STAFF NEWS & ANALYSIS
Governments Are Authoritarian Monopolies That Cannot Encourage Social Creativity
By Daily Bell Staff - July 11, 2016

Government Holds the Promise of Faster Growth … One of the U.S.’s biggest economic challenges is the slump in productivity. After climbing steadily for many decades, productivity has slowed dramatically since 2011:   Productivity is the key to long-term prosperity. It represents a hard ceiling on the amount of valuable things that a society is able to produce. If productivity flatlines, it means that the pie isn’t growing, and there will be less to divide up among us. So finding the cause of the slowdown is a big, important task.-Bloomberg

We almost never agree with Bloomberg’s Noah Smith, but he is habitually provocative.

This editorial is no exception. His point here is that, “Many economists have slowly been warming to the idea that government, far from being ‘the problem’ (as Ronald Reagan put it), might actually be a big part of the solution.”

More:

Recently, some economists have suggested that government can play a vital role in innovation, technological progress and productivity growth.  One of these has been the University of Sussex’s Mariana Mazzucato, who champions the idea that government research is behind most of our major innovations.

But recently, she has been joined by some very heavy hitters: Daron Acemoglu of Massachusetts Institute of Technology and James Robinson of the University of Chicago.  Acemoglu and Robinson are known for their theory that good government is critical to economic development.

They believe that strong institutions, such as property rights and the rule of law, are the key to allowing countries to unleash their productive potential. But more recently, these economists have come up with an even bolder thesis. Government, they say, might be central to technological progress itself.

This new approach to economics is called “state capacity.” The state, it turns out, supports innovation and creativity. “It’s a necessary and crucial input.”

To try to figure out if they could prove their hypothesis,  they examined counties in the US that had post offices in the 19th century and then checked the amounts of patents filed.

In fact, they did find that having a post office correlated with increased patents.

Taken together – while we do not establish unambiguously that the post office and greater state capacity caused an increase in patenting – our results…suggest that the infrastructural capacity of the US state played an important role in sustaining 19th century innovation and technological change.

They suggest that people stop thinking of the government as the enemy of progress and start contemplating ways that government can help with problem solving.

Government provides “infrastructure, education reforms, more research funding, even government-sponsored angel investing.”

This seems to us to be a freakishly Pollyannaish perspective. Take government angel-investing.

The CIA put lots of money into various technologies companies in the past several decades. But its biggest successes are perhaps Facebook and Google.

Both Facebook and Google are relentless anti-privacy machines that collect data that inevitably finds its way into government hands.

Together, they are purposefully destroying the remnants of pre-Internet privacy. They are doing this at the behest of the US government in order facilitate further authoritarian snooping and worse.

Once government believes it has a firm comprehension of its “enemies,” much worse often takes place. This has happened over and over throughout history.

Government is rarely the people’s “friend.” Only perhaps when it is organized as a republic and rests lightly on the shoulders.

But that is rarely the case. In fact, the real problem with government is that the people running it are never the people who SEEM to be running it.

And the people who are really leading governments from a variety of secret places are almost always in conflict with the larger mass of the populace. They tend to be paranoid, suspicious and eventually murderous.

Within this context, it is hard to imagine that government can do much to foster innovation.

Almost everything government does, or wants to do, involves setting up additional controls to insulate the leaders from those they lead.

This leads almost inevitably, sooner or later, to various kinds of genocide. As a given government grows more bloody, it also begins to run down. Authoritarian governments implode.

Conclusion: The bottom line is that government operates by force. It is hard to comprehend how creative endeavors can be cultivated by authoritarian monopolies.

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  • alaska3636

    The success of a creative endeavor is often derived from a feeling of how good it will be to turn an idea into a tangible thing. The accuracy of the representation of the idea as subjectively judged by the artist is ultimately what makes good art good.

    Big, complex ideas about the meaning of the human experience molded into something physical for other humans to consider is the essential act of creativity. Much of the profit and loss calculation done to provide creative work is psychological (or thymological).

    Creativity is also used to solve problems of catallactics. Oftentimes, thymological creativity is used to discover natural laws which then become subject to catallactic creativity such as the discovery and application of electricity.

    The possibilities of creativity like most aspects of the human experience are derived from the uncertainty regarding subjective valuation of ends and means. Market prices are no different than psychic prices in this regard. The same reason that a government cannot price goods is the same reason that the same government cannot legislate creativity. The ultimate decider’s judgment in a command economy is ultimately arbitrary, whereas markets for prices and creativity depend on the volume of the marketplace to sort out the good from bad ideas in the same way that nature supposedly selects for fitness.

    The only true judge of ultimate ends would have to be omnipotent and many people believe in this kind of judgment. Technocracy is the idea that omnipotence can exist here on earth in the minds of a wise man or committee. This is hubris and distinctly un-scientific – it denies the absolute nature of uncertainty that underlies the human experience.

  • Webforager

    “One of these has been the University of Sussex’s Mariana Mazzucato, who
    champions the idea that government research is behind most of our major
    innovations.”
    While this statement rings true I think there is a more subtle aspect to look at that is conveniently overlooked. When we strip away the language of labels and get to the object being described we find humans acting (thank you Mises). In particular, humans acting upon what they value. In the case of government agents, that value is translated into what these people wish to achieve. Couple this with the monopoly privilege of producing and distributing currency we get a dominant bias in the expression of human action which Rothbard termed the “health of the state”.

  • Praetor

    Cause of slowdown!

    You don’t build growth in an economy dedicated to the service nor financial sector of an economy, which the U.S. is doing. Internal needs being met, exports become an imperative. The exports most be innovative and of high quality, which the U.S. isn’t doing, but has the capacity to do.

    Of course we have a ruling class incapable of seeing the errors of their ways. This is an indication of Mental Illness. A situation that must be dealt with by we the people.

    This is an indication that, ‘Dissolution of Government’ be needed!!!

  • r2bzjudge

    “Many economists have slowly been warming to the idea that government,
    far from being ‘the problem’ (as Ronald Reagan put it), might actually
    be a big part of the solution.”

    Laughing.

    The government promoted a housing bubble during the Bush administration. How did that work out? The economy has been in poor shape ever since the housing bubble burst. The bubble burst 10 years ago.

    Obamacare, so-called, has resulted in businesses eliminating a number of full time jobs. It has helped to drive up insurance costs, which leaves consumers with less money to spend on other things. Two sporting good stores, recently went bankrupt.

    Government promoted student loans have created a financial mess for graduates, as colleges take advantage of the cash cow provided to them- driving up student costs, sinking them further in debt. After college, too many students are left moving back in with their parents.

    Economists are wearing rose colored glasses, if they think government is a big part of the solution.

    • BB

      “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
      —Upton Sinclair

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