The Carpenters Who Build Your House Aren’t Equipped to Tell You How to Live In It

by Don Boudreaux on August 19, 2010

in Hubris and humility, Reality Is Not Optional, Seen and Unseen

Here’s a letter to the Los Angeles Times:

Harold Meyerson proposes that California’s government implement an “industrial policy” (“Reviving California’s economy: Meg Whitman versus Jerry Brown,” August 18).  As some evidence of the wisdom of his proposal, Mr. Meyerson writes that “it was investments by Pat Brown, California’s greatest governor, in the state’s universities, roads and water systems that made the state’s economy the marvel of the world for much of the second half of the 20th century.”

Whether or not such investments are best carried out by government, they are emphatically not “industrial policy.”  They are, instead, examples of government provision of what most economists – including Adam Smith – have long regarded (correctly or not) to be “public goods.”  Unlike industrial policy, government provision of infrastructure and education does not override consumer choice in order to promote favored industries.  Unlike industrial policy, the provision of public goods does not protect firms or industries from competition.  Unlike industrial policy, the provision of public goods is not part of a government plan to achieve specific, foreseeable, and targeted patterns of investment and employment.

The fact that government supplies a blank canvas does not imply that it is an artist capable of painting a pretty picture.

Sincerely,
Donald J. Boudreaux

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