Wednesday, March 21, 2012

How Government funding creates an enviornement for corruption to thrive and innovation to die

It seems the more government funding we apply to education, the worse it gets. Government tries to regulate and inform the public on nutrition and the population keeps getting less healthy. Recently we've spent more tax dollars on "green energy" companies that go bankrupt. There are those who believe that our elected officials and government bureaucrats actually conspire to destroy the things they claim to support. In some cases, maybe that's true. But for the most part, the system itself creates failure by its very nature.

In a free marketplace, ideally producers and end users voluntarily enter into transactions at mutually agreeable terms, absent any third party or government influence. A buyer may get fooled into buying a shoddy product or service once, even twice, but over time bad ideas wither and die. Good ideas thrive and are imitated and replicated.

Now add some government funding and regulation to the mix. Now there's money and opportunity on the table that comes not from customers, but from legislators and executives at government agencies. Where previously my product had to stand the test of a 300,000,000 person focus group, now I just have to influence a handful of bureaucrats. I put on a nice suit, maybe a lab coat, come up with a professional, heady presentation and presto, I've got a big ole subsidy or a competition crushing regulation. The legislator's intentions may be noble, but by taking the decision making out of the hands of the end user, they've corrupted the whole process.

This process actually favors those who are inclined to get ahead through deception, obstruction and fraud and puts those who would like to test good ideas in a free market at a distinct disadvantage. Legal maneuvering, and influence peddling become more important than hard work and innovation. Even with the best of intentions, the government employee is not going to get input from everyone. They guy with the small shop, trying to prove himself in the capitalist arena, can't afford the plane ticket, the suit and the time off to go to Washington and lobby a bunch of legislators. Advantage cronies.

Our lawmakers and executives are not omniscient experts in everything from nutrition to education and energy production. They're just people. Furthermore, they're more likely to be elected based on their "likability" or how they feel about abortion or gay marriage than any expertise in any of those fields. Of course they're influenced by lobbyists. We've charged them with making decisions effecting industries, products and services they know absolutely nothing about. Most of them have no experience in any kind of business outside law firms and politics.

The solution isn't to elect different people to make our decisions for us. It's to take those decisions back for ourselves. We're discouraged from doing so by people who constantly point to the worst possible outcomes and convince us that those are the norms; that left to our own devices, we are doomed to fail. But just look at the track record. Societies that have been most successful at limiting choice and restricting free markets don't have illegal immigration problems. In fact they have to force people to stay. Don't buy the rhetoric. Believe your own eyes.

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