Teach to Destroy
By Alice Temnick
How should we be teaching the merits of creative destruction? Can future economic dynamism be stimulated on college campuses through fundamental changes in economics curriculum? Arthur Diamond and EconTalk host Russ Roberts applaud the inventors, entrepreneurs and venturesome consumers who make our lives better daily in this episode. That tricky question of “just how much government” is woven throughout this broad conversation.
How would you respond to each of the following prompts? We hope this sparks some continued conversation.
1- Diamond opens with Schumpeter’s insight that the key essential fact of capitalism is creative destruction. Diamond believes “destruction” receives undo emphasis, due to its placement in the phrase. Russ claims the tendency to misconstrue this beneficial process is due to the zero-sum game fallacy and the misunderstanding of “creative” energy. How does the ensuing conversation convince you of their arguments?
2- What obstacles besides workers’ skill levels might obstruct the theory that a robustly redundant job market leads people who lose their jobs to find jobs that are as good or better in their lifetimes? Explain.
3- New, fast-growing “gazelle firms” and not small firms are the job creators according to Diamond. What particular regulations might he be referring to that oppress such entrepreneurial efforts that are separate from the costs of labor market regulations? Do these types of regulations differ from the heavy government influence in health care and drug research?
4- Roberts presents the asymmetry of the two players with skin in the game for costs of medical devices and pharmaceuticals: 1) firms who are focused and motivated by profits and FDA incentives, and 2) dispersed taxpayers facing complicated information. How do you think about the role of government versus the role of competition in the future of the U.S. healthcare system?
5- If problems are often solved by non-experts, how valuable do you believe teaching alternative views of competition or market structure through economics courses might be? What other courses might influence, inspire and inform leaders of tomorrow’s leapfrogging firms?