A Stitch in Haste

To review: The Broken Window Fallacy reminds us that an event must be evaluated not only by its visible effects but also by its hidden effects. Whether it’s an exogenous shock (e.g., an errant ball smashing a shopkeeper’s window) or a government policy (e.g., subsidizing scientific research), you must consider not only what is seen, but also what is unseen.

Someone please tell this retired professor:

If it is true that higher government taxation depresses job creation and that the government can’t create wealth (only the free market can), it becomes rational for struggling workers to vote Republican on economic grounds. They don’t need cultural issues to get them to vote that way[.]

Huh? “Struggling workers” are not neutral economic observers and should not be expected to vote as such. They are a faction. And like all factions, they will vote based on their own factional interests. So in a regime, like America today, dedicated to the principle that the majoritarian faction can extract ransom from the minority factions, the only rational political goal is to be the majoritarian faction. “Economic wisdom” is simply not part of the equation.

While minimalist government may be necessary for a free market, that doesn’t necessarily mean minimalist government is good for the growth of the economy, or for job creation, or even for generating private wealth.

Consider the kinds of industries usually associated with the modern economy: jet aviation, semiconductors, computers, the Internet, global positioning systems, laser technology, MRI technologies, high-strength steel alloys, fiber-reinforced plastics, nanotechnologies. Tens of millions of new jobs — well-paying jobs with good benefits — were created through these innovative industries.

Each of them arose out of government-funded research, initial development by government, requirements established by regulation, large-scale governmental demand and purchasing to provide initial markets, or some combination of these. Every one of them.

Not exactly. First, the fact that government contributed to the funding of any of these industries hardly means that government proximately created those industries (i.e., that those industries would not have exited but for economic interventionism by government). It’s cute when your spouse brings out your birthday cake and your child says, “I put the candles on!” But that doesn’t mean the child really baked the cake.

Second, how many of those “thanks be to government” developments were really “thanks be to the Cold War” developments? As I’ve noted repeatedly (one example here), the Space Race was a legitimate function of government only to the extent that it was military, not because it generated patriotic warm fuzzy feelings watching rockets go up or capsules come down. Today, with the possible exceptions of atmospheric and climate research, or perhaps asteroid detection, NASA is nothing more than a giant, and expensive, “national greatness” boondoggle (the kind that supposed earmark slayer John McCain would no doubt embrace unhesitatingly).

In any event, the purpose of defense spending is not to invent new technologies (i.e., the Tang-Teflon-Velcro fraud, now apparently repackaged as the “Jet-MRI-Internet” fraud); that is strictly incidental. The purpose of defense spending is defense, and nothing more. Not new technologies, not putting people to work, not propping up dying industries. (And besides, since when do liberal neo-Keynesians actually like the military-industrial complex? Whatever rationalization it takes, I guess.)

Third, and most important, is the simple, insolent disregard this academic shows for the Broken Window Fallacy. Yes, we indeed have “jet aviation, semiconductors, computers, the Internet, global positioning systems, laser technology, MRI technologies, high-strength steel alloys, fiber-reinforced plastics, nanotechnologies.” But what don’t we have — thanks to higher-than-necessary taxes, appropriations and deficits? What breakthroughs were thwarted because of petty partisan factionalism, rent-seeking and the Politics of Pull? How much more cheaply, or quickly, could those technologies have been developed if government had gotten out of the way and out of our wallets?

Blank-out. Nothing but blank-outs.

One last quote:

A pivotal role for government is to offset lapses of the free market that confine the market’s ability to generate basic, large-scale innovation on its own.

“Pivotal”? To whom? By what standard? “Lapses”? Defined how?

The answer is, as always: To someone else, by their standards and defined by them.

You only get to thank the central planners, pick up the tab and drink some Tang.