Deinonychus antirrhopus

Wrong First Step Kevin

Kevin points to an article that argues that there were a great many things the government did that helped the economy. To a large extent there is truth to the claim. Information can be costly to obtain. You go into a store and want to buy some aspirin for your headache. How do you know that the various remedies on the shelf will do what they claim to do, and are not just a variant of snake oil? Are you going to buy a bottle of pills, send them to a lab, and then sit around waiting for the lab report? Will you understand the lab report?

In some respects information is very much like public goods. If I consume the information (i.e., I read it or listen to it) it does not prevent others from consuming the information. Hence the government provision of this kind of good could very easily help the economy function more efficiently.

Similarly for the articles other example, the internet. The internet is a commodity that exhibits network externalities.¹

My problem is not with this view. My problem is with Kevin's policy prescription,

Instead, of course, we've gotten an initiative to go to Mars. So I'd add to Ben's recommendations one more: the first step is to elect people to office who believe that government has a serious role in the economy in the first place. We liberals need to work on that.

No. The first step is to get people to understand that there is a role for government, but that it is a limited role. The government spends quite a bit of money compared to the good ol' progressive days of the 1930's and 1940's. Yet we probably don't get nearly the kind of benefits Kevin is talking about. Instead of government working to make markets more efficient we have calls for the government to provide private goods (health care, retirement savings, and prescription drugs). We have the government passing more restrictive intellectual property laws. We have the government running huge programs that subsidize the consumption of goods (Medicare).

Now with respect to health care there are some external benefits. For example, immunizations can help reduce the number of people with a given communicable disease making any outbreak that much less of a problem. However, a blanket subsidy on any and all medical care is unwarranted by the very principles that Kevin is pointing to for liberals to get to work on. If liberals did take Kevin's suggestion seriously they'd start to look quite a bit more like libertarians. Not that I'd complain about that, but somehow I don't think this is what Kevin means.

As for the specific recomendations from the article that Kevin points too, namely,

A stronger government role in a few specific areas such as broadband, wireless, alternative energy, and healthcare IT, combined with a bipartisan commitment to policies that broadly encourage innovation.

I don't have a problem with these, but my question is what are we going to cut to fund it? Oh...how silly of me, lets use that wonderful tool for impeding economic activity: (higher) taxes!
_____
¹What good is the internet with one person? You going to send e-mail to yourself? The more people who use goods that have network externalities the more valuable the good becomes. Think of facsimile machines. The first machine was worthless in terms of sending facsimilies as there was no second machine to recieve the data. Once a second machine is in use the first machine becomes more valuable. Each successive machine adds value to the existing machines.