Tuesday, September 25, 2007

Creative Destruction

Sheldon Richman has a great Perspective piece in the current issue of The Freeman - Ideas on Liberty, the monthly publication of The Foundation for Economic Education. In it, Richman has some great quotes from Sudha Shenoy, an economist at the University of Newcastle, Australia. The piece is about how economic nationalism is senseless. For example he quotes Shenoy as saying:
When you read a label which says 'Made in China,' it is not made in China. It is made by the world economy as a whole.... It is impossible to make anything in one country.
However my favorite quote is one which answers the question about how we are going to compete with all these other countries, particularly ones with low wages:
You say, how are we going to compete with all these other countries? The answer is, of course, you compete by producing goods that were not produced before.
Americans have always been great at inventing new things and we should continue to do so. We shouldn't dwell on maintaining mature industries. We can take advantage of the cost savings afforded us by cheaper manufacturing elsewhere to invest in developing and building new things. That's the way to make the entire world richer.