Danny DeVito as “Larry the Liquidator:”
“Buggy Whip” speech from Other People’s Money.
I’ve posted this before, and it’s beyond belief that he even needs one within his own field, but if Mitt Romney needs a defense of his tenure at Bain for the upcoming debates, he could hardly do better than the above speech.
There is a huge net benefit for society from Schumpeterian capitalism, but there are losers, as economist Michael Cox of the Dallas Fed points out in this great article (and table) on creative destruction at the Library of Economics and Liberty:
A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. Schumpeter’s enduring term reminds us that capitalism’s pain and gain are inextricably linked. The process of creating new industries does not go forward without sweeping away the preexisting order. … The disruption of lost jobs and shuttered businesses is immediate, while the payoff from creative destruction comes mainly in the long term. As a result, societies will always be tempted to block the process of creative destruction, implementing policies to resist economic change.
Attempts to save jobs almost always backfire. Instead of going out of business, inefficient producers hang on, at a high cost to consumers or taxpayers. The tinkering short circuits market signals that shift resources to emerging industries. It saps the incentives to introduce new products and production methods, leading to stagnation, layoffs, and bankruptcies.