7.29.2010

Why Ron Johnson Is Right About Creative Destruction

Does anyone out there bashing U.S. Senate candidate Ron Johnson for his comment about creative destruction realize that it's a defined term?  SteelworkersNewswireTom Nelson (who never misses a chance to preen)?  Sly?

I found only one detractor out there who at least had the sense to ask "Schumpeterian? What the hell is that, and who is Joseph Schumpeter?"

Johnson, in referencing creative destruction to describe the painful reality of job loss and economic instability, was clearly referring to the term popularized by Austrian economist Joseph Schumpeter.

What is this abominable creative destruction that everyone is all alarmed about?
Innovation by the entrepreneur, argued Schumpeter, leads to gales of “creative destruction” as innovations cause old inventories, ideas, technologies, skills, and equipment to become obsolete. The question is not “how capitalism administers existing structures, ... [but] how it creates and destroys them.” This creative destruction, he believed, causes continuous progress and improves the standards of living for everyone.

Ron Johnson's only fault here was in getting too close to the truth - stating an obvious fact of life, namely that economic change is a reality in American society and the modern global economy.  The only thing that's clearly not going to change is that things will always be changing as we move forward. 

Poor Ron Johnson.  How was he to know, as someone new to politics, that stating a harsh reality is entirely too impolitic?  Don't tell people that the way ahead is dynamism and that's what we need to gear ourselves toward.

Instead of encouraging the state's workforce to adapt and engage their ingenuity to get back on course, Tom Nelson and the Steelworkers Union would seemingly prefer stasis and hiding behind trade barriers.  That and they exploited the ease of using a term of art that had the word "destruction" in it to paint Ron Johnson - innacurately - as someone who doesn't care.

If Johnson's detractors want to have a bare knuckle fight on trade policy, then so be it.  As someone who prefers free trade, I still believe sussing out the hard facts of specific free trade deals or world trade groups should not be off the table.  If, say, a series of bilateral trade agreements would make more sense than a global organization or if a particular party isn't upholding its end of a legal agreement, then things may need to be corrected.

But Johnson's detractors in this matter instead seized more on his comment - an intelligent, realistic, pro-entrepreneurial one at that - and have tried to spin it off to the electorate as some sort of shocking revelation.  It's nothing of the sort. 

If anything, it's refreshing.  It's a recognition that economic progress, especially these days, can't be about sitting back and griping defensively anymore.  It's about finding a new path - even if diverting from the old one is less than comfortable.