What is the proper role of government in the economy?

In this recent post we touched on what government should not attempt with regards to the economy (via Camille Paglia). Here's something it should do.

Government is not efficient (nor is it meant to be), and does not generate new, viable industries. It does not create new jobs except for the worst of political reasons (aka 'pork').

Government does best when it facilitates improvements that private businesses can utilize to achieve new efficiencies, and build jobs and wealth. These improvements fall into government's purview when they are too large in scale (and their ecomonmic payoff too far down the road) for business to assume. Roads and bridges are examples that test back as far as ancient Rome. Build such structures and commerce improves, with quality of life rising as a result. The Internet, established by the Defense Department, is a great modern example.

Space exploration and transportation should be another example, and there is in fact a modern aerospace industry which grew out of early governmental efforts. But space technologies never achieved the economies of scale that are key to the more profound changes brought about by roads and the 'net. Therefore the benefits of 'space' have never been as significant and widespread as they should have been. The Internet today is everyman's domain, while space still belongs mostly to NASA.

This project could finally change all that, and lead to an economic revolution along the lines of those generated by the interstate highway system and the Internet. It still looks to be some ways off, but the change it would engender is so significant that it really cannot happen soon enough.

Tim Worstall wants the space elevator built, ASAP. This blog has regular updates on the subject. More here. And, the state of nanotube technology is advancing rapidly.

Categories: Technology, Economics