That’s title of this excellent Wall Street Journal editorial today. The writers acknowledge the originator of the phrase, economist Joseph Schumpeter, who used it to capture the essence of competitive markets, namely that investments in old ideas are eventually wiped out by new and better ideas.
One of the points made is that the “social democracies” of western Europe have done much to prevent creative destruction. With enough political muscle, it’s possible to shelter industries and workers from having to adapt to changing conditions — for a while. But the results are not good even in the short run (high unemployment and economic stagnation) and in the long run, nations that attempt to prevent the market from working will end up like Cuba or North Korea. Human and financial capital will flee.
Political intervention leads to something akin to arteriosclerosis, but the short-sightedness of most politicians and voters brings it on anyway.
