Q: CURT: “WHY CAN’T WE CENTRALIZE PRODUCTION?”
There are some things the state can direct, which is largely defense, transportation and communication infrastructure, primary research and development in any competitive or comparative advantage, strategic trade policy, strategic industry, treasury, and law (courts). Of those, only ‘strategic industry’ is open to variations because the constitution of strategic industry varies constantly in time and over time.
What is government good at:
Capital formation and the organization of production and maintenance of those goods, services, and information that the private sector cannot achieve because of risk, time frame, and capacity to profit from it, while maintaining the production of a public good.
Why is government bad at almost everything
1. You’re apparently unaware of the “knowledge problem”: how government control creates poverty, corruption, and decline:
(The knowledge problem, as articulated by economists, highlights the inherent limitations of governmental entities in acquiring the vast, dispersed information and the incentives necessary to produce goods, services, and information that the market can otherwise generate. This combination of ignorance and incentives leads to corruption within government as officials exploit their authority for personal gain in the absence of market disciplines and accountability.
At the same time their failure and corruption degrade public trust and incentivize individuals to circumvent official channels, leading to the formation of black markets. These underground economies emerge not just as a symptom of regulatory and economic failure, but also as a pragmatic response by citizens seeking goods and services that are otherwise unattainable or exorbitantly priced due to government intervention. Thus, the knowledge problem underscores a fundamental challenge: without the nuanced understanding and incentives provided by market mechanisms, governmental interventions often result in widespread inefficiencies and societal corruption.)
So 1. Failure of the pricing system to provide necessary complexity reduced to useful information 2. Necessary incompetence that results. 3. Lying and Corruption that results as a consequence. 4. The collapse of public trust, collapse of public incentives, public expansion of free riding, and the formation of black markets. 5. The resulting poverty as all these overhead costs more than exceed the costs and uncertainty of markets wherever markets CAN supply good services and information.
What is the optimum role of government in the economy?
1. Non Market Long Term Capital Production: Military, Infrastructure, Treasury, Insurance of Last Resort, – Possibly including medical infrastructure (buildings and equipment)
2. Basic Research: not academic research but basic scientific and technological research that provides a competitive advantage.
3. Venture Capitalist: Venture capitalist in strategic industry, formation of new industry, resulting public participation in profits of the industries governments have used public funds to invest in.
If this means starting the production within the government, and when viable, turning it over to private sector management, or whether it means investing in private sector industries to maintain or expand comparative advantage, the utility of the government as an investor ‘and capitalist’ seeking returns for the public in lieu of taxes, is irrelevant. The government can accumulate capital in ventures that are necessary for the public good, useful for the public good, and that may take a long time to produce returns, while the private sector is better at making use of capital and producing returns on capital once a market exists.
4. Subsidy of Primary Production: This is where our food supply requires vast regulation and reconstruction. And it is the only primary production that appears to be necessary,
5. Insurer of Last Resort
– Resolution of Conflicts (courts)
– Disaster Recovery and Reconstruction
– Defense
And I’m reluctant to add these because they’re going to need vast reforms:
– Catastrophic medical care
– Catastrophic elder care
– Catastrophic unemployment
– Catastrophic genetic burden and resulting incompetence at survival.
Everything else is better done by the private sector.
Cheers.
Reply addressees: @Gyeff0