Donald Boudreaux: Conservatives can be just as mistaken as 'progressives'

Oren Cass has launched a new conservative think tank, American Compass. It’s meant to “restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.”

Family, community and industry — and liberty and prosperity — are indeed important. But as he inadvertently shows in a recent essay, Cass’ understanding of these things is confused.

For starters, Cass carelessly accepts the familiar, but false, assertion that Americans’ wages have long stagnated. In reality, ordinary Americans’ wages over the past few decades have risen handsomely. As the American Enterprise Institute’s Michael Strain reports, when the dollar’s purchasing power is adjusted for inflation using the personal consumption expenditures index — a measure superior to the more-familiar consumer price index — “the wages of a typical worker have increased by 32% over the past three decades. That’s a significant increase in purchasing power.”

And it’s not only the typical worker whose real wages have risen significantly. According to Strain, “Wages for the bottom 20% of workers grew by more than one-third.”

Furthermore, as my Mercatus Center colleague Daniel Griswold showed, these wage gains were fueled in part by the very trade and globalization that Cass (and others) allege, without evidence, to cause wages to stagnate.

The fact is that ordinary Americans are today economically more prosperous than they have been at any time in history.

Cass would likely push back by noting that today more women work than in the past. True. But this fact is evidence of economic growth rather than of the decline that he suggests when complaining of “trading off the non-market work that people historically performed within their households for a model where everyone goes to work.”

Improvements in the likes of home appliances and prepared meals enable today’s families to enjoy nearly all goods and services once produced by stay-at-home moms plus whatever additional goods and services they purchase with incomes earned by working women.

Cass errs also in failing to understand the incompatibility with liberty and prosperity of schemes designed to protect community and industry.

Joseph Schumpeter, Julian Simon and Deirdre McCloskey are only three of the economists who’ve demonstrated that high and rising prosperity for ordinary people is the result of innovation that destroys old patterns of production and replaces these with new and better ones. Such “creative destruction” is inescapable for those who wish to be members of a society that grows and prospers economically.

Yet Cass and other proponents of “national conservativism” are uncomfortable with creative destruction. Obsessing over the destruction, they’re blind to the creativity.

It’s true that patterns of production, work, and community life are changed by competition and the innovation that it inspires. It has been so for the past two centuries. But it’s untrue that the replacement of older forms of community engagement with new forms necessarily means less, or less-satisfying, personal engagement with others.

Oren Cass despairs — understandably — at the loss of the familiar. What he misses is the fact that government-imposed “models” to temper such change reduce not only prosperity but also liberty. This last price, for me, is too high to pay.