Here’s a letter to the Washington Post:
Megan McArdle rightly challenges Rep. Ro Khanna’s (D-CA) simplistic tweeted assertion that today’s bloated government indebtedness is caused exclusively by tax cuts and military spending (“Politicians in both parties need to face up to the national debt,” December 4). I wish to challenge the other quoted part of Rep. Khanna’s tweet – namely, that government should “make a moonshot investment in American industry.”
Of course, more investment in industry is welcome but only if that investment is wise. Yet entrusting government to invest is to ensure that investment will be unwise. Politicians and bureaucrats invest, not their own money, but other people’s money. In addition, politicians specialize in winning elections while bureaucrats specialize in pleasing politicians and expanding their bureaus’ budgets (which, of course, are filled with money not earned in commercial markets in which customers can say ‘no’ but, rather, taken from taxpayers who are obliged to hand it over). Politicians and bureaucrats have neither appropriate skin in the game nor the expertise to distinguish promising investment opportunities from duds. The best that government can do is to leave investment decisions as free and open as possible to private entrepreneurs – that is, to the same kinds of people, investing their own money, who were responsible in the past for America’s remarkable economic dynamism.
It’s no good response to point to NASA’s successful moonshot. That effort was a scientific one, the goal of which was singular and clear, and the pursuit of which did not have to meet any serious cost-benefit test. (Taxpayers weren’t asked to pay for that moonshot; they were compelled to do so.) Allocating resources to satisfy a vast, complex, and changing array of consumer demands in a market economy is a categorically different task, one that history shows can be performed well only by free markets.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030