Pyramid Schemes

Here's a letter to the Wall Street Journal:

The tale told by Matthew Kaminski about Egypt is depressing ("Searching for Hayek in Cairo," April 21).  As long as most Egyptians fear free, competitive markets and believe that their well-being is promoted by protected nationalized monopolies – as long as "privatization and liberalization are dirty words" (as Mr. Kaminski describes Egyptians' anti-bourgeois attitudes) – Egypt's economy will stagnate and ordinary Egyptians will continue to be among the poorest people on earth.

As the economist and historian Deirdre McCloskey notes at the end of her book on why the west grew rich, "in the long run the acceptance of creative destruction relieved poverty.  It has been in fact the only effective relief.  Wage regulations and protection and other progressive legislation, contrary to their sweet (and self-gratifying) motives, have only preserved poverty."*

McCloskey understands what Hayek understood: prosperity comes only to societies that welcome entrepreneurial-driven economic change – only to societies steeped in the realization that better tomorrows are impossible if everyone is protected from every economic disappointment today.  Societies that reject this reality seal themselves in the awful amber of poverty.

Sincerely,

Donald J. Boudreaux

* Deirdre N. McCloskey, Bourgeois Dignity (University of Chicago Press, 2010), p. 425.