The Central Planning Version of Capitalism

From Libertarianism from A to Z the blog of Harvard economics professor Jeffrey Miron.

"MARQUETTE, Mich. — Declaring that “we can’t expect tomorrow’s economy to take root using yesterday’s infrastructure,” President Obama traveled to this snowbound town in a remote corner of Michigan on Thursday to make the case that expanding wireless access is critical to the nation’s economic recovery.

This is a perfect example of what politicians don’t understand (or prefer to ignore) about capitalism.

The fact that the private sector has productively invested in wireless infrastructure in the past does not mean that government subsidy for more such infrastructure will be similarly productive in future.

The crucial difference is that private sector decisions reflect market demand and the subtleties of when, where, and how much.

Government just asserts that, if some is good, more must be better, so spend away."