I find Boettke's claims about mainstream economics to be very wrong, but he's obviously got a lot of good discussion in the article. The guy is a student of the market economy, so while I may disagree with 95% of what he says about the economics profession, I agree with a ton of what he says about the economy - and we should never lose sight of that. Later in the article, he gives us one of my favorite quotes from WN:
“What is the species of domestic industry which his capital can employ [ie what he should invest in], and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in which manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”
Dan:
ReplyDeleteI am really hard pressed to understand the point of your post, or the quotation, as there is no "there," there.
While it is true that the state cannot direct every investment it is equally true that the state can direct some investments very effectively and that only the state can effectively regulate use of certain kinds of natural resources.
Just for example,as to the first: (1) the Eire and Panama Canals; (2) locks and dams on the Mississippi and Great Lakes; (3) interstate highways; and (4) the Intercostal Waterway. Other likely candidates would include the Internet and air and space exploration, including many airports.
If there are any laws or rules of economics that tell us which will work best, I am not aware of them. In fact, I would expect most people would frame the problems in terms of agency or ability to finance (or in the case of nuclear energy, national security). There is, to me, no politics to this, just common sense. Given the specific issues, which approach or combination of approaches will work best.
Thus the Corp does location and design work on Miss. locks and damns, but bids the actual construction to private firms.
IOW, the quotation to me is nothing more than political bias. Living on Lake Superior, I can only say that the only way one can let anyone private engage in economic activity on the lake has to be under such heavy regulation that to draw a line between public and private is almost meaningless.
I agree anonymous - I can't imagine Adam Smith is saying that the state cannot make important investments. I certainly don't see that here. It would blatantly contradict other things Smith says. And I obviously think the state can make important investments.
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