markets and perfect market competition do not exist, but neither do perfect regulations. The errors made in markets, though, are often rapidly correctable, at least in comparison to wrongheaded government policy. Such corrections in the market come with short-term pain, but state intervention, which spawns a system of winners and losers, tends to harden around special interests whose concentrated benefits are defended tenaciously. This process has been repeatedly documented by public-choice scholars and has led to years of lost growth for countries that pursued robust industrial policies.
To paraphrase Richard, as history demonstrates, capitalism is superior because the imperfections in markets usually self-correct but the imperfections in government policies like industrial policy tend not to exacerbate themselves rather than self-correct. Socialism is just the virus of industrial policy with a greater infection rate. Yet we ignore the facts. Deirdre is on the COVID-19 beat specifically and the nature of government coercion:
Socialism should therefore be called “coercionism.” Sometimes, rarely, what the government coerces us to do is a swell idea, such as coercing parents to inoculate their children against measles. One measles case infects 20 others and the disease is regularly fatal for adults who haven’t had it as children. Ask the Aztecs and the Incas and the Mohicans on that score.
She ought to give The Donald credit for using coercion to stop Chinese from entering the US early. We are sure Deidre is not surprised by the behavior of the Chinese government. We hope she likes his federalism approach to reopening the economy. That happened after her article was published.
Sidebar: The search for “Trump stops Chinese from entering US” is now filled up with “fact checks” of The Donald’s claims on live saved. It is an astonishing example of the bias of major news organizations. End Sidebar.
Deirdre reminds us that capitalism is why we are so comfortable:
The Great Enrichment, 1800 to the present, that factor of 30 in goods and services, was not caused by coercion but by liberty. Its magnitude was further multiplied by the free trade and free migration and free press that [The Donald] and his advisers Peter Navarro and Stephen Miller so disdain. [Link added]
We are in agreement with Deirdre on her criticism of The Donald but not sure why she picks only him out. As Richard says about the left before getting on to the right:
Implementing the Green New Deal’s stated objective of simultaneously eliminating greenhouse-gas emissions and solving economic inequality would result in cultural, political, and economic conditions best described as despotic. Such policies, which have drawn wide support from Democratic presidential candidates this year and from the broader party, would obviously be installed incrementally, forestalling a total capital strike. But they nevertheless entail a striking rejection of free-market capitalism, and represent a remarkable detachment from reality among many leading minds of the American left. [Emphasis added]
The second bold item (despotic) shows that Deidre and Richard are on the same page as orphans. We love the third bold item because it is exactly right yet ignored by a large portion of the population. We are less enamored with the first bold item because there is nothing about economic inequality that needs to be solved.
It is the strange story of capitalism and why we refer to ourselves as capitalistic orphans. We have centuries of data (well, over two is a lot of centuries) to show that capitalism is the solution. We have just over a century showing us that socialism is not the solution. Now we have the events relating to COVID-19 to amplify the history. We deserve a whole capitalism loaf in 2020. Yet The Frontrunner and the left offer us, at best, the heel. Like markets, The Donald offers us much more of the loaf. Like markets, he is far from perfect but he is the best choice we have and us orphans should unite to support The Donald. We wish it were different but it is not.