I have an aversion to virtually every form of modern economic theory. Whether it is based on aggregate demand or marginal utility, they all seem to think economies are driven from the demand side. And no level of failure built on such policies ever gets the profession to recognise that an economy is driven by value adding production and nothing else. If you want to understand how things work, you must return to classical economic theory. It is what drove Reagan’s revolution which was described as supply-side economics but was explicitly based on a return to classical economic theory and Say’s Law. Which brings me to this, an article Mill Power, which has as its sub-head, “‘Trumponomics’ from a classical perspective”. This is by Stephen MacLean writing in the Quarterly Review of Canada’s Disraeli-Macdonald Institute.
Foregoing the legitimate question about the efficacy of U.S. fiscal dictates that induce home industries to take advantage of tax structures in foreign lands — and penalise them when they try to patriate capital — what policy should a possible Trump administration advocate for congressional legislation?
The answer lies in entrepreneurship and innovation. As Mill explained, ‘What a country wants to make it richer, is never consumption, but production.’
What can you find in all of your modern texts that makes as much sense as that? And oddly, just today, this showed up: What has Trump Wrought by Pat Buchanan. And there, right in the middle, we find exactly the same argument:
Economists who swoon over figures on consumption forget what America’s 19th-century meteoric rise to self-sufficiency teaches, and what all four presidents on Mount Rushmore understood.
Production comes before consumption. Who owns the orchard is more essential than who eats the apples. We have exported the economic independence Hamilton taught was indispensable to our political independence. We have forgotten what made us great.
In dwelling on all this, you might contemplate which side of this issue those crony capitalists are lining up on, the ones who would find their massive lashings of government money shorn away as a more economically literate business-like administration took over.
And just in case you are wondering where you can find a modern version of Mill’s Principles, might I suggest this, now in its second edition.