In An Important Emerging Economic Paradigm, Arnold Kling explains that the old, math-heavy economics paradigm looked at allocating limited resources, while the newer paradigm looks at the economy as a learning mechanism. Schumpeter’s creative destruction is an early instance of this, referenced in a recent Wired article:
”Schumpeter probably was right all along,’ says [then FCC Chairman] Michael Powell, ‘but it’s only now, at Moore’s law speed, that you can actually observe it.”
Kling notes that “the main way that government impedes innovation is by siding with those who are threatened by innovation,” by preventing creative destruction. I love this example:
In higher education, no well-known university or college has gone out of business in my memory. Over this same period, countless corporate giants have bitten the dust. To me, this says that the incumbent protection racket in higher education works really well. There is hardly any entry, and hardly any exit. No surprise, then, that dousing this sector with subsidies leads primarily to inflation.